Post Divorce Guidance
Divorce has ruined my credit due to court ordered status quo where half my income was going out the door to my soon to be ex husband. The day that I signed my lease he filed for a status quo and the judge didn’t recognize any of my new obligations. So for 6…
Divorce has ruined my credit due to court ordered status quo where half my income was going out the door to my soon to be ex husband. The day that I signed my lease he filed for a status quo and the judge didn’t recognize any of my new obligations. So for 6 months I’ve been sending all of this money to him which has completely eliminated my ability to pay any debt because all I could afford was my living expenses and this court ordered financial situation. Anyway…Capital One doesn’t have a program for people who have mandated court ordered financial obligations and that’s where 3 of the 4 of my credit cards were obligated to. In the process, one of them has charged off. I spoke to them at length and they were not able/willing to work anything out. Then I was awarded a vehicle through the divorce that is under water, and must be refinanced into my name within the next 4 months. Here’s the current status: 41 years old. 1 minor child I get to claim every other year, this year is my year. Annual income is around $90k Vehicle - owing: $16500, value: $11k CC #1: owing: $12,500, charged off CC #2: owing: $5700, 29.9% interest CC #3: owing $1240, 28.9% interest CC #4: owing $900, 29.9% interest Student Loans: $45k, beginning repayment now - unsure on payment amount, also thinking about going back to school but I don’t want to keep adding to the debt balance here. Housing expenses: $1900/mo Living expenses: $1200/mo Income: $1400/wk End of December, my ex spouse is required to pay me $40k, less attorney fees ($4500), less what’s owed on the vehicle if it’s not refinanced. I anticipate that I’ll net $20k from that. I would like to plunk a good chunk of it away for an emergency fund, but also not sure if that’s the best decision either. Soooo….i have a few specific questions- Should I refinance the vehicle? I don’t think it can be sold, and whatever is happening with it must happen within 5 months or the divorce funds will be used to pay it off. if refinancing that is the suggestion, where do I go for that when credit is challenged due to this situation? I want to setup the best scenario for emergencies due to the fact that I no longer have a second income to fall back on. what order should I pay the credit cards off in? whats the best way to navigate the student loan debt? I feel like I’m gonna be paying on that forever. what should I am for in savings funds every month and what vehicle/method is advisable for the best success? I really need to not see it and have it be automatic, I think. I have no retirement or savings account currently. I need an adult who’s more adult than I am! TIA for any help- I want to ace my finances after being tied to a man for 2 decades who constantly sabotaged any of those efforts.
Collected discussion
Now: cut every extra expense. Pack your lunches. Make do with what you have. Make sure you make your minimum payment of every card every month. Do NOT charge ANYTHING to your cards because they immediately start charging 30% interest! If possible, pay off the $900 card, keep it clean for a month, then you can use ti for purchases you can fully pay off each month. Consider it the price of freedom. Dec: do not put money aside for an "emergency fund". THIS is the emergency. Use the payout to pay off your debt. Since they're all high interest, start with the ones you can fully pay off. As to refi: you didn't say what your interest rate for the car loan was, so it's impossible to say. With your current debt load you may not be able to refi it. You need to find out if you can refi and if so, at what rate. What is the loan rate on your student loans?
Do you need that car? If not, you can sell it for a loss and cover the rest in cash. Other than that, it’s basically decrease expenses as much as you can
You haven’t given any info on the car so I can’t give advice. Toyota Corolla - keep it. Other vehicles- I’m not sure. Looks like you can save ~$1500 a month based on what you’ve given us. Pay off the highest interest credit card first. What are your other bills? I switched to Mint mobile for $20 a month. Lowered my internet speed, etc etc. Start using food pantries now.
Follow this - https://old.reddit.com/r/personalfinance/wiki/commontopics That means getting on a fully written out budget and figuring out how much margin you have. Detailed. Looks like this for my wife and I at 42 - https://imgur.com/a/budget-spreadsheet-2026-2MZk8Xq - and that margin will determine how quickly you get this turned around. If there isn't enough margin, you have to look at the big line items in your budget - income, housing, transportation - and make drastic changes, like downsizing, working more, or job-hopping for a higher salary. Once you have that margin, just follow the guide. About one month's expenses in savings so you don't have cashflow/overdraft issues, then tackle the debts one at a time, paying minimums on the rest. I'd just go after the active CCs smallest to largest, then the vehicle, then the student loans, then you can save up and try to negotiate the charged off CC for less than the full amount. Then build a six-month emergency fund, then start investing 15% of your gross income to retirement. You have a great income, but you've been living way, way above your means. You'll need around $20k in margin per month to clean all this up in four years, that still leaves plenty of time to build retirement savings. Your lump sum payment will speed that up.
You know you need to decrease your expenses. At your level of debt, you need to take a second job for a couple of years or work to increase your income quickly in your primary profession. It's tough to start over in your 40s. Many of us have done it successfully.