139 – Rebuilding After Divorce: A Financial Guide for Single Moms

Wayne Kay 00:04
Rebuilding after divorce, a financial guide for single moms. That’s our topic today on the Debt Matters podcast, where we help Canadians find solutions to their debt with licensed insolvency trustees from across Canada. I’m Wayne K. And in today’s show, we’re going to talk about how do you even start the rebuilding process? Who can you talk to that is trustworthy, and why is it important to take these steps to rebuild?

To help us out with this and more, Derek Chase is joining me from Chase & Associates Licensed Insolvency Trustee serving Vancouver island and the Sunshine Coast, BC. Derek, thanks for being on the show today.

Derek Chase 00:45
Oh, hi, Wayne. It’s my pleasure to be here today.

Wayne Kay 00:47
And we’ve got a heck of a topic to be diving into because this affects a lot of Canadians. What are the stats? Have we seen any stats on what divorce is these days in our country?

Derek Chase 01:00
Well, the last I saw, it affected up to 40% of marriages. But, I mean, that’s just an anecdotal stat. I don’t know the true one.

But in addition to that, I think a person could be a single mom if they’re all of a sudden a widow. I mean, that’s another angle there that plays into this. But nevertheless, when all of a sudden you’re a single mom, regardless of the cause of that, the finances get really tricky really fast.

Wayne Kay 01:30
Yeah, I can just imagine. Either way, it’s such a shock to the system that you.

I would think you almost. You put everything on cruise control and a lot of things would just fall by the wayside.

Derek Chase 01:42
Yeah, there’s no doubt about it. I mean, relationship changes are one of the biggest causes of financial difficulty right across Canada. So we see a fair amount of that.

And you’re correct. I think initially, someone’s in shock, and there’s all those emotions that are swirling of anger and betrayal and despair, and it’s a real tough spot for a person to be in. And then all of a sudden, you’ve got kids to deal with and finances, and, you know, what do you do? Where do you go? What are steps that you can take? So I’m glad we have a chance to talk about this today.

Wayne Kay 02:25
Okay, well, why don’t we dive right in? What is the first thing you do to start rebuilding?

Derek Chase 02:31
Yeah, I think this is similar to the time we had a chance to talk about financial literacy. Whenever you’re on the edge of this journey, it really starts with that decision to that, hey, I’m going to do this.

Like, I’m going to accomplish this. I can do it. I need to. You might need to, you know, find some grit and some determination. But when you start rebuilding, you have to make that decision that you’re going to do it and you’re going to put some energy behind it.

And I think that’s the very first spot. And then once you’ve made that mental choice, then you start putting in some of the practical things. And just like every, just about every podcast or article that I’ve seen on finances, you’re going to next start with making an inventory of your assets and your liabilities. You write things down, you’re going to write down your budget. You’re going to get a clear picture of where you are now. That’s how you start rebuilding.

Wayne Kay 03:34
And it doesn’t matter how horrible it is, right? The more honest, the better.

Derek Chase 03:38
Oh, yeah. You need all the facts. You know, you can’t run around making choices without the facts. It’s, if you’re doing that, you’re trying to find something in the dark, you know, you just. It’s not going to be good. And so you’ve got your decision, and then you’ve got your facts, and that’s where you start from.

Wayne Kay 03:56
Okay, so all of a sudden, you start with the list. Assets, liabilities, you write it all out, and then all of a sudden you realize, uh oh, this isn’t good. Because during the time when, you know, I was ignoring things, also debt started growing. And this is often a problem. In fact, correct me if I’m wrong, is marital changes not like, right up there on the insolvency list of, like, the top three things that happen.

Derek Chase 04:25
That’s correct. And not just marital, but any relationship change can cause a person’s finances to go topsy turvy.

Wayne Kay 04:32
Okay. All right. So then all of a sudden, we’re like, okay, we’ve got our list. Now, who do you find?

Somebody that’s trustworthy. How do you go about finding that?

Derek Chase 04:43
Yeah, I think that’s a good next step, is to find people that you can talk with and discuss your situation and have them speak into your life. And then the question really becomes, who can I trust? Who can do that?

And I think people’s first thoughts go to their friends and their family, which is, is quite normal, especially if you’ve got a good friend that you’re willing to sort of open up to, which I think is really healthy. But I also think people should try to get into this circle of trustworthiness, some people that have some formal training, and even if you’re not actually paying them money. Lots of people, I think, who do have training about finances are willing to help. They’re willing to comment on your situation and at least steer you in the right direction. So i’m thinking a person like an accountant, perhaps an investment advisor or maybe even a lawyer, if you’ve got those sorts of folks that you can tap into, its a good thing.

And then, of course, if you’re in a situation where you’re dealing with debt, which a lot of people going through relationship changes or divorce do have, I would highly recommend someone like myself who’s a licensed insolvency trustee because we’ll give you some good information about what your situation looks like and important next steps and practical things to do. So there’s people to search out for and get that info before you make any big decisions.

Wayne Kay 06:25
When you make the phone call to them, how do you set it up? Like, what do you say to get them to maybe say yes to helping?

Derek Chase 06:33
Yeah, I think that depends if you’re on the track to be paying somebody or if it’s just more informally. You know, a friend of a friend has got this training. So lots of times professionals will give a free half an hour to talk to you. And I know that we certainly do that at our office. And it’s just about asking questions and getting info, especially if this is something for that person that’s coming out of the relationship that’s never handled funds before, that just wasn’t their part of the relationship. You just need to build your financial literacy, and I could refer people to that podcast to figure out how to do that.

But a part of that is having these mentors or people that can speak into your life that you can trust because you do want to have that screen of you don’t want to be sharing or trusting just anybody because you could get abused that way again. So there is some safeguards required there, and professionals have that built into their training.

Wayne Kay 07:45
Right. And I’m thinking you want to check in with more than one, if you can. When you mention financial advisors, I know, like right, right here around our block, I’ve got a few different ones and, and, you know, maybe each one has a little different ideas. So you want to go and shop to find the right person who you can kind of connect with.

Derek Chase 08:06
Yep. And that’s, again, getting a reference from someone else who might have used them or, uh, depending on, you know, where you are in your investment journey. It could be just starting with your, where you’re banking at. Um, or again, it just could be talking about general finances and general wisdom about what to do with different financial questions. It doesn’t necessarily have to mean investing.

Wayne Kay 08:36
It can be the day to day life information that you need. Right. That will lead to the investing when that time is right. But at this point, we’re just trying to get everybody up into the life raft, if you will.

They’re starting to rebuild. It’s important to rebuild. Why? Instead of just coasting along with maybe how they’re going.

Derek Chase 09:00
Yeah, I think the why question is always a good question. And why do it? Certainly if you do make this decision, put the energy in, build your network and your financial literacy, you know, what that’s leading to? You know, why do that? It’s leading to a more secure future. You know, it’s leading to a spot where you’re not always on the edge every month of your, of your income versus your expenses.

And I think perhaps probably a bigger, more intergenerational aspect to this is along this way, you’re going to learn things and you’re going to have a chance to teach that to your kids. So we, in our days talking with people, it’s quite common to have them comment that nobody ever talked to me about these things, I never learned these things in school, just that lack of exposure to talking about basic financial matters. You can turn this in a way, making lemonade out of lemons or whatever that particular saying is. You have a chance to teach your kids about some of these choices. And that in itself is a good reason as to why to do this.

Wayne Kay 10:22
Let’s talk about the future of banking. What does that look like when somebody has gone through this situation? How does it change for them?

Derek Chase 10:30
Yeah, I think banking is a very important thing to consider when you’re rebuilding after a relationship change or divorce. We strongly recommend that people open up new bank accounts at a new financial institution.

A new bank account gives you somewhere that’s fresh and clean and you don’t want to have any debt at this new bank and a new account. A new bank. That way you’re not going to have any surprises. As a single mom, you know, you’re not going to have some creditor just dipping into the bank account and taking money when you least expect it. And now you can’t pay your rent because they don’t know about this new bank account, they know about the old bank account.

And you’re also not going to run into any problems with your spouse, your ex spouse, who’s all of a sudden, at least they’re not going to be able to access the new accounts. You hopefully aren’t co signed on them with your old bank account, but that’s a whole other matter. But having a new bank account gives you the peace of mind to know that the money that you deposit there will be there in the morning. And I think that’s an important piece to rebuilding, is having the confidence to know that you’re in control. You’re in control of that deposit and where it’s going to go, and nobody’s going to force your hand.

Wayne Kay 12:00
I love that. I like that you’re making that split all the way. You’re saying, okay, I’m getting. I’m starting new. And you literally are starting new.

Even with your banking, your credit cards. Now, a lot of times, primary credit card is in one person’s name, and that can cause problems as well. And I just learned about that recently, the importance of making sure that both in a relationship have their own credit cards.

Derek Chase 12:28
Yeah. You want to, again, to have that control and not be swept along with the other person’s decisions or have them be able to put something on an account that you’re all of a sudden liable for. So it’s good to have that fresh banking start.

Wayne Kay 12:46
we’re going through this really quick. We’re diving through this, going through the rebuilding, finding somebody trustworthy. Why it’s important. Important your future banking, what that looks like, what’s next after this, in the entire process?

Derek Chase 13:01
Yeah, well, I think there’s two possible scenarios there. Like, if you’re able to take these steps and your situation is okay, you’re not really being pressured by collectors or you’re having too much debt. If you’re okay in this setting, then what’s next is really time. You know, you need to keep making good decision after good decision after good decision financially, and that time needs to elapse before you can build some financial momentum, building some savings. It just.

It’s not going to happen next week. It’s probably going to take months, if not years to make it happen. So you just have to be patient and stay the course and continue to increase your financial literacy, continue to increase your savings, even if it’s just by the smallest of amounts. And if that’s the case, then you have to be patient and time has to go by. The other scenario is if you’ve done these things and you’re looking at your numbers and your inventory, of your assets versus your debts, and you’re like, oh, my gosh, this is scary.

And maybe you’re getting collection pressure and the phone’s ringing and it’s not working. Well, what’s next is you better pick up the phone or send an email to an lit to get some information about what federal options are available. And that would include getting protection from your debts through either a consumer proposal, which is a fantastic way to consolidate debts, or perhaps with the federal bankruptcy laws, which can be, although that sounds daunting, it can be a very practical way to get that fresh start, much like having a new bank account. So it’s good to know that those are there. And if you can get to the point where you can see whether you just need some more time because things are going good or okay, or you get to the point where you recognize that I’m just getting a little bit more in debt every month, then you need to put the brakes to that. And that’s by talking to a trustee office.

Wayne Kay 15:29
Yeah. Great advice. And if somebody’s listening and they’re nodding to this and they’re saying, I like what Derek’s saying. There’s always the free consultation that you offer as well, you and your team, and they can book that through the website. bankruptcytrusteebc.ca Derek, any final words you want to share with us?

Derek Chase 15:50
Oh, I think that’s really good. I think there’s, there’s life to be lived and it’s just a matter of getting some pieces in place and, people can do it.

Wayne Kay 15:59
I like it. Some encouragement. I appreciate your time. Derek, thanks very much for being on the show.

Derek Chase 16:05
It’s been great. Wayne, thanks a lot.

Wayne Kay 16:08
My guest today, Derek Chase. You can learn more or schedule that free consultation with Chase & Associates Licensed Insolvency Trustee through their website bankruptcytrusteebc.ca and that’s it for today’s Debt Matters podcast. Make sure you subscribe wherever you get your favorite podcast from. And of course, for more information, you can always check out debtmatters.ca

Thanks for listening.