Divorced and Trying to Cut Costs?

    Ok, you ask yourself… How bad is this going to get? When is this centipede’s next shoe going to fall? You don’t know and you’re in very large company because no one knows for certain. Seven different economists may paint seven different scenarios and even as the markets’ volatility accelerates in both directions and as global policy makers meet, the fact remains, as the eight ball would say: “Outcomes are unclear’.

We see it and hear about every day: One divorced dad starts using credit card cash advances to pay last month’s child support. Sibling teenagers are using their parents’ master cards behind their backs for basic clothing needs or occasional dinners with friends. A third family’s parent loses her job, getting downsized just as she and her high school senior son begin sending applications to college.

What steps can we take  to protect ourselves – to limit the damage already done? First we must all figure out what is and isn’t in our immediate control. And then begin to do any and everything possible to positively affect those things over which we have even a little control. Divorced Parents: Now's the time to create a positive proactive example, regardless of your age or circumstances. Children: regardless of your age, too, now is the time you can be an invaluable help. You can become a committed team member -- with your family, divorced or otherwise. Everyone should pull together to help keep one another from falling into a financial abyss.

A couple of tips to help:

1. Let’s get everyone to work:

A. Parents: If as the parent, you’ve been laid off, you’ve likely already started looking for new work; consider  part time or project work as well as full time. Of course, it’s easier said than done, but there is no alternative but to plow ahead. If you have a skill, time or desire, get plugged in now with others who can benefit from your services while you continue to upgrade or even change your skills. For example, many local nonprofits or community colleges offer a large array of programs. These may range from teaching computer skills to retirees to offering  reentry skills for homemakers. Daunting tasks face out of work former executives:  don’t’ neglect networking and volunteer projects to augment your search  for full time work.

There is tremendous need here and globally for helping hands, and many job openings remain unfilled, so your determination to  become gainfully  (re-)employed may be helped by your willingness to reach outside of your traditional  boundaries of comfort

B. Children: Even if your parents divorce has hurt you and your sense of security – your approach to your studies and work can become a part of your learning through these difficult times.  By determining that you can and will work -- you may be taking important steps for your own empowerment, as well as providing help to your family.  You can help teach the whole family, your friends and community how  to spell one of the best insurance policies against economic uncertainty: “J – O – B”

Think creatively – if you’ve young, ask your parents if it’s OK with them and safe to get together with them, neighbors or friends to start a little business -- dog walking service  or a weekend lemonade stand? If you’re in 6th grade, would your mom or dad allow you to tutor your second grade neighbor? And of course, if you’re older, there are so many opportunities to make some after-school and summer money.  Many schools have lists of companies and nonprofits that need volunteers – and volunteering can often lead to paid work if you take the initiative and check it out.  Standard entry level jobs that require only a few hours might be a way to go.

Caveat: Beware though, that as the parent you don't encourage your children  to take on a too  burdensome, too time consuming job that would leave not enough time for homework – which should still be a student’s job number one.

2. Let’s stop buying stuff we don’t need.
Now’s  the time for us all to once and for all figure out the difference between ‘needs’ and ‘wants.” Apparently it’s human nature to want more than we need. We need transportation; we don’t need a new sports car. We need clothes; we don’t need new designer threads each season. Nix the knickknacks.

Say no to impulse items. To all of them, for now… We don’t’ need to buy that fruit and ice drink available after work or school that costs $6.75 per drink. You’ll be spending $33.75 a week before tax, provided you only stop by the stand on weekdays. After buying these 42 weeks a year, you’ll be out of pocket over $1,500 a year, including sales tax. And that’s for just ice and fruit that would cost you perhaps $100 a year out your own refrigerator. Is it worth it? That’ s a lot of money flying out of our pockets without our even noticing.

3. Let’s stop using the plastic.
Now we’ve all heard it a billion times. Or perhaps a quadrillion times. Quadrillion – 1. 000,000,000,000,000 -- the number set that is now too large to fit onto the New York City scoreboard, that keeps track of the federal deficit. Regardless of  what and how others  manage their personal finances, we should commit to ourselves to try here and now to reduce our use of credit cards.

With divorcing families, again, you’re often working with twice the expenses with half the money  --  now's the time to take heed. Banks are in a horrific position – some may have already started decreasing credit limits. And the highest interest rates are now nearly 30 percent could be headed higher. Do yourself a favor and just stop. Use cash or money orders, if you are able and if it’s absolutely necessary.

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.