Do you feel like your life is over?
When something, or more like someone, exits your life, you might feel like you’re on a downward trajectory to, I don’t know, the end.
I sure did. I thought it was game over. No future. No happiness. No life ahead.
I had celebrated graduations. I had celebrated my wedding. What more?
I had gloomily thought that the only next celebration I would look forward to is one I wouldn’t be here for – death.
Yes, these thoughts might have come from my darkest places in my most trying hour, but it was what filled my mind.
I was wrong.
Divorce isn’t an end.
It’s a new beginning in every aspect of your life, including, and especially, in your financial life.
If you struggled during marriage, if your divorce left you in serious debt or you even had to file bankruptcy after your divorce, you can start over.
My financial life today is 10, maybe 100, times better than it was when I was married.
I not only divorced the woman I was married to but also from my hungry and all-consuming third partner in our relationship – our home, which ate up our finances like a hungry Cookie Monster.
I divorced irresponsibility, unconscious spending and debt.
Here are 7 ways to get your finances back on track.
1) Simplify your life.
We live in extravagance. Like it or not, know it or not, we continue to spend what we have and even more so with our personal banks known as our credit cards. There are many expenses in your life that you can cut down. You don’t even know how elaborate, extravagant and complicated your life is. There are services you don’t need, monthly payments for things you don’t use and regular spending on items that don’t enhance your life.
Look around your life and look at your spending habits. Where is your money going? What can you reduce, simplify or get rid of?
2) Downsize
Since my divorce, I’ve chosen to live with roommates. Why? Because I enjoy the company and I enjoy the cost savings. I’ve also enjoyed living in smaller residences in less expensive parts of town to save money.
You might think you can’t possibly live with other people or move, but you know what? You can. It’s a little bit of personal sacrifice for a whole lot of financial freedom.
If you can’t live with someone else no matter what, then considering moving to a small place or less expensive part of town. You can cut down your living costs by 20-40% or more.
3) Cut out frivolous spending.
You’re ready to spend every time you walk into a store or every time you pass a Starbucks.
Your money/bank cards/credit cards feel like a natural part of your body, except they shouldn’t.
Spending without thinking is the easiest way to financial ruin. Do one of two things: either stop altogether so you’re not spending any money or give yourself a limited amount of funds each month to spend. If you’re beyond the limit, don’t buy it.
Spending money on things that don’t fulfill is a double negative. One, you’ll get a transitory moment of joy that you’ll forget about after you drink half the cappuccino, and two, you’ll be racking up credit card charges that will continue to keep you in debt.
If you had not planned on purchasing it when you went out, don’t.
4) Get clear on what’s important
I should have started with this step.
Why are you saving money in the first place? Why do you need to get your debt under control? What will having more money and financial freedom mean to you?
Think about this and get clear on this part.
Having no debt allowed me to start living the life I wanted. It allowed me to write and publish more books. It allowed me to take coaching courses and start coaching people. It allowed me to leave full-time employment for months or years at a time. It allowed me to travel. It allowed me to save money for retirement.
Why do you want to be debt-free? What will financial freedom mean to you? Answer these questions first! Know why you’re going to change your behavior and find some motivation to stay the course.
5) Start an automatic savings plan
The first thing you do on pay day is figure out which store to visit or what to purchase first.
Well, that’s one sure way to live the lifestyles of the rich and famous poor and infamous.
Even if you’re going to frivolously spend, at least set up an automatic savings account first so some of your funds go into a retirement account and some goes toward a savings account. After you’ve saved your money, then do as you please with the remaining funds.
This was one of the first steps I took after my divorce and I’m thankful for Ramit Sethi’s video on this topic.
6) Pay off debt – more than the minimum
I used to avoid paying off debt, thinking I was winning. The less I paid and the later I could pay it, the more I would have now.
Credit cards and banks had a laugh on my behalf because they were the ones winning.
The more I delayed on payments and the less I paid, the more interest they made.
One of my biggest debts is my student loans from law school. I had paid the minimum on this for the longest time, thinking this was going to be a lifetime payment plan. Forget that, I realized. Paying it off is doable; it just takes paying more than the minimum each month, so I’ve tried paying at least $100 more each month toward paying off these loans once and for all.
(I sure wish I had found this blog earlier by The Power of Thrift. She’s a 30-something year old lawyer who paid off law school student debt and retired. What!?!)
7) Be intentional with money
I’m asking you to do something here that I didn’t do for a long time, to be more conscious with your money. To know ahead of time what you’re going to do with it.
This might require some planning. It might even require examining and thinking about your finances each month. A little planning or a basic budget can go a long way.
Figure out what you are required to pay, budget your expenses, and see how much money you have left at months end. Buy less stuff. Don’t spend all your money! That’s the surefire way to debt and how corporate America wants you to spend your money –without thinking about it!
When you’re in debt and reeling from the financial pain of your divorce is the best time to start over. Set your finances right with these simple tips and you’ll feel happier, freer and more peaceful than even before.
Start the next chapter of your life financially-savvy and debt-free.
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