Low Apr Life Of Loan Balance Transfer Card

Splitting Up: How to Avoid Turning Your Personal Finances into a Divorce Statistic

You've split up the furniture, decided who's keeping which novelty mug, and said your courteous and warm goodbyes to your former spouse who will remain your close friend. Okay, maybe not so much the last one. But you get the idea: you're dividing the loot. Unfortunately, extricating your previously communal finances is a bit more hairy.

Depending on how your divorce goes, you may have to find a new place to live, open new savings and checking accounts, and perhaps find a new job--all of which can be compromised by bad credit.

And while you're setting off on a whole new stage of your life, your previous debts will follow you like that one cheapskate wedding guest who asks if he can have his melon baller back. Staying on top of your finances just got harder, but trust me, you’ll want to keep them in order.

Too Little Credit

Whether you worked in or out of the home during your marriage, you’ve probably accumulated some credit history. A loan taken out in both yours and your ex’s name will still reflect on your own credit history, for better or for worse.

Even if your primary role in your former marriage was in the home, you probably have generated a credit history in some way. If you've kept up with your debts, this should only be beneficial to your overall rating. Even having a limited credit history isn't the end of the world though. Starting out with a credit card that has a low balance ceiling or requires you to pay the equivalent of your balance up front can start you on the road to healthy credit.

"I Owe How Much?"

However, even a top-notch credit score can be shaken by divorce. For example if the credit accounts you shared with your spouse are closed but not fully paid in the event of divorce, you will have less credit available to you, but roughly the same balance that you had previously. So, your ratio of available credit can decrease relative to your outstanding debt, which can dent a pristine credit history.

If you don't want to end up in such a situation, try and settle whatever you might owe in common before divorce proceedings begin. However, that’s not an option in many cases, so a further alternative is to work with your ex to split up your balances equally. In this case, balance transfer credit cards may be a convenient method to shift existing debt into new accounts held under each ex-spouse’s name individually.

Financial House In Order: What's the best way(s) for people to ...

Welcome to our third edition of getting your Financial House in Order, Debt Reduction focus. This is an exciting series where we bring  you some of the best minds in personal finance on the Internet together in one place for your enlightenment.

For those that don’t know about about series, we post a question to personal finance professionals and have them all answer them in the space below. It is a terrific way to get multiple view points to very serious personal finance issues. You may be at a different place in your development, therefore, having more than one person answer the question increases the likihood that someone will speak to your current situation. Without further build up, let’s get into the question and content.

Financial House In Order: What’s the best way(s) for people to reduce their debt?

For those suffering from credit card debt, I think the very first step is to give up those rewards credit cards. For one, the enticement of cash back is probably encouraging you to use your credit card too much, when you should really be locking it in a drawer and focusing on paying it off. Additionally, rewards cards typically carry the highest APRs, so you’re accumulating unnecessary amounts of interest. Instead you should switch to a low APR, no annual fee credit card that will minimize the interest you end up paying. Or if you think you can get your debt paid off in a year or two, consider a 0% introductory APR balance transfer credit card that will allow you to avoid interest altogether for anywhere from 12 to 24 months. Just make sure you pay it off, otherwise the interest rate will jump much higher after the intro period!

Tim Chen blogs at NerdWallet , about consumer debt issues and low apr credit card offers .

There are three ways to start reducing your debt. 1) Cut back. Start recording every transaction that you make; every penny that goes in and out of your account and what it is spent on. Then go through this log and see if there are any areas where you can cut back or cut out. For example, if you eat out a lot, start trying to cook at home more. If you have a gym membership, see if you can work out at home using videos and minimal equipment. Instead of going out with friends to a club or restaurant, invite them over for some games and a visit.

2) Use the money that you save from cutting back and put it towards your debt, preferably the debt that has the highest interest rate. If you have consolidated your debts, use this money to make additional payments.