My divorce became official in June 2006. I was already in school working on my degree in accounting and working a full and part-time job. I guess you can say that I was rebuilding after divorce. The idea of my life was beginning to take shape, and I was finally starting to feel in control of my life. I eventually graduated college and began my career in my chosen path. I was hired as an intern for a small CPA firm, which later transitioned into a permanent full-time job.
Purchasing a House
I was on my way to building a financial life for myself. I was making a whopping $38K my first year; by most standards, that isn’t much, but it was more than I had previously made. With that colossal salary (lol), I felt it was time to leave my parents’ home. Gracious that they allowed me to stay, but eager to venture out independently to see what I was made of. It was time to purchase a home. I’ve never been keen on renting as it builds someone else’s equity; the best route for me was to go all the way in and build equity in my home.
On January 10, 2010, I purchased my house for $134K in New England (You can buy a house on a meager salary). If you know anything about New England, you know that housing can be expensive, and I was lucky. I purchased my home in the United States during the housing crash fiasco. There were thousands of houses on the market in my area, which were severely discounted. Without the housing crash, I would have never been able to afford a house. When I think back now, God couldn’t have granted me a better time to start over.
Drowning in Credit Card Debt: Suze and Dave Saved Me
I was introduced to Suze Orman via one of her books that I happened to stumble upon at the bookstore one day. She introduced me to a different way of thinking about money, and it revolutionized my life. I started an emergency fund and began to save aggressively to increase it. Additional pay raises lessened the tightness of my purse, and I began to save money outside of my 401K. However, I was still not convinced that my debt was the only thing holding me back from starting the wealth-building journey, so I continued to use credit to pay for my everyday needs and wants.
Then I came across Dave Ramsey and his method for conquering debt. I don’t subscribe to all of his theories about money, but he did have a few ideas that resonated with me, and eliminating debt is one of them. I began to pay off debt using his Debt Snowball Method. Progress was being made but, I needed to fully ween myself off of credit card usage, and that was just plain hard to do. In my mind, I wasn’t spending my own money. Only paying the minimum on the credit cards increased my savings balance. It seems like a win, right? Wrong! Absolutely wrong! Paying the minimum kept my credit score intact, but the interest drowned me! I had to do something!
I Made the Choice to Stay in Debt
Believe it or not, I stayed in that rut for years. It was a self-inflicted financial mess that I could have dug out, but I consciously decided to stay in the hole. I was standing in the way of being free and didn’t see myself and my poor money management habits as the problem. I continued to increase my savings while increasing my debt load. Yes, it is possible to do both. I looked at my savings account balance one day and recall thinking, “When did I get so much money!” I was so proud of myself. Then I looked at my credit card balance and was immediately ashamed. My debt surpassed the amount of my savings. I had accomplished nothing and owed more than I could pay off! I wallowed in a false sense of accomplishment, which cost me dearly.
It was a sad state that I allowed myself to be in. Self-inflicted pain is the worse type of pain you can experience.
Getting My Money Together
I have always been money conscious, so with the increased pay, I began my dive into the stock world. I always had the mind to save money; I just never had much of it to save. That changed with the bump up in pay and a little sacrifice of some wants. I saved 10% of my pre-tax annual salary, which I invested in my employer’s 401k plan. The more knowledge I gained, the more I began to create a portfolio outside my 401k, which included setting up a Roth IRA account and funding a Health Savings Account (HSA). Ticker symbols, bull runs, and options excite me; I’m weird that way.
The need to spur economic recovery caused a downturn in interest rates, and I seized the chance to score a lower interest rate on my mortgage. Originally the interest rate on my house was 4.85%, which was alright. As I said before, I had good credit but severe debt. With the new economic environment, I could score an interest rate of 2.99%. By then, I had built up equity in my home and decided to incorporate my student loans and outstanding credit card debt into my house payment, plus I took out $10K to give my savings account an added boost. Re-financing was the best decision I ever made because it helped me increase my monthly cash flow and pay off my non-mortgage debt at a significantly lower interest rate than I could otherwise get on student loans and credit cards.
Building Peace of Mind
With the added cash flow, I felt financially secure and did not worry about using credit to finance my living. I also started Uber and Lyft as side hustles. This brought in about $5-8K per year, depending on how hard I hustled. I used credit only sparingly and paid the balance off in full each month. If I don’t have the cash to pay off the credit card in full each month, I don’t use the credit card. I started taking budgeting seriously. Each month I accounted for both my income and expenses. I included ‘Me Money’ in my budget to allow myself cash for those ‘just because I want to or want it’ things. I allocated gas, groceries, and my Spotify subscription, which I cannot live without! Budgeting brought about the discipline that I lacked in my financial life. I was well in my way to rebuilding after divorce!
Conclusion
Believing that rebuilding after divorce is easy is a lie, but it is possible. I am proof that it is. It starts with believing in yourself and then following through with a plan. You may not rebuild precisely as I did, but you can rebuild your financial life. Take it one step at a time. Make wise, calculated decisions and watch your financial life become a blossoming flower.