Ask an Advisor: Divorce left me in debt

Nancy: I recently went through a divorce that left me in debt up to my eyeballs. I still own a home, although I have no equity in it. I still have a pension and I'm still employed, making about R240,000 a year, but I am paying for my kids school fees, taking care of my mom and supporting my sick sister. I feel like I need to start over, but don't know where to begin? I'm hoping you can give some direction, as I feel I'm going down for the third time.

Advisor's Answer:

Jolene Bauermeister  - Certified Financial Planner ®

Divorce is indeed a major disruptor but, it is also an opportunity to dust off the proverbial shelves of your life.

It is always a good idea to see a councillor to help you work through your emotions and get back to a more positive place. Some companies offer wellness programmes for employees and that may allow you access to a councillor.

As your divorce left you with quite a bit if debt, perhaps you should consider being placed under debt review if you feel like the light at the end of the financial tunnel is non-existent. Find a company with a good name in the market for this.

Alternatively, if you are a very disciplined person, you can research the options available to you yourself. Some companies that offer loans charge really high interest rates. Find out what interest rate (or rates if you have multiple loans) your current debt carries and what interest rate the banks would charge for similar debt. If the banks are willing to offer you lower rates, perhaps you can look at loaning money from the bank to pay off your old expensive debt. Essentially you will be consolidating your debt.

If you can, continue to pay the monthly amount you previously did on the expensive debt. This will allow you to pay if off much sooner. Once you are debt free, you can focus on building up your savings again.

In addition, draw up detailed cash flow analysis for yourself in order to see where costs can be cut and, keep track of this on a monthly basis. This will make sure you stay in control of your finances.

Nothing engenders a sense of self-worth quite like accomplishing something.

So, invest in yourself and study something to further your career. Many companies are willing to pay for studies or at least contribute towards studies that will enhance your job profile. For a company this expense is tax deductible.

Speak to your HR or line manager about company funding and what line of study they would be willing to pay for.

Not only will you be able to increase your earnings capability but, you will have achieved something for yourself.