Suddenly Single
Posted by Gail | Filed under Money Management
Perhaps one of the most difficult of life’s passages to navigate is that of moving from being one of a couple to one alone. Whether through widowhood or divorce, thousands of people find themselves taking over the reigns of their lives each year, directing their own futures as the Suddenly Single.
One moment, things are as they should be. The next, everything has been thrown into chaos. And just at a time when we are least able to think straight, we must make dozens of decisions, consider myriad possibilities, uncover important facts, many of which are not at all intuitive.
Divorce and widowhood not only rip a person’s life apart emotionally they also often mean digging though a pile of financial stuff many are unfamiliar with. Even the savviest of us may not be completely aware of everything our spouses did when it came to the money. Inevitably there are surprises. Often there are tears. Sometimes we’re lucky enough to have great sighs of relief. Inevitably we must take control of our wallets and carry on. But how? It all seems so foreign. Or just so overwhelming.
Hey, relax. No one expects you to become a financial whiz overnight. But now that you are responsible for doing the detail, you’ve got to establish a routine for yourself. The idea is to get to a point where the day-to-day stuff takes place by habit, so you don’t constantly have to worry about it. Then you can turn your attention to the important issues that must be dealt with on a one-time basis.
You’ll want to establish some good habits to keep yourself on track. If you want to have money set aside for the future, for retirement, for your kids’ education, or just-in-case, the best way is to set up a auto-deduction to have the amount you specific — be it $25 or $200 — automatically taken from your account and invested in the alternatives you’ve chosen.
If you expect the money you’ve squirreled away to work as hard for you as you do for it, you have to learn more about investing. Keep it simple to start. As you learn more you can become more adventurous. Continue to rebalance your investments as your needs and circumstances change. Join an investment club. Read a few good books. Use the web to educate yourself.
With a reduced income stream, look for expenses that can be cut. If you think you may be faced with shortages in your cash flow, consider applying for overdraft protection as a way of avoiding NSF cheques. The last thing you need is to ruin your credit history. Few people actually enjoy tracking their spending or paying bills. It’s a little like cleaning the toilet and vacuuming. But if you want to keep yourself in the black, minimize your credit costs, and eliminate the midnight spectre of a bogeyman reminding you that you’ve bounced yet one more cheque, you’ve got to manage your cash flow. So it’s time to set time to manage your paperwork.
If you’ve been left holding the bag on debt, it’s time to get busy consolidating. Throw the credit cards behind the freezer so you can’t use them for a while. (You’ll have to clean that floor to use those cards, yuck!) Go to the bank and arrange a consolidation loan to minimize your interest costs and put you on a regular repayment plan.
If your partner had retirement assets, they can be transferred to you without tax consequence through your partner’s beneficiary designation, will or through a divorce settlement. You won’t have to pay any tax on the money, provided you roll the funds directly to your own retirement savings. You may also be entitled to a lump sum from the corporate pension plan, which can be transferred tax-free to an RRSP in your name.
Now that you’re on your own, if you want to protect yourself and your family, at least financially, from life’s tragedies you’ll need insurance: life, disability and, perhaps, health.
Book an appointment with your lawyer. It’s time to change your will, powers of attorney and any other documents in which your spouse was named. Remember to change the beneficiary designations on your own insurance, RRSPs, RRIFs, or anything else on which your partner was your beneficiary. And you’ll want to make a guardian designation to protect your minor children.
It’s not easy starting over. Doing the detail can be difficult when all you really want to do is hide from your sorrow. Let your friends and family help you. And don’t be too hard on yourself during this emotionally ripe time. Trust the people you know and accept all the help you’re offered. You’ve got to keep your perspective and your sense of humour if you want to survive. And you’ve got to keep track of the details. Focus on the future and you can make it anything you want it to be.
May 21, 2009 at 6:44 am
A really good post, Gail. I went through this myself six years ago. My biggest warning – watch out if you have a joint line of credit. We did and it was empty but had a limit of $40K. For marrieds, the bank usually gives a joint line but requires only one signature for withdrawals. The day after I told him I was leaving, he went to the bank and attempted to draw a cheque for the entire $40K, payable to himself. Only because I lived in a small town and the manager knew me did he call and ask me if this was OK. Of course, it wasn’t. He told me to immediately fax him a letter to the effect that I would no longer be responsible for monies withdrawn by my spouse that did not also have my signature as consent. This had the effect of freezing the credit line, so I did, followed up by delivering the letter in person right after work. He didn’t get the money, but if he had, I would have been on the hook for half of it. But, like everything else, it was a learning experience.
May 21, 2009 at 7:19 am
Great post once again Gail:)…One spouse can indeed freeze the line of credit due to marital breakdown (or any other reason)..but it takes TWO to activate it again….the consolidation loan is not so easy to get…especially if it’s not your first one OR the majority of debt is not from your own debt…i.e. other financial institutions, finance companies, credit cards etc….you should go see your banker and ask what they can do to help…there are things we can help with…
May 21, 2009 at 8:21 am
Good guidelines to live by..thank you.
Last January, I moved to my new condo … however I did not divorce or become widowed. I moved out of my parents house (had a basement apartment which I thought was working good for me)…what a joke!
You don’t know what you have until it’s all gone.
I’ve learned so much about home ownership and all the little things my mom did for me. I took so much for granted. Now, I tell her all the time that I appreciate everything that she does for me.
E.
May 21, 2009 at 9:50 am
Very empowering post Gail-thanks! I’ve supported close family members who have lost spouses, and patients who have suffered some kind of major loss, and one thing I might add is to not rush into any major decisions in the first few months. I agree with you that you have to get your day-to-day things in order and not live in denial of the new reality, but in terms of selling houses, retiring early, etc., it’s tough to make a good decision when you’re totally emotionally exhausted from the loss you’ve just experienced. A few months won’t make a huge difference to your bank account in most cases, but it might give you some time to settle into the new reality before deciding what’s best for you. Just my two cents!
May 21, 2009 at 3:01 pm
Great post Gail. Just emailed it to my girlfriend who was widowed a year ago. It is still a work in progress for her.
Psychsarah~couldn’t agree with you more about not rushing into anything – sound advice.
May 21, 2009 at 6:22 pm
Sobering post. No matter how secure I feel right now with my spouse, it really could change in a flash.
May 21, 2009 at 10:01 pm
great post…….yet again!
i just emailed it to a girlfriend now going through a separation and divorce…..
i learned these lessons the hard way after finding myself in the same situation…………
May 22, 2009 at 9:21 pm
Ditto! Am going through more MESS than I expected with my divorce. I thought I was “independent” , since I was the one who *arranged* everything. However, I was in reality only an accessory to my husband’s credit and banking…therefore, HE had the kill power on the visa card, HE closed accounts without my knowledge, and I was powerless to change it.
I have posted before, but I want to warn everyone out there: IF YOUR SPLIT RESULTS IN A BANKRUPTCY, YOU WILL LOSE YOUR SHARE OF HIS PENSION. IT GETS EATEN UP IN THE BIG HOLE CREATED BY ASSETS – DEBT. I NEVER SAW IT COMING.
May 22, 2009 at 9:56 pm
20 years ago today my father became a widower and single father of two girls aged 17 and almost 14 after my mother lost her 6 month battle to cancer. She was 45, he was 44. They had a “time” to ensure that everything was in order before but not everyone does. My parents had done well for themselves and I know that despite my father’s struggles as a single parent we were okay financially. Since losing my mother at such a young age, I have made sure to have all the ducks in a row in the event that something would happen to my self or my husband or both. Providing for my family is the best and hardest thing that I could ever do and I do know that since my father was financially stable it made for dealing with the emotional struggles easier.
May 27, 2009 at 11:30 pm
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