Divorced Mom Asks: How Do I Rebound Financially?Lynn, a 53-year-old Florida nurse and mother of two, has navigated several treacherous years. In 2007, she and her husband bought their dream home in a gated community after selling their smaller house at the top of the real estate market. A year later, after 28 years of marriage, he walked out.

"I know it's a cliché, but it was a mid-life crisis," Lynn says. "He wasn't a bad person, he was just unhappy and unable to articulate it. He got up from the couch one day and started screaming and punching holes in the wall."

As the South Florida housing market collapsed, they dumped the place in a short sale, which required writing a check to the bank. Lynn came away from the marriage with about $40,000 in credit card debt and medical bills from the treatment for her daughter's brain tumor. Her credit score plunged to 540, and in order for her to purchase a car to get to work, her 19-year-old son had to co-sign the auto loan, which had an interest rate of 21%.

"It seemed easy to bag it all, file bankruptcy and start over," says Lynn. Instead, she began working 14-hour overnight shifts to maximize her overtime pay, pushing her annual income over six figures.

A Dysfunctional Financial Upbringing


Splitting up makes a mess of your finances. Overall wealth declined an average of 77% for people who divorced, according to a study in the Journal of Sociology that tracked the financial and marital status of more than 9,000 people from 1985 to 2000.

Lynn wants to move to the Midwest, finish her bachelor's and master's degrees, and escape the brutal overnight shift. "I need to get into school so I have choices," she says. "[Older] people come to work and they look like soldiers falling apart."

She feels daunted by her lack of financial education, which she attributes partly to her childhood. "I came from a very dysfunctional, frenetic household. My dad was a baseball player and my mom was a model," she says. "My dad was a gambler, so it was a very unstable household. We would live lavishly in an enormous home and then there would be no electricity."

Getting the Tools to Craft a Plan

Given her income, Lynn can bounce back, says Ginita Wall, a certified financial planner and founder of the Women's Institute for Financial Education and Moneyclubs.com. "If she were 95, I'd say tread water and die with debt, but at 53 you still have the opportunity to get out of it," says Wall. Moreover, even if she filed for bankruptcy, the court would have set up a repayment plan based on her income, although interest on the debt would be waived.

So far, Lynn has tackled her debt alone, following advice she found online. "I have made some progress, but very slow," she says. "On payday, when the money hits my account, I'm up at 5 a.m. paying my bills, sitting there like a miser with my calculator."

For a free, do-it-yourself pay-down plan, Lynn could try MoneyClubs' 21-day makeover program. Participants receive a daily email with a small step to do in 15 minutes or less, adding up to a pay down plan at the end of three weeks. Other options are the ad-supported Payoff.com or Debtgoal.com, a subscription tool that costs $15 a month.

Over the last three years, Lynn refinanced the auto loan at 8% at her local credit union; negotiated lower interest rates on her credit cards; and paid down about 25% of her outstanding debt. She saved $4,000 in an emergency fund and contributes 10% of her pay to her 401(k), which offers a 2% match and now has a balance of $63,000. Her credit score has climbed back to 650.

Taking the Long View


Carole Peck, a Florida certified financial planner who specializes in women in transition, recommends Lynn max out her 401(k) even if the investment return is less than the interest she is paying on her credit cards.

"The 401(k) reduces taxable income and if she's in the 28% tax bracket, she's saving 28% on that money right off the top, plus the matching funds," says Peck. "It's also disciplined saving. I have found when people take a break in saving in their 401(k), it's a long break and it's hard to get back where they were, because something else always comes up."

Peck advises Lynn to stay put and pay off as much debt as possible before relocating. "She should stick it out as long as she can in Florida, it's her best opportunity to pay off the debt," she says. "Going back to school, she will not able to work overtime. If she can hang in there a little longer, that would put her in that much stronger position when she gets to the Midwest."

If Lynn can't find an employer willing to pay her tuition, she should look into federal student loans. "That probably feels like, 'here she goes again, increasing the debt,' but I really like my clients to keep liquidity in this economic environment," says Peck. A job loss might require tapping retirement accounts early, paying penalties and taxes, and creating "a downward spiral."

Finally, Lynn should wait as long as possible to collect Social Security to boost her benefit. "If she can wait until 70, even working part-time to delay taking Social Security, that could be a big help in long-term retirement plan," says Peck.

Struggling with your own personal finance situation? I welcome your questions but it's also about your wisdom, ideas, and experiences that may help other readers. Email me at laura.rowley@teamaol.com. You can also follow me on Twitter @MoneyHappiness.

Content Solely Informational:
Content on this site is for informational purposes only and is not intended to be investment advice, or any other kind of professional advice. You must determine for yourself or in consultation with a professional whether any financial strategy or advice is right for you.

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oiweolsd@yahoo.com.cn

Luckily for her she is a nurse. Nurses make good money. Especially registered nurses. There are a lot of women out there who aren't so fortunate. Imagine working at Mc Donalds with two kids one on the way and no husband. That is the reality of many women.

Going back to school is out of the question for many of them. Especially for the poor. Our government in 2005 decided to aid all future generations of students by not allowing students to wipe out their student loan debt. Now we have a new generation of kids coming out of our universities for the first time ladden with debt and no forseeable job in sight. Sweet deal for Citibank and those caring politician. They forgot one thing without jobs there is no revenue. Without revenue there is no America. http://www.weddingdressregie.com/bridesmaid-dresses

November 14 2011 at 12:37 PM Report abuse rate up rate down Reply
rum39aust

Since she was married over 10 years, when she turns retirement age she can receive spousal social security payments on her ex husbands record, then when she turns 70 receive much higher benefits on her own record.

September 27 2011 at 5:46 AM Report abuse rate up rate down Reply
TERESA

hey, Obama has told all of us to quit moaning and groaning, that should fix everything.

September 27 2011 at 4:35 AM Report abuse -1 rate up rate down Reply
kv37

What she complaining about? It says she makes a six figure income.

September 27 2011 at 4:32 AM Report abuse rate up rate down Reply
1 reply to kv37's comment
Lisa

Even people with six figure incomes have troubles. It's all relative. The more you make the pricier items you buy. The bigger house, the nicer car, the trips to nordstroms instead of kohls or walmart.....

September 27 2011 at 5:42 AM Report abuse rate up rate down Reply
hapirn

Her best shot might be to do an online BSN and begin an MSN online as well. If she has an AD...or diploma, she might look at the CLEPS to score some extra credit and many schools give credit for life experience, xtra certigication in her field, ets. she might also look to the military or civil service, while the money isn't as good the educational opportunities are huge...

Good luck, my x had a midlife crisis and he put his boyfriend x2 through nursing school, he was a doc and a jd...
I managed to raise our two with no help from him and even got one of them through law school...alone...

You can do it...

September 27 2011 at 2:56 AM Report abuse rate up rate down Reply
winterberryshop

let her live in the real world, its a recession thankful you have a job, going back to school for a degree what purpose will that serve, already a nurse. No pity for her and her sob story. A 401k count your blessing & she can contribute. honestly lady get off your high horse. when you have to use your 401K to survive and pay penalty & taxes & can't get a job in this resession those are the people who can cry woe with me. Talk to some real people with real problems. Many people lost or are losing their homes & don't know where their next meal is coming from. a nurses salary can provide you a good home.

September 27 2011 at 2:42 AM Report abuse rate up rate down Reply
artgrcia

Im looking for any divorced hot mamas out there who need a man to take care of them if you're a good looking woman between 30 -45 and you are newly divorced and in neeed of a new man to take care of you feel free to get back at me.

September 27 2011 at 2:41 AM Report abuse rate up rate down Reply
cherylannrnjm

Take the 13 week financial peace university class by DAVE RAMSEY. Go to his website to find out more. He has the best advice about getting a plan to get out of debt and saving for the future!

September 27 2011 at 1:57 AM Report abuse rate up rate down Reply
jannjanf

The tanking market has no effect on making her payments. The market simply means she can't sell it for a profit. That means a 15 -20% drop in market value since 2008 still leaves her able to sell at a price that covers her mortgage. I realize she loses the down payment but she can also buy another house for much less. Finally, if her husband walked out after 28 years and they could afford to buy the lovely home in question - then she got spousal support. She can make the payments. Also, as nurse, she is making good money on her own with little chance of lay-off. Perhaps she should make payments and wait for the value to increase again or simply plan to live there for the remainder of your life. I'm a bit jaded hearing sob stories about people who feel ruined because their house stopped appreciating 10 -15% per year in places like California, Florida, and Las Vegas.

September 27 2011 at 1:14 AM Report abuse rate up rate down Reply
Sped Man

Luckily for her she is a nurse. Nurses make good money. Especially registered nurses. There are a lot of women out there who aren't so fortunate. Imagine working at Mc Donalds with two kids one on the way and no husband. That is the reality of many women.

Going back to school is out of the question for many of them. Especially for the poor. Our government in 2005 decided to aid all future generations of students by not allowing students to wipe out their student loan debt. Now we have a new generation of kids coming out of our universities for the first time ladden with debt and no forseeable job in sight. Sweet deal for Citibank and those caring politician. They forgot one thing without jobs there is no revenue. Without revenue there is no America.

September 27 2011 at 12:14 AM Report abuse rate up rate down Reply