Managing Debt

How One Woman Survived Divorce & Bankruptcy

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Divorce can simplify finances — if for no other reason because there’s a lot less potential for miscommunication. Just one person is making household financial decisions, so it’s a lot easier to know what’s going on. Indeed, a recent Credit.com survey found that 51% of divorced women say that they are very satisfied with how they’re managing their finances post-divorce.

It’s still far from simple, though. Tomi Tuel, the author of “101 Things I Learned AFTER My Divorce,” said that, financially speaking, she felt less stress after her divorce and bankruptcy.

As a young family, she and her then-husband had purchased a house. He worked in construction, and she worked at a winery. Told that a master’s degree in marketing would assure her a job as a brand manager when she got out, Tomi went to graduate school. The winery changed hands, though, and her job plans fell through. She switched gears to study accounting. At about the same time (the mid-1990s), her husband’s construction business was running into trouble, as was the industry in general.

The couple used credit to try to keep afloat, and the debt kept growing. Tomi estimated their stack of credit cards was about an inch thick. And so they found themselves saddled with business debt and student loans. Her husband was working three jobs — and they were deeply in debt — when he told her he wanted out of the marriage.

A Bit of Control

“At that point I had little control over anything: my emotions, my children, my marriage, and least of all, him,” she recalls. “The only thing I could control was my half of the finances, so I got busy and made a plan.”

Tomi said that though she wanted to pay off her portion of the debts, as a newly single parent of a not-quite-5-year-old son and a 22-month-old daughter, she didn’t see how she could pay off the money owed to creditors and also take care of her family’s day-to-day needs. She also hoped to start college accounts for her children. It soon became clear that wiping the slate clean would give her the best shot at financial recovery. She estimates that bankruptcy wiped out between $30,000 and $40,000 of unsecured debt.

“Bankruptcy is truly a gift, in a roundabout way,” she said in an email. “I learned to be satisfied with what I had, save what I could (even if it was $20 a month), shop at thrift stores, fix my own leaky faucets, and stagger my purchases in phases…. The cable guy once called me the customer of the year because I ran the cable under my house when he wouldn’t.”

Living on a Shoestring

Her children, now young adults, were largely unaware of the financial stress. At the time of her divorce, she had a job, so there was income. And they didn’t know most people buy a table and chairs at the same time. Tomi’s “installment plan” was a table one month, two chairs the next, and a third the month after that. Her son, a picky eater, loved a certain chain’s hamburgers. Because they were 39 cents on Sundays, Tomi would buy five at a time, giving him reheated burgers on weekdays. His friends were envious.

Her son and daughter are now college students. Tomi is remarried and now also has a son who is 3. She continues to favor buying used over new, and she is chiefly responsible for family finances, a dramatic change from her first marriage when her former husband handled the money. This time, though, she and her husband work as a team, formulating financial strategies together. Together, they are funding retirement.

The bankruptcy is no longer on her credit reports, and she and her husband now use credit cards mainly at home-improvement stores and with a plan to pay them off.

Challenges include figuring out how much to budget for the adult children. She said clear and continuing communication is important, and so is a willingness to admit you might be wrong. (Did I tell you what I planned to do, or had I been telling myself so long that I thought I had mentioned it to you? I didn’t?)

Her advice for any couple trying to figure out how to live on what they make? Track spending. “The person not doing the budget needs to see where money is going and how little expenses can add up.” Because living within your means is the first step toward becoming financially strong.

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  • Susan

    Bankruptcy is different now. You have to reorganize and pay what you owe, not wipe them out. Am I correct? Just asking.

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