Living Independently After a Loss or Divorce
Starting over after divorce or the loss of a partner can be one of the biggest challenges in life, as emotional stress often accompanies financial and family demands. Yet you can take some positive steps to enhance your financial well-being today and for the future.
Assess your situation and establish a budget
The first step in establishing your independent life is understanding your assets and liabilities.
- If your home is paid for, what is its value? If it’s mortgaged, what equity do you have in it, and what do you still owe?
- Did you receive any cash, investments or other assets in a divorce settlement — and have you assumed any debts?
- Have you received an insurance or pension benefit as a result of your spouse’s death?
With an understanding of your assets, your income and your liabilities, you can establish a budget to address immediate financial needs and plan for future goals.
Re-evaluate your retirement plan
As a result of divorce or loss, your retirement goals and timeline may have changed. You may need to add to your job skills, earn more, work longer or revise your goals, depending on your situation.
Consider your insurance needs
Life insurance, which can help pay off debts, provide income or fund a child’s education in the event of your death, is an essential consideration if you have dependents. Disability-income insurance can replace a portion of your income if you are unable to work due to an accident or illness. And adequate homeowner’s and auto insurance can help avert a potential financial crisis due to property damage or loss.
Manage debt wisely
Debt is often a fact of life after divorce or death. If divorced, you’ll want to close any credit accounts you held jointly with your former spouse and pay off any outstanding balances you may be responsible for. A debt-consolidation loan can help lower your interest and accelerate your payoff with a single, fixed monthly payment. With debt paid off, you can establish an emergency fund through an interest-bearing money-market savings account.
Talk to a qualified Financial Advisor
Through knowledgeable advice and a personalized financial plan, a First Command Financial Advisor can help you as you begin your financial journey — with solutions for building up your financial resources, reducing debt, managing financial risk and planning for your future. To learn more, contact a trusted First Command Financial Advisor today.