Need your opinions please..

[Thevail]

A new friend of mine is getting divorced, things have been financially rough for a while, and both he and she just sorta stopped dealing with the finances. We all know how this ends.. not well. So one day he and most of the money left, no one knows where.

She lived in the realm of denial for about 6 months before she finally woke up. Her finances are a literal mess, and she says she doesn't even know where to start.

She's asked for my help. (oh goody!)

This is what I've come up with so far, what do you guys think?

How to get started cleaning up a financial mess:

#1 Sort bills and statements into piles of like type.. if you have 5 electric bills, put them all in one pile, 6 bank statements from one bank go in one pile, 4 bank statements from the other bank go in a different pile. Etc.

#2 Separate bank statements and all tax and income information according to date and store by year. Truly organized people have filing cabinets.. I have manila envelopes with the year written in sharpie on the outside, whatever works for you!

#3 Go through the bills and keep only the most recent one, the rest can go in the garbage. If you are carrying a balance on the bill it will always show up on the most recent one. Throw the rest out! It's crazy, useless clutter that make the financial mess seem much larger than it actually is.

#4 Open and look at those bills you have kept. Keep the envelopes they came in AND the envelope you pay in. On the outside of the envelope it came in write clearly how much and the due date, and place the bill and the payment envelope back inside.

#5 It's a good idea to look at the “current monthly charges” line on the bill and keep a running record of these for each bill in a notebook, although a file in your computer will also work. Put a note next to each bill amount saying whether it's a Constant bill, the same amount every month, or a Variable bill, one that changes each month. If you have credit cards it's good to list the current interest rate on it next to the amount owed.

#6 Organize these bills by due date with the one due the soonest right on top writing side up. You'll need someplace to keep these where they'll all stay together and you can see them. I use a cute little basket thing. I had a “rack” type of thing, but the end of an envelope is not very informative, and you can't miss those due dates and amounts if the bill is lying flat within eyesight.

#7 Now go back to your notebook (or computer file) and add in any actual bills that you don't happen to have a copy of right this minute. For example, many people only get a bill for their car insurance or land taxes every 6 months so you might not have one this month, but you need to include it in the list.

#8 Now get a friend, a cup of coffee or whatever, a calculator, an INK PEN.. no pencils here.. and add it all up. Budget in ink, ink doesn't lie.

#9 Next divide those bills into separate columns on a separate sheet of paper. One column for “house”. One column for “utilities”. One column for “car”, gas goes here too. And a separate column for credit cards. Make an extra column for general stuff too.(ie. Food, cleaning supplies,clothing, personal)

#10 Add up each column separately. This should give you a good idea of how much you're spending in each category.

[ladykemma2]

aargh i went through this...divorce budgeting 101.

first thing i did was open a new checking account in my name and redirected automatic payroll there. i also hid 6000 in a friend's account.

then my good friend who went thru divorce budgeting 101 too and is an accountant sat with me and set up an excel budget spreadsheet. we did it from memory at first...and she included sinking funds from day 1.

the hard parts were the oddball bills that comes annually. this took a while to figger out.

as each bill rolled in i changed the official budget to reflect the true amounts. it took a year to get the spreadsheet budget functioning and accurate.

i bought a gorgeous file box from tjmaxx and threw the receipts and paid bills in there. i didn't file but they are in there. i set up a bill paying station in my kitchen because i dreaded paying bills and wanted to make it easier.

i racked up huge credit card bills paying for divorce expenses. there were many. my attorney advised me to be a weepy woman pleading for tearful reconciliation, and asking for spousal support. teary eyed, i guilted him into spousal support. i was not legally entitled to it. he paid well for his affair.

after a while i arranged things so that all bills came due after the 15th. it made savings and bill paying easier for me.

[Greebo]

Quick scanned your list - I don't see anything missing off the top of my head. Your friend is lucky to have you!

[frugal is fun]

your friend is very lucky to have you, I didn't have anyone on my side when I got divorced.

Thankfully we didn't have any debt and all our bills were current. But yes, it is VERY important to separate the finances LEGALLY. We went through mediation so our divorce cost us just under $2,000 and that was with the family services classes, filing fees, etc.

good luck!

[Birdie]

The only thing I might add is to keep statements with any transactions on them. She might need that info to dispute fees or to try to get the husband to pay or to deduct from any money he might get from the sale of a house.

You're a good friend to help her.

[JanieD]

But yes, it is VERY important to separate the finances LEGALLY.

If she hasn't already, have her CLOSE any accounts that still have her soon to be ex's name on them. I've seen too many who wait & it causes nothing but problems at some point (maybe in 6 months or a year from now).

Its good she has you to help her get started, but be sure she doesn't expect you to just do everything. She needs to take an interest in learn how to manage her own budget. Not that I think this will happen, but it just easier to get started off on the right foot.

Your plan looks thorough... not sure I could toss all the bills except the recent ones. I can see how it could be overwhelming & possibility unnessary to go through each one. Just feels like I'd need to at least put them to the side until I went through the recent/current bills & statements to make sure the numbers looked correct. I was trying to figure out if you're looking at monthly totals in #9 & 10 or a total yearly budget. It may not matter... I got a little lost for some reason. I think it will help so much for her just to see the numbers so she can get a budget started.

[Thevail]

When I said she didn't look at her finances.. I mean.. literally.. not opening the bills. The pile looks like Everest. Hence the toss all but the most recent bill.

I feel like right now she has to do whatever it takes for her to literally be "able to face" the bills again.

#9 is basically to give her an idea of what her monthly bills are. Lifestyles change pretty drastically when you get divorced, for example cooking for one sucks... especially in a kitchen for two.. and you eat out more.

I want to make sure that she has a real handle on what she thinks she spends every month..

Bwahaha.. then comes the little notebook for a month or so that will..ahem.. correct her assumptions.

[mauimagic]

Great plan - good for anyone in similar position for any reason!! Reminds me I have a few things to shape up on our finances too.

You are a kind person!!

[McD]

#3 Go through the bills and keep only the most recent one, the rest can go in the garbage. If you are carrying a balance on the bill it will always show up on the most recent one. Throw the rest out! It's crazy, useless clutter that make the financial mess seem much larger than it actually is.

I would modify this to shred or burn the past bills. There are so many instances of identity theft. People begin by finding just the most basic info of people....off a cable bill for instance. Or a cell phone records. etc.

It's good of you to help your friend.

[ruderring]

Good for you for helping your friend out! Give yourself a pat on the back you deserve it.

[Liane]

Thank you for helping your friend. She needs supportive friends like you in a time like this. As a person who went through divorce, I got off really easy. Just wish I had someone there to lean on. You are a great friend.

[Greebo]

Sign up for FPU with her. Did I say that already?

[Thevail]

Sign up for FPU with her. Did I say that already?

Isn't that like a religion or something.. LOL

I really like parts of Dave's stuff, but not all of it works for everyone. What she decides to do about her financial life once she's clear of the swamp is her thing!

I like her, but I'm not involving myself in someone's finances that deeply. There are days I feel like the horses are loose with the carriage up on two wheels with mine!

[frugalfranny]

Whew...good of you to help. Hope she knows what a special friend you are.

Good luck...........

[Josephhgoins]

Have you accounted for the 1 time only bills? Little stuff like, getting a new car title without his name or taking the cat to the vet to update his shots every so many years?