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Budgeting and Credit Management — Part V
Creating a working budget is an important step in managing this difficult change and taking control of your family’s finances. It is important to understand that most of your household income and expenses will now change, and there may be additions like insurance premiums or daycare and the potential loss of a significant income. Your budget will have to make adjustments to accommodate them in order to avoid serious consequences.
- Roughly 80 percent of widows living in poverty were not poor before their husbands died.
Include an emergency fund in your budget. As a rule of thumb, most experts recommend a reserve of anywhere from six months to a year of living expenses. However much you decide to set aside, be sure that this fund is 100 percent liquid and readily convertible to cash. A money market account or certificate of deposit will work and pay slightly more interest than a bank savings account.
HerTip: If the loss of your spouse’s income is significant, you may want to consider financial aid for covering education costs if they become unmanageable.
Credit Managemen
Credit management is another serious concern for new widows. If you are like many women, you may have had the bulk of your credit cards either in your spouse’s name or held as joint accounts. You will simply need to change the name on any joint credit cards to yours alone — you do not need to go through the process of applying for a new, separate individual account. If on the other hand your spouse held cards in his name only, you will need to cancel them right away.
What’s more, if you and your spouse have any outstanding loans, you will need to review them carefully and be sure that payments are all current and manageable going forward.
To confirm outstanding debts and their personal credit information, be sure to contact one of the major credit reporting agencies to get a copy of your spouse’s credit report.
- Experian – 1-888-397-3742; www.experian.com
- Equifax – 1-800-997-2493; www.equifax.com
- TransUnion — 1-800-888-4213; www.transunion.com
If the credit agencies have not already been notified, send in a copy of the death certificate. Once the file has been updated, your spouse’s name will no longer be on the list of people receiving pre-screened and pre-approved credit card offers and can greatly reduce your exposure to fraud.
HerTip: You should also contact the Mail Preference Service and ask that your spouse’s name be removed from mailing lists. You certainly do not need to continue to receive this kind of correspondence. They can be reached by mail at the following address:
The Direct Marketing Association
P.O. Box 9008
Farmingdale, NY 11735
Continue to: Widowhood VI: Investing