Post-Divorce Debt Repayment Strategies

Post-divorce cash flow is difficult to manage at first and requires attention and focus to avoid a daunting stack of bills that becomes overwhelming.  The ideal approach is to have a well-developed cash flow analysis prepared along with a budget to follow post-divorce. 

If the bills have a way of piling up there are two popular debt-repayment strategies to strategize payments. One is the snowball method and the other is the avalanche method. 

The snowball method is a bottoms-up approach which starts with paying off the smallest debts. This has the effect of achieving a feeling of satisfaction from seeing the balance on the decline and helps build momentum in paying of the remainder of the balance. It reduces stress and anxiety in seeing a growing balance and produces a feeling of accomplishment.  

Another method is the avalanche method which is a top down approach targeting debts with the highest interest rates first. By attacking the larger interest rates, it saves money and allows more cash flow for expenditures to reduce the propensity to add to the debt load. 

In that same vain, it is important to take a look at the expenses and cut wherever feasible. Assessing subscription services, dining-out habits, impulse purchases and other non-essential spending is a good start. Even small expenses can free up extra cash for debt repayment. 

Another approach is to consider the top line—income. Taking on a side hustle, doing freelance work, selling unused or non-essential items one of the various websites. 

Despite whatever method is chosen, another tactic is to set up automatic payments to avoid missing any due dates for payment. 

Small consistent actions can help to regain control of spending habits and focus the attention on repayment of what may feel like overwhelming debt.

This article does NOT constitute legal advice and is for general information purposes ONLY. Prior to making any decisions, seek legal counsel from a licensed attorney.