My ex-husband and I divorced in 2003. To say that, "I got half," would be true, but instead of half of the assets, I got half of his debt. One of the many reasons for our divorce was that he was taking out credit cards in my name, hiding them from me, and running up huge debts. I was left with $25,000 in debt that I didn't incur, with nothing to show for it, and a huge helping of bitter resentment that I was stuck paying for it.
Leonore J. Weitzman, a sociologist at Stanford University found that, on average, a woman's standard of living plummeted 73% in the year following divorce and I was no exception to this finding. I had been working part time and suddenly I had more debt than my annual salary, plus a mortgage, 18 months left on car payments, and all the living expenses of a house, on top of also being a graduate student. I had three choices: I could either let the debt default, and risk being sued by creditors, or I could pay the debt and lose the house to foreclosure, or I could try to pay everybody a little bit at a time and try to muddle through.
I decided that my pride and stubbornness was going to get me out of this. I was going to find a way to get rid of the credit card debt, keep my house, and get on a better financial footing. My first step was to leave my $14K part-time job and get a $32K full-time job with health insurance. I had about $2K in savings. I also had some money from my parents' life insurance when they passed away but I never touched it. I never considered getting into that money because when I was young, someone had told me, "Don't ever spend this money, not ever, never, just don't even think about it. For you, it doesn't exist." And from that day I had considered it completely untouchable. I was afraid to get into it, afraid to spend it, afraid that I'd get in trouble - if I tried to get into that account, someone would take it away from me.
The first year was hard. I started out with several maxed out credit cards, a mortgage payment, and a $600 car payment, and all of the little bills: car insurance phone, utilities, electric, security, water, groceries. I got paid every two weeks, and paying minimum balances and the basics was keeping my accounts empty. I spent my savings just trying to keep the lights on. I was afraid that I was going to lose everything Just when I felt like I'd hit bottom, a couple of things started going my way. One friend got her own finances in order, and began to repay a loan that my ex had given her. She didn't want to give him the money, so she repaid it to me. She sent me a check for $50 every time she got paid. I swallowed my pride and took the money. For many months, that little bit of money kept me from eating beans and rice every night. Then, my elderly ex-Father in law (who I loved dearly) insisted on paying me "a little something" for my help in keeping his house and running errands for him. There was another $25 a week
About this time, I got a copy of Your Money or Your Life. I also found out about the snowball method of debt repayment and decided to give it a try. In order to come up with a "snowball seed," I got inspired by a TV show, and went through my house and uncluttered years of accumulated crap. I had a virtual garage sale on the internet, and an actual garage sale to get rid of the little stuff. I took the cash and started my snowball. It was tiny at first. In addition to working for my FIL, I put in a couple of nights a week at my university's writing center for extra money. I went through the house again and sold more of my things. This time it was the "good stuff" that was worth more money. They were nice things that had once meant affluence and leisure to me, but were now reminders that I was barely hanging on.
The second year, things got a lot better. I got a bonus at work, and a raise, which put a big dent in the debt, and my car was paid off early in the second year, which gave me additional snowball money. I no longer felt stressed or worried that I would lose my house. I had to deprive myself of many things during that first year. I sold many things because their cash value was more important to me than their sentimental value. I didn't have cable, didn't see all the shows people were talking about, and came out none the worse for wear. But I escaped the post-divorce poverty that so many women find themselves thrust into, and came out a better educated, money-savvy woman with a graduate degree and a positive net worth.
I learned several things:
1. Knowledge is power. When I learned more about money and how to handle it, I didn't feel fearful anymore. Money no longer had power over me - I was the one in charge.
2. Patience is a virtue. It took almost three years to pay down nearly all of that debt, and those balances didn't seem to budge at first. But near the end, I felt like I was cutting up a card every two months.
3. Spartan living does make you stronger. You don't really need a TV. Unplug from the box and go out and participate in life. It's amazing how little you "need" when you're not bombarded by advertising.
4. Yes, there is such a thing as gourmet cooking with Ramen and canned tuna.
1. I should have taken a roommate. It wouldn't have been hard to find another adult grad student to share my house with, and it would have taken a big load off my finances if I had done it.
2. I should have tapped into my inheritance and paid my car off immediately. The biggest tipping point in my finances was when that car was paid off. $600 extra month was just like an additional part-time job!
3. I should not have been afraid of that inheritance. The admonishment I received when I was 15 was good advice at the time, but I should have learned to handle that money when I became and adult. Though I never touched the principle until I was "ready," I shudder to think how much growth I lost by letting it sit, neglected, for 16 years.
Steal what works, fix what's broke, fake the rest