Finances Post Divorce

You won the house in your divorce. Yea! Now, how will you afford it on your own? With adjusting to being a single parent, you don’t want to get a second job.

So, what can you do? Here are 10 ideas on ways to manage a house that is financially unmanageable. As with any financial decision, you should consult a professional to make sure you are making the best financial decision for your set of unique circumstances. However, these are some helpful ideas that you may not consider when you are stressed out about how you will manage unmanageable bills.

#1 – Liquidate Your Equity To Pay Off Monthly Bills. Look up a rough estimate of your home’s value on to see if you have enough home equity for a home equity line of credit (HELOC). If your credit score is average, or even slightly below average, you should be able to quality for a HELOC. This type of loan is better than the traditional mortgage refinance. You can put money into your HELOC to pay it off quickly or you can pull money out of it when you need it.

Use the HELOC to pay off other financial obligations such as car notes, credit cards, or other monthly bills. This is a type of loan consolidation. However, you do not want to ask the bank for a ‘loan consolidation.’ Banks will typically offer you a different loan product with less flexibility than a HELOC when you ask for a loan consolidation.

By using your home’s equity to pay off other bills, you can reduce the money going out each month. Additionally, you can have access to money when you need it. Talk with a financial planner as to how you can maximize the use of your HELOC to gain the most financial benefits.

Did you know that you can pull equity out of a car , or other assets, just like you can a house? Although the amount of money you get may not be a long term solution, it can help in the short term while you make other long term financial plans.

#2 – Seek A Payment Reduction On Your Mortgage. Let your mortgage servicer know that you are undergoing financial hardship due to a divorce and ask them if they can give you any of the following: A) a mortgage interest rate reduction in order to reduce the payment, B) 3 months of non-payment of the mortgage that will be tacked onto the end of your mortgage, or C) a cash out refinance. Again, a HELOC is preferred to a cash out refinance. However, if you need to refinance anyway to get a lower interest rate, you can get cash out during the refinance.

#3 – Rent Out Your Extra Rooms. What, strangers in your house? Yes. If you have extra space, or even if you have to combine the children’s room to make extra space, renting out a room is one way to bring in enough income to afford the mortgage. People rent out rooms all of the time, so you will find a lot of online resources to help you do that. You can do background checks on your tenets using one of many online resources and you can check references just like you would for a job or regular rental applicant.

You may want to rent to another recent divorcee with whom you can share household duties and childcare responsibilities as part of the lease agreement. Or, you can rent the room to a handy man who has to do upkeep on the house (e.g. sweat equity) as part of the rental agreement.

If you have an unused basement, that is even better. You can make the space into 2-4 bedrooms with a common living space. Rent those rooms to students, people looking for short-term accommodations, or to traditional tenants.

#4 – Move and Rent Your Home Out. If it makes financial sense, meaning that renting out your house has high cash flow, then you can derive revenue from your house. For example, if your house can rent for $2000/month and your mortgage payment is $1500/month, it might make sense for you to move somewhere else and have the additional $500/month income. Yes, you will pay rent somewhere else, but you can scale down to keep your expenses low.

If you are uncomfortable with the renting process, has helpful ‘rent-it-yourself’ resources. Or, hire a property manager. A property manager will cost you some of your cash flow, but it can still make financial sense.

#5 – Reduce Your Expenses In Other Areas. Do you find that after divorce you need new furnishings and more? Well, buy quality used items in order to save money. You can buy used furniture from hotels, resorts, or other businesses that replace their furniture while it is still in good shape. You can buy quality house fixtures from estate sales or you can buy items from furniture rental stores as well. For clarity, I never recommend that you rent furniture. However, you can buy the used furniture from furniture rental stores. Because furniture rental companies have already made a significant profit on renting their furniture, they will make good deals with you on their already reduced priced items for sale. Additionally, you can buy items like televisions, vacuum cleaners and more from your local pawn shop. Pawn shops often have nice things that are in good condition. You can buy an affordable warranty from the pawn shop in case the items you purchase break down.

#6 - Buy A Home Warranty. Costly repairs on a home can sink you financially. It is much better to buy a home warranty. You pay from $350 - $450 per year for a normal sized home. Then you pay a service call fee of about $45 for each repair needed. With this plan, all of your appliances, heating and air conditioning, water heater, basic roof damage, plumbing, electrical, and more are covered for any needed repairs. Any one of these items having to be repaired on their own can cost you far more than the annual cost of the policy. In addition to saving you money, having a warranty saves you from unethical or ineffective repair companies. Your warranty servicer will only do business with reputable repair companies. Having a warranty is like having an on call ‘do everything’reliable handyman do any repairs for approximately $45.

#7 – Manage Your Money. As Your Second Job When you lose the second income that was provided during a marriage, it is natural to want to go out and get another job. However, this can add additional stress to an already stressful situation. Additionally, it gives you less time and energy to manage your finances. Making better financial choices could eliminate the need for a second job.

So, let’s say you were going to get an job whereby you made $10 per hour working 15 hours per week. That is $150 per week or $600 per month. Therefore, it is your job to save $600 per month even if you have to work 3 hours at home doing it. So, your second job would be to call around to make sure you are getting the lowest cell phone, internet, and cable bill rates. If you are going with a major carrier, it is likely that there is an independent provider available for a lesser rate. They do minimal advertising so you will have to work in order to find them. But, they are worth it. You can also raise the deductable on your car and home insurance to save money. You can call your credit card companies and ask for reduced interest rates and you can cut out unnecessary bills by scaling back.

Even if companies say “no” to giving you a better financial deal, keep calling back every few days until they say ‘yes.’ Or, keep searching until you find a more affordable company. You can also use online financial calculators to input different scenarios of paying your bills whereby you pay bills in a specified in order and amount so that you save on interest payments over time. Remember, your job is to work everyday to save money. So, set aside hours each week to work on that.

Any time you purchase something, get in the habit of asking ‘ can I get a better price on this?’ You will be surprised at how often the answer is ‘yes.’

#8 – Barter With People. Do you make home cooked meals everyday, decorate, paint, create art, sew or provide any other service that people need? If so, make bartering agreements to get the things that you need in exchange for improving the life of other families in your area. We tend to be comfortable bartering for things like picking the kids up from school whereby each parent takes their specific days to do pick up. However, you can make similar arrangements for things that would lighten your financial load while giving others what they need.

You would be surprised at how many men would do handy work in exchange for 10 home cooked meals. Or, you could teach the children in the neighborhood how to paint, sing, play an instrument, or do any number of things. You could pack the lunches for all of the children in the neighborhood for a fee or for services that you need. The possibilities are endless.

#9 – Sell Your House, Ouch! What about the memories, the good times, the neighborhood? While all of those things are important, you could lose them anyway if you don’t figure out how to make your lifestyle affordable. Sometimes, instead of hanging on and sinking further and further into debt, you have to cut your losses. It is best to choose a home that you will not struggle to maintain.

If your home has over $100,000 in equity, you can relocate to another area, or state, and buy a home for cash. You will no longer have a mortgage payment and you have money left over to start over. With no house payment, you may choose to work part-time or take time off while you adjust to your new life after divorce.

#10 – File Chapter 13 Bankruptcy. No one wants to file bankruptcy. However, there are common reasons why people do and divorce is one of them. With a Chapter 13 filing, you can keep your house as long as you can show the ability to afford the payments. Chapter 13 will give you a multi-year repayment plan whereby your creditors will only be paid what you can afford. At the end of your multi-year repayment plan, your debts will be cleared aside from your mortgage, any remaining taxes, and student loans.

While the idea of filing bankruptcy is scary, rest assured that many Americans have filed during the recent economic downtown. Therefore, since so many families with good incomes filed bankruptcy recently, companies have come up with better ways to work with people who have filed bankruptcy in order to get them to participate in the marketplace once again. While bankruptcy should be a last resort, it is a better option than losing your home.

While there are no easy answers to financial recovery after divorce, there are many things you can do to lighten the load. For starters, change your relationship with money. Many people ask; ‘how can I make more money to pay what they say I owe?” However, in order to reduce struggle, you need to reframe that thinking to ask: “how can I reduce my bills?” Or ask, “how can I get a better price and keep more of the money that I have?” When you do that everyday, one day you will look up and see that managing your finances is not a struggle. You do not have to go without just because your income has been reduced.

Dr. Felicia Clark is a life coach who specializes in the math and science of happiness. She works with women to use their feminine, or Queen, energy in order to experience fulfillment. Financial struggles are one of the many reasons that motivate women to survive using masculine energy. Because the workplace validates masculine energy, many women feel that they have to be masculine in order to make enough money. Well, what if you could be successful using feminine energy? Sign up for one of Dr. Clark’s coaching programs on how to make money with ease and grace. End your struggle with money once and for all. More information at