Divorced and Strapped for Cash?

    As the going gets increasingly rough, divorcing adults sometimes face what can seem  insurmountable obstacles – and often at a time when they are the most traumatized and vulnerable – emotionally as well as financially. So it continues to be important to get support and advice, keeping yourself and family safe and whole to fight the battle another day. And as you go, often one tiny step at a time, let your own persistence  and willingness to learn  from inevitable mistakes be an encouragement to yourself as well as to you children. Some suggestions to help:

1. Keep meticulous track of what you’re spending now. 
This may sound like personal financial management 101 – and it is. But there are really only two ways of living within one’s means: either increasing revenue or decreasing expenses. Now is the time to do both or either, continuously, the best you are able.

• Grab a notebook and start writing down everything! Don’t look back and don’t stop for two weeks. At the end of two weeks, review it. Read it and weep and  let it sink in: you’ll have a wealth of information here on where your money in your accounts and pockets is going.
• Log every item according to a category that makes sense. Make them easy for you to remember – “food”, “clothing yours”, “clothing children.” “charitable donations.” Make these specific enough to be really helpful. For example, the category “Food – groceries” should really be a separate category from “Food – eating out." Just comparing those two categories over a two months for most families  will be positively eye opening.

2. Stop eating out, now.  
We need to eat. We don’t need to eat out or even eat extravagantly. The fact is, shopping for healthy groceries and cooking at home, packing lunches, eating out of our own fridge, after going once every three weeks to Costco, will cut back on one of the largest and most unnoticed waste of dollars – eating out. Rural and large families have long known that  buying and cooking two chickens and steaming lots of green beans will go twice as far on 1/4 of the money it takes to eat out. Also the food itself is often healthier.

3. Then repeat this logging exercise again for another two weeks. 
Mark each item as “need” or “want” that is – a  “necessary” or “discretionary.” Example: your utility bills come each month no matter what you do and are necessary to keep the lights on – so they’re definitely a “need”. On the other hand, what do you think about the third trip in one month to the craft store for children’s school projects supplies? Review and adjust –  be brutally honest with yourself.

4. Engage the whole family, including children if you have them -- in keeping records for a second month. 
As the adult, you must continue to do it yourself anyway, even if others want no part of it. Even a little cooperation is better than none. For example, you may decide to  share with them your monthly electric bill, allowing them to now really know  how much someone must earn keep  the heat on during  winter.

Of course, you should consult with mental health professionals if you’ve questions about how to best  tailor this information for  age appropriateness. To a five year old, your dollar mortgage payment could seem like a million Monopoly debt. But to an much older teenager --  what a potential  eye opener  -- and be prepared for 'ticker shock’ and pushback. Know that financial reality, like any reality check is often very painful. Especially at first.

5.  Scour your own data for areas where you may  cut back on expenses – even on some of the “necessities."
You now have two full months of raw, reality based data. Pick it apart, line by line. You and your family best know what can and can’t be modified. If you’ve shared the electric bill with other family members, knowing it might mean that they might now be more likely to turn off the TV and basement lights before going to bed. Or will at least better understand your constant exhortations on the subject.

Again – knowledge can be empowerment – you may even want to set up a reward system for your family’s helping you to get and keep that particular bills lower.

Once you and anyone else who’ll listen  starts thinking this way, it may set in motion new creative and helpful solutions to ongoing expenses, spending pressures and habits. Take heart, the numbers are what they are – it’s better to know them so that you may take  action over time, than not know them at all and be left, literally, in the dark.

Cynthia Anderson Thompson, Certified Divorce Financial Analyst (CDFA ™), MBA (Harvard), is founder of Divorce Planning Solutions LLC, a fee-only financial planning firm in New York.  She can be reached at cindy@divorceplanningsolutions.com or 914-906-2919.