How to Rebuild After Divorce and Get Your Life Back on Track

Recover from a divorce

Divorces can be financially devastating. Not only is the loss of a spouse’s income detrimental to your fiscal health, but you also lose moral support, often retirement benefits, and the safety net that comes from having a partner. You can rebuild after divorce and get your life back on track.

A few critical steps will help you start getting your life back together and rebuild after divorce. Forgetting or delaying these tasks will cost you precious time and money, and add to your headaches.

Rethink Your Retirement Planning

Money is typically tight after a divorce: Both partners’ monthly budgets will almost always take a hit as one set of household expenses becomes two. But that’s not an excuse to forget about saving for retirement. You need to assess your new budget and make the adjustment required to allow you to continue to set aside money for your golden years.

You may find you have a hodgepodge of investments after your divorce. Or, just as likely, half a hodgepodge. Do you have a 401(k)? Or did your spouse have the 401(k), while you put your money into a Roth IRA? Did your spouse invest in stock index funds, while you played the more conservative role and went with bond funds? Now that you’re flying solo, you may need to rebalance your portfolio.

“A good amount of investors look through their investment and retirement accounts [after a divorce] and realize that they have no overall strategy for their portfolio,” says Grant A. Webster, a certified financial planner and investment consultant at AKT Wealth Advisors in San Diego. “To correct this, think about all of your accounts as one investment vehicle. Make sure that your portfolio is diversified and all of your investments are working together.”

You may take a short-term investing pause while you get a handle on your new financial situation. It’s vital not to let that retirement-planning hiatus last too long. As soon as you get your household’s monthly budget worked out again, get back to investing each month. Delays could do serious damage to your long-range plans. Time and compound growth are your two greatest allies in investing, and you shouldn’t let a divorce sidetrack you.

Joshua Austin Scheinker, senior vice president of Scheinker Investment Partners in Baltimore, recommends taking advantage of dollar-cost averaging to rebuild assets while at the same time while paying down any debts.

Check out these most expensive celebrity divorces. And, don’t fall into some of the same traps that they have with their divorces.

Start to Rebuild Your Credit

In many families in America, one spouse does the bulk of borrowing. Maybe one partner has a better credit score and can get lower interest rates. Or perhaps when they divvied up household tasks, one ended up handling most of the money matters, including applying for credit. Either way, it’s not unusual to see joint debts rest official in only one spouse’s name.

If you didn’t have a strong credit history while you were married, or had a low credit score, you’ll need to build your credit up after a divorce. Be careful to ease into this and don’t take on new debt. You might be able to build your credit history with a secured credit card or specialized credit starter loan from a credit union.

You may also consider asking your landlord to report your on-time rent payments to the credit bureaus to help you build a positive credit history that’s not tied to your former spouse. Laying the groundwork now will pay dividends later when you want to apply for a car loan or mortgage.

This article was first featured on AOL Daily Finance and has been reprinted with permission.

Recover from a divorce

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