|
 |
 CAREFUL WITH THE CARDS |
|
Most women and men feel they have been taken
to the cleaners when the divorce is finally over. They did not consider
these "extra expenses" when negotiating a settlement, and the first thing
that most do is to liquidate some of the assets received in the divorce
settlement to pay for the extras. No wonder everyone feels they got cheated.
The credit-card dilemma
So how do you pay for this? An increasing number of divorcing couples
are showing up with large amounts of debt -- mostly credit-card debt.
The good news is that you are not alone.
It's tempting to overcharge. If you're like most people, your mailbox
is packed with credit-card applications offering a very low percentage
rate, even 0% interest for a six-month period on outstanding balances.
Who can resist? It looks like free money.
The problem is that this low interest charge prompts even more spending
and six months later, with an even larger credit balance, the interest
rate jumps up to somewhere between 14% and 20%. Now you're in trouble!
You have to stretch just to make the minimum payments. Suddenly you realize
that you're living beyond your means. You'll be paying for that sweater
or new CD unit you couldn't afford yesterday -- but charged anyway --
for many tomorrows to come. It's tempting to start living off your credit
cards when the spouse who moves out stops sending money. If there is absolutely
no money, it may be necessary to use credit cards, but do so sparingly.
It is more important to pare down your living expenses to the bare bone.
This means no vacation, new clothes, or even car repairs -- unless you
have the cash to pay for it.
As in most cases, there seems to be another side. Some attorneys advise
their clients to buy whatever they need and run up the credit-card balance.
Why? Because it's considered marital debt and your about-to-be-ex will
have to pay for half of it. This is bad advice. Too many times spouses
max out the credit cards before the divorce. After the divorce, each spouse
has difficulty paying off his or her share or getting any other type of
credit. Once you run into trouble making credit-card payments, you have
put your credit standing into jeopardy. It just isn't worth it.
Evaluating your expenses
So, where does this leave you? Remember the sleuthing you were doing digging
up papers and information for your attorney to fill out the various forms
you file during the divorce? Your hard work will come in handy when it
comes time to create a budget.
You'll also need to take a hard look at what you consider necessary expenses.
If you are used to taking a nifty vacation each year, you probably feel
that it should be part of your regular life post-divorce. That's not necessarily
so. Spending the day golfing or lounging by the country club pool may
not be in the cards, either. Also, if your normal expenses include $350
per month for clothes and you have two closets full of clothes, you may
need to make them last longer than before.
Typically, divorce changes everybody's life. Yours, your ex's, your kids',
your pets', even your friends'! To determine your minimum financial needs,
ask yourself the following:
|
|
|
.gif){kind=small}
