After I got divorced, my financial life changed dramatically. Going from a two-income household to a one-income household was a difficult transition. Here is what I learned along the way.
Know What Things Cost
While I was married, I was not even fully aware of what all of the bills were and what we paid for each one every month. Because I now needed to learn how to make one income pay for what two had been covering before, I needed to figure out what everything cost. So I made a list of each bill that I knew we had. Then I started tracking how much each bill cost every month. It took a few months to establish an average monthly cost for everything and I had to also factor in seasonal things like how much my water bill would go up when I had to start watering the lawn in the summer. After I got these baseline averages, I could start figuring out where I could cut back.
It quickly became clear to me that I could not afford the house payment on my income. It was well over half of my monthly take home pay. So I figured out how much I could afford in rent each month and started looking for an apartment. When I was looking for an apartment, I made sure to check into what was included with the rent so I would not get surprised by an extra bill that I did not expect. I also cut back on some non-essential bills like cable TV and cell phone service. I did not watch much TV so cutting the cable TV bill was easy. I had a land line so cutting the cell phone bill made sense for me too.
Where I Ran Into Problems
The biggest issue I had was the discretionary spending areas and the variable expense areas. Expenses like clothing and groceries quickly became problem areas. Entertainment and eating out expenses were also difficult. I would overspend in these areas one month and then try to cut back in the next month. This was not an effective way of managing my money and led to some unnecessary credit card debt.
A better overall approach would have been to make a list of all of my expense categories and my net take home income. Then figuring out how much I could realistically afford for each category. Essentially simply creating a budget and then sticking to it.
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- Personal Budgeting
- Banking & Budgeting