Will you be able to make ends meet in your post-divorce life? Unless you have a wealthy new spouse waiting in the wings, you should be asking yourself that question. The first step to finding the answer is to know how much you spend now. Exactly how much you spend now.
I have worked with hundreds of people in Houston and College Station. Most of them want to estimate their expenses. All of them underestimate the number. And, even at that, all of them have been shocked at the amount of money they spend – in their estimates. The truth is that they spend much more than they estimate. I’d say they spend about 30% to 70% more than they estimate.
The problem with estimating too low is that you will wake up one day – maybe 7 months after the divorce – and wonder why you can’t afford to pay off your credit cards each month or sock away some savings.
To get a real picture of your spending you need to haul out 12 months of credit card and bank statements. Enter each and every credit card charge and check and debit and ATM transaction in Quicken or QuickBooks. Don’t double count your credit card charges by entering credit card payments shown on your bank statements after entering the credit card charges.
Tedious? You bet. Accurate? Totally.