Debthelper: Debt after Divorce

    Most Americans are in the red when it comes to their budget. People need to realize that spending more than make is bound to catch up with you sooner or later. This is particularly true if you're getting or have just gotten divorced, when splitting into two households is even more difficult. And in the current recession, it's almost an impossible situation. Before I was a credit counselor, I like many Americans thought of credit cards as a way to buy things I couldn’t normally afford. As I type this I am sitting on my IKEA couch that was purchased four years ago and will be paid off this year. 

cWhy do people view credit differently? I think it is because it doesn’t feel like real money. Working for a non-profit credit counseling agency has transformed my ideas and attitude about money. Not everyone is so lucky to have a financial awakening. I went through times when I was literally obsessed with budgeting and saving. It made me miserable, but then I thought about the freedom of not being tied down to monthly obligations for things I had purchased years ago. Things I couldn’t even remember. It forced me to start me to start viewing credit differently. 

What does it take to get to that point, particularly when you're dealing with a divorce? First and foremost, you need to know how much money you are bringing home, and have a reasonable spending plan in place. This may not sound like much fun to devise, but think of the spending plan as a road map or guideline. It is not a budget, just an idea of what you make versus what you spend. After you have this information down, you can proceed to the store. Now it is time to go to the store. You see an item that you would like to have, and you are ready to put it in your shopping cart; now is the time to ask yourself some questions. Every time you make a purchase, it is good to ask yourself three questions:

1.  Do I really need this?
I grew up in a household of impulse buyers. People that buy things they don’t need just because they are on sale. The result is that you end up with a cluttered house, no money and nothing to show for your purchase. You wonder where your money went, as you sit looking at the all nick-nacks littering up your house. If the answer is no, don’t buy it!  If the answer is “I don’t know,” give yourself twenty four hours to think about it. If after that the answer is yes, proceed to question number two.

2. Can I afford this right now?
If you have the money in your checking account, make your purchase. If you don’t have the money in your checking account; proceed to question number three.

3. How long will it take me to save up to buy this?
Divide the product’s cost by the amount you can afford to set aside each month until you can afford it. What is the surplus in your spending plan? What can you afford to set aside each month to make this purchase? How long will it take? Then other questions may pop into your head: “Is it really worth this trouble? Is it something that needs to be a priority? Do I really need this? How will buying this enhance my life?” After that, if you still decide it is something you need or really want make a commitment to save up for the item.

What if there is no surplus in your spending plan? If there is no surplus in your spending plan then you need to make some changes. Where can you reduce your expenses? If you are at a loss and are having a hard time buying things that you need, it is time to contact your local non-profit credit counseling agency.