Rebuilding Your Finances

Your Finances Just Got Hit by a Truck

Between legal fees, splitting assets, possibly paying alimony or child support, and setting up a new household — your financial picture right now probably looks rough. Maybe worse than rough.

That's the reality. No point sugarcoating it. But here's what matters: your financial situation is temporary. What you do in the next 6-12 months determines how fast you recover.

This is your step-by-step plan.

Step 1: Face the Numbers

You can't fix what you won't look at. Sit down with a bank statement, a calculator, and something strong to drink (coffee, not bourbon — you need to be sharp for this).

Write down:

• Your take-home pay after taxes
• Any alimony or child support you're paying
• Your fixed monthly costs (rent/mortgage, car payment, insurance, utilities, phone)
• Your variable costs (food, gas, subscriptions, everything else)

Now subtract expenses from income. If the number is positive, you have something to work with. If it's negative, you have work to do — but at least you know it.

Step 2: Build a Bare-Bones Budget

For the next 6 months, you're in financial recovery mode. That means cutting everything that isn't essential.

Keep: Housing, food, transportation, insurance, child support/alimony, one phone, basic internet.

Cut or pause: Streaming services you don't use, gym memberships you can replace with running, dining out more than once a week, subscription boxes, anything you signed up for and forgot about.

This isn't permanent. It's triage. You're stopping the bleeding so you can start building again.

Step 3: Close Joint Accounts

If you haven't already, close every joint account. Bank accounts, credit cards, store cards — all of it. This should have been handled during the divorce, but if any slipped through, do it now.

Open new accounts in your name only. Pick a bank that works for you. Set up direct deposit. Start clean.

Any joint debt that was assigned to you in the settlement — make sure you refinance it into your name only. If her name is still on a loan and you miss a payment, it wrecks her credit too, and that creates problems you don't need.

Step 4: Check Your Credit

Pull your credit report. You can get it free at annualcreditreport.com. Look for:

• Joint accounts that are still open
• Late payments you didn't know about
• Debts that aren't yours
• Your overall credit score

If your score took a hit during the divorce (common), focus on two things: paying every bill on time and keeping your credit utilization low. Those two factors alone account for about 65% of your score. Time heals the rest.

Step 5: Build an Emergency Fund

Before investing, before paying off debt aggressively, before anything else — build a cash cushion. Three months of essential expenses. Start with $1,000 if that's all you can do.

Why? Because unexpected expenses will come. A car repair, a medical bill, a furnace that dies in January. If you don't have cash on hand, you go right back into debt and the cycle continues.

Automate it. Set up a weekly or biweekly transfer to a separate savings account. Even $50 a week adds up to $2,600 in a year. That's a real safety net.

Step 6: Deal With Debt Strategically

If you're carrying debt from the divorce — credit cards, legal fees on a payment plan, a personal loan — don't panic. But do have a plan.

Two approaches:

• Avalanche method: Pay minimums on everything, throw extra cash at the highest-interest debt first. Mathematically optimal.
• Snowball method: Pay off the smallest balance first for a quick win, then roll that payment into the next one. Psychologically motivating.

Pick whichever one you'll actually stick with. The best debt payoff plan is the one you follow.

Step 7: Update Everything

Divorce changes your legal and financial identity. Make sure these are updated:

• Beneficiaries on life insurance, retirement accounts, and bank accounts
• Your will and any estate planning documents
• Tax filing status (you're filing single or head of household now)
• Insurance policies (health, auto, home/renters)
• Power of attorney and healthcare directives

This is boring and tedious. Do it anyway. The last thing you want is your ex collecting your life insurance because you forgot to change a form.

Step 8: Start Thinking Forward

Once you've stabilized — emergency fund in place, debts under control, bills getting paid — you can start building again.

• If your employer offers a 401(k) match, contribute at least enough to get the full match. That's free money.
• If you lost retirement assets in the divorce, don't try to make it up overnight. Consistent, steady investing wins over decades.
• Consider talking to a fee-only financial advisor. Not someone who sells products on commission. Someone who charges a flat fee to look at your situation and give objective advice.

You're not starting from zero. You're starting from experience. And that's worth more than most guys realize.