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Ask Dave

Starting Over After Divorce

Meryl is going through a divorce and has some questions for Dave about what to do when it's over.

QUESTION: Meryl in New York City is getting divorced in a month. She will have $100,000 left when it's over, but nothing else except $8,000 in credit card debt. What does Dave suggest to help her move forward?

Dave's ANSWER: Normally, if everything were stable and you were not in a state of such transition, I would take $8,000 out of the $100,000 and just pay off the credit card debt. You probably could do that anyway and just be debt-free and have $92,000 in cash. That probably doesn't make much difference. If you were going to run through $100,000, you'll probably run through $92,000.

If you raise your hand and swear to never use a credit card again, then cut the stupid thing up and live on a budget, and create some kind of an income immediately. You need to clear this money, you don't want to live off of it. If you are going to get back in the saddle of life pretty quick, then I'd write a check and pay off that credit card debt because it's such a small portion of the money.

If you were using up half the money, I would start to get scared and say to wait until you get the transition completed. Get settled, get a job, get a place to live–that kind of thing. But this is a small percentage, so I don't think it's going to make much difference. You may be covering that money right now, but that's good. It will keep you from using it.

Pretend like that money is not there. Don't look at it so you can go make some money and eat and pay your light bill without touching that. Then a year from now, when you get past some of this stuff emotionally and start to heal and are looking out toward the future, that money will still be sitting there.

You will have gone out there and gotten enough money coming in from some kind of employment, even if it's from a couple of temp jobs or some self-employed ideas, or even part-time stuff that you patch together before you get the big job. Anything to keep you from dipping into this.

As long as you've got that kind of mentality, I'd probably go ahead and pay it off. Then your goal is to pretend like you don't have any money.