How to Recover Your Finances After a Breakup
What could be more stressful than having a first conversation about money with your significant other? The moment when you realize that it just doesn’t work out.
You weren’t married, but you could. You’ve divided your rent, utilities, maybe a bank account. If you didn’t live together, you had a shared family plan, or at least a Netflix account. Anyway, it’s over. And it’s a mess.
Now you feel like the years gone by have been wasted. But you don’t have much time to get bogged down in heartache. You need to think about your money.
I asked two personal finance experts (who have gone through their fair share of breakups) for advice on how to recover your finances after the relationship ends.
Focus on facts, not feelings.
Don’t start packing your bags – at least your emotional ones – until you know exactly what you are dealing with. “Be ahead of yourself and your emotions and do the most strategic things first,” said Whitney Morrison, CFP and Chief Financial Officer at LegalZoom . Make a list of all the accounts and expenses that you share, paying particular attention to the accounts that are in your name. Your list could include a house, a car, a credit card – anything that contracts you to that other person.
Separating shared financial accounts should be your top priority. “The problem with shared accounts, such as shared savings or checks, is that whenever you deposit money in that account, you both become the rightful owner of that money,” Morrison said. “Either of you can spend the entire balance without going to court, because the money belongs to both of you.”
If you have a joint savings or checking account, pull out your share of the joint money (check your records if you need to remember who contributed what) and make sure you turn off any direct deposits or automatic transfers you have set up for that account. …
“I hope you have at least one checking account of your own,” said Lillian Karabike, personal finance educator and author of A Guide to Money for Cats . “If not, open one immediately and deposit some money into it. I’ve heard too many stories of people whose exes have depleted their account or blocked their access to a shared account out of spite, ”she said.
Rate your housing options
If you have a contingency fund , it’s time to use it.
“Even if you can quickly get out of the lease, you will still need funds for the first and last lease, as well as for the replacement of common tableware and furniture,” said Karabaich.
Karabaich explained that if you are both on leases, consider asking your landlord if you can move to another apartment, although this scenario works best with corporate landlords and large apartment complexes. “Sometimes you can ask one of you to move to a smaller apartment or even ask if you can each transfer your tenancy rights to two different apartments,” she said. “This can often alleviate the financial and logistical difficulties of relocation, and an additional apartment will be taken over by your property manager.”
If you don’t have the means to buy your own home, it’s time to lean on your family and friends. You may already be sleeping on their couch, so it’s worth talking about if you can extend your stay to save money. “People are often really surprised at the support they get when you ask for it,” Morrison said.
Donate your Netflix login (but maybe not your insurance)
“Just shrink it,” Morrison said of shared accounts like Amazon Prime, Netflix, your phone plan, or anything else where you share a password. If you’re still tied up with even the smallest monthly expenses, “it looks like the gap will never end,” she said.
“Sometimes it’s easiest to convey a message or objection to someone who cares,” advised Karabaich. She advised to beware of the hidden costs associated with breaking a relationship that can often arise when you browse this inventory, such as creating your own streaming accounts, getting your own Instant Pot after you vowed not to use it as often. …
One aspect that may require further elaboration: if you are using the same health insurance. If you were in a family partnership, then one person removing insurance from another person will be considered a “change of status” or “loss of insurance,” explained Karabaich. “You will be able to qualify for the special enrollment period either through an exchange plan or workplace insurance.”
But if you’re nearing the end of your plan’s year, you can hold out until open enrollment if all goes well. “You will have to face a completely new franchise” if you upgrade to a new program before open registration, she warned.
Keep track of your credit
Once you’ve determined which accounts belong to whom and split them accordingly, you’re not really done yet. “I definitely recommend keeping an eye on your credit score,” Karabaich said using a free credit monitoring service .
Your average ex may not be doing something insidious, like opening a new credit card in your name, but if they slip through accounts that still have your name attached, you could end up ruining your credit history. “You don’t want to leave it in the hands of someone else.” Morrison said, “Especially your ex.”
Keep a record of what you have been removed from any shared accounts, and be on the lookout for infrequent payments that didn’t make it to your original list of shared accounts. Karabaich said car insurance with an extra driver or renter insurance for an apartment you no longer live in are frequent culprits here.
Understand it will be messy
Sharing finances with a long-term partner is not an instant process. And getting back on a solid financial footing after a breakup can take time. So don’t be too hard on yourself if you feel like something is wrong right after the breakup.
“Working with two incomes and separating bills and expenses is a whole different matter,” Morrison said. “Life is really changing for you. But now is the time to become aware of your personal financial situation and start creating new boundaries around what works and what does not work for you now from a financial point of view. ”
It can take a while to feel safe with a new budget and perhaps a new living space that suits it. But if you take the time to set yourself up for success, avoiding the temptation to respond to your ex’s messages, you will find yourself on a solid financial footing and also learn a few lessons to learn in your next relationship.