Rebuilding Your Financial Future After Divorce

By: Michelle Buonincontri, CFP®, CDFA

If you are like most, your divorce ends with debt, and the last thing we are thinking about is retirement. I know, I've been there; nothing kills a retirement plan like a divorce. There are no student loans or government bailouts to help us.

According to a report released by the National Institute on Retirement Security on March 1, 2016, 80% of women over 64 are already more likely to live an impoverished life than men.

So what’s a gal to do?

Cut Discretionary Spending

This might sound obvious, but life is not the same. The income that once supported one household may now be supporting two, and you may be entering the workforce again or for the first time. Things will need to change, and you are the catalyst for that change!

For example, renting instead of owning a home may make more sense, even if just in the interim to keep expenses down. We need to remove the emotion from our financial decisions and take a longer range view.

Take Advantage of Any Employer Retirement Match

Many employers offer workplace savings plans that match employee contributions—often up to 6% of your salary. Execute the strategy above so you may contribute enough to your tax-deferred employer plan to earn 100% of the employer match in a 401(k), 401(b) or 457 plan. Earning the match is like receiving a 100% return on your investment. Where can you find a 100% return? This will help your nest egg grow and boost your retirement security. Not contributing enough to utilize the employer match is like leaving free money on the table.

View Your Divorce Debt Like An Investment

Like a what? I know that intuitively does not make sense. But there are competing resources for paying off debt and saving. Start by comparing the interest rate on the debt to that of an expected investment return and the power of compounding of retirement savings.

If, for example, your student loan or mortgage has a before-tax interest rate of 3–5 % (which may be even less after a tax deduction) and you can reasonably earn 5% with compounding over a longer time horizon in retirement, it may make more sense to put money in your retirement account than pay off that debt early—always considering cash flow and remembering that market returns are not certain. 

But if your credit card is charging 10%, put more money there. Once you stop paying that 10% it’s like earning 10%, because it is no longer being spent and is available in your budget for other items. Look at the interest rates you are paying like market returns that are leaving your pocket, and try to consolidate debt into a lower interest rate whenever possible.

Get in Touch With Where You Are in Your Story

What is going on for you right now, in this moment? Are you living in the past with regret, bringing the past into the present, or maybe even living in the future with fear?  What messages have you taken in and believe about yourself? This can be scary. For me, being grateful for what I have, acknowledging a point of view or a set of expectations I have of a situation, or others that are coloring my perspective, is freeing. Once done, I can choose to see things differently and I can choose to take actions so that I may be the architect of my life.

When we are not blaming and we are choosing, it can be very empowering!

Yes, these are the basics. We need to lay the foundation before we can move onto planning strategies. Consult a certified financial planner for comprehensive advice on strategies that address your retirement planning needs.

This article originally appeared on Investopedia.

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Michelle Buonincontri is the Founder of Being Mindful in Divorce. She’s a divorced single mom, passionate about using her professional experience as a CFP® & CDFA™ and personal journey to support women in transition; creating confidence through education so they can make financial choices with peace of mind. Bringing together a background in investment management, tax prep and retirement planning, to provide Divorce planning (with singles or couples) and Financial Coaching services, financial literacy workshops and writings.

The Key to Handling Credit Card Trouble: Don't Procrastinate!

by Elliot Raphaelson

Consumers can find themselves with insurmountable debt for any number of reasons. Unwise use of credit cards ranks near the top. As a Florida certified county mediator for the last 12 years, I have seen cases involving failure to pay credit-card debt increase markedly over time.

It is not unusual for an account with a limit of $2,000 to rack up a balance of, say, $4,000 within a few years. How does this happen?

Many, if not most, consumers fail to read the initial agreement when they sign for a credit card; they assume they will always be able to make sufficient payments. When they cannot make the required minimum payments, or when they charge more than the limit on their card, bad things happen. Failure to make minimum payments results in an increase in the interest rate and a monthly charge for not making a minimum payment. Exceeding the card's credit limit brings additional charges.

When faced with hard times, many people naturally pay mortgage and car payments first, putting off paying their credit card debt. Given the high interest rates and fees this triggers, their debt can quickly spiral out of control.

Once you stop making minimum payments on your credit card bill, your card issuer will send you statements showing additional fees and higher interest rates. If you do nothing, these fees and charges will continue to accumulate.

If you do nothing and procrastinate until faced with a lawsuit, your options become limited. The credit-card issuer, or its representative, is entitled to legal expenses as well as court costs, if it can demonstrate that you owe the amount in question.

Along the way, however, you may have options you are not aware of to get a resolution more in your favor.

For example, once you have failed to make minimum payments for several months, the creditor recognizes that it is unlikely that you will be able to pay off the account in full. If it is forced to sell this account to a collection company, it will do so at substantial loss, so it may be willing to negotiate with you. If you offer to pay off some portion of the balance over a short time frame, such as two to three months, you may be able to receive a substantial discount.

If you are unable to negotiate successfully with your creditor, you can get help from a local nonprofit counseling agency. Contact the National Foundation for Credit Counseling (, or call 800-388-2227) to help you find one.

If the issuer has increased the interest rate on your account because of missed payments, try to renegotiate the rate. (When you call the creditor's customer service line, you can ask to speak with a supervisor.) Indicate you are now able to make minimum payments -- if the company is willing to reduce the interest rate. You have nothing to lose.

What can you do once you have been sued by a debt collection firm for an account on which you have not made payments for several years? If you do not believe you owe the money, or if you believe the amount is incorrect, send a certified letter (requiring acknowledgement of receipt) asking for documented proof.

When an account is purchased by a debt collection firm, especially if it has been sold many times, the firm may not have sufficient documentation. This helps your bargaining position. If the case is heard by a judge, the plaintiff will have to provide proof to the judge that the debt is owed. Once you request such proof from the debt collection firm, they know they are dealing with an educated consumer.

State and local laws and procedures vary. Your case may be heard by a mediator initially, who cannot offer you advice. If you believe your case is strong, you should insist on an appearance before a judge. If you do not want to appear before a judge, you should negotiate with the collection firm; there is no downside in asking for favorable terms for repayment and lower and/or no future interest charges. The collection firm may not want to appear before the judge either, especially if it has insufficient documentation. If you have requested documentation, and it hasn't provided it, it probably doesn't have it.

If you have credit card debt you can't handle, don't procrastinate. Find ways to pay off the debt at a discount, or have the interest rate reduced. Otherwise, the debt will increase quickly, and it will become even more difficult for you to resolve the problem.


Elliot Raphaelson welcomes your questions and comments at



Elliot Raphaelson

A retired executive of Chase Manhattan Bank, Elliot Raphaelson joined The Savings Game after decades of experience as an advisor, teacher and author in the field of personal finance. He has taught courses in personal financial planning at The New School for Social Research and at the Military Academy at West Point, as well conducting seminars for Chase, Dow Jones & Co. and other corporations.

Past publications include Planning Your Financial Future (Wiley, 1982), and his writing has appeared in The New York Times, Town & Country, Vogue, Self, Savvy and Working Woman magazines. For ten years he has worked as a certified mediator and trainer in a Florida county court, where he helps resolve personal financial problems of every description.