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Did a Surprise Blow Your Budget? How to Move Forward and Get Back on Financial Track

No matter how earnest your efforts to ride down debt and build savings, life has a way of bucking you off the saddle. 

Beware of your emotions

Big changes like the loss of a job or marriage are emotional earthquakes followed by a potentially more devastating financial tsunami. One common problem in divorce settlements: To avoid having to move out of a beloved home, a partner takes property over a bigger slice of retirement savings. That can create a “house rich, cash poor” scenario that spells trouble.

“Poor planning in splitting the assets in a divorce can create hardship for one party – and often it’s the woman with the emotional attachment to the family home,” says Lorraine Ell, CEO of Better Money Decisions, LLC, an Albuquerque, New Mexico-based fee-only financial planner.

A 56-year-old Phoenix woman who kept her house in a divorce came to Ell’s firm, overwhelmed by upkeep and mortgage costs. “Fortunately, the home had $500,000 in equity, so the answer was obvious – sell the house, get a smaller place and invest the rest,” Ell says. “She just needed help to get there.”

Make a plan, celebrate wins

Often, the emotional impact of the financial loss “is far greater than the actual loss of cash,” Ell says. Rebuilding morale with a new reality – and a new financial plan – is crucial.

“You have to know and accept what is happening, and understand there are more important things than money,” Ell says. “Then construct a financial plan to get back to some semblance of normal. That’s easier said than done because often that means working more, downsizing and reducing your lifestyle.”

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About the Author

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Lorraine Ell

CEO and Senior Financial Advisor

Lorraine is the CEO of Better Money Decisions (B$D) and co-author of the blog Better Financial Decisions. As a principal of B$D, she is excited to continue her long career as an investment professional which started when she worked in the 1980s as an advisor with Drexel, Burnham and Lambert and J.W. Charles and as co-owner of a Registered Investment Advisory firm.

Living and working in places as diverse as Jeddah, Saudi Arabia, and Budapest, Hungary has given her a unique perspective on the world of investing. Through these experiences she has learned that life can change in an instant and having a financial guide can make all the difference between a retirement fraught with worry and one with peace of mind.

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