Divorce and Your Budget Text Size:

You're getting a divorce, but have you thought about your financial situation after the divorce? Will you have enough income to meet your needs? You can take steps to reduce the strain on your finances that a divorce will have by preparing and sticking to a budget.

Get Your Financial House in Order

The marriage is a bust and you've decided to go it alone. Your spouse handled all the finances and bill paying. It's time to educate yourself on the costs of surviving on your own. Preparing a monthly budget will force you to recognize what it will take to meet your needs.

Estimating Income

Here are the steps to estimating your monthly income after divorce:

• List your monthly net salary or wages
• Add the monthly average of any net or after-tax overtime, commissions, tips or bonuses
• Add or subtract any court-ordered monthly alimony or spousal support payments
• Add the amount monthly child support payments you receive
• Add any monthly interest, dividend or other income that you receive in your name and deduct estimated income taxes for those amounts

The total amount is your estimated monthly income you will have available to pay your bills.

Estimating Expenses

This exercise will be more difficult because you won't really know what the actual expenses will be after the divorce. You can use your current bills and canceled checks as a guide and call service providers such as cable, phone and utility companies, day care centers, schools and insurance companies for quotes or estimates.

It is a good idea to group your monthly expenses into the following categories:

• Household—mortgage (including taxes and insurance), rent, gas, electricity, water, phone, cable, trash collection, groceries including dining out, termite control, lawn care and repair costs
• Automobile—car loan payments, licensing and registration, gasoline and maintenance and repair costs
• School—tuition costs, school fees, school supplies, class photos, field trips, yearbooks and school lunches
• Day care—include before-school care, after-school care and babysitter services
• Health care—co-payments and deductibles, prescription drugs, eyeglasses, dental care, braces and other health care costs not covered by insurance
• Insurance—life and health insurance costs not figured in determining your net income
• Credit cards and loans—scheduled payments on credit cards, department store cards, lines of credit, installment loans and other personal loans
• Miscellaneous—the "catch-all" category that includes clothes, work lunches, hair care, holiday gifts, birthday gifts, pet expenses, entertainment and hobby expenses, vacations, subscriptions and dues, donations, retirement savings and any other additional expense that doesn't fall in other categories

Total your expenses and compare them with your income. Shocking, isn't it? Your anticipated expenses will always be greater than your income.

Take Control!

Now you have some tough but necessary decisions to make. Taking on another job is certainly an option and may even be a necessity. But you should first try to cut unnecessary expenses.

Assess what you need to survive versus what you would like to have. Even your fixed expenses can be reduced. Sell the high-priced home and car for something more affordable, downsize the cable and cell phone service and eliminate the land line. Cut such luxuries as regularly dining out, weekly movies, annual vacations or amusement park season passes.

Do not apply for new credit cards or loans to pay for any luxuries and do not overspend your budget. It will only make your financial condition worse. In time, your income will improve and you will be better equipped to make additional financial decisions on your own.

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