As couples try to support two households on the same income that used to support one, finances become critical.
Follow these tips during the decision-making process, you help ensure financial viability after the divorce.
Capture financial information. Often one spouse knows more about the family finances than the other. Even more often, neither knows much. Gather the data into one place for handy reference and to understand the big picture.
- Bank accounts: savings, checking, money markets,
- Debts: mortgage, second mortgage, car, student, family, credit cards,
- Investments: IRAs, 401Ks, stocks, bonds, pensions
- Wills, trusts
Create a budget. Detail your financial picture so you know the income you need to be viable. Go to sites like Google docs, www.spreadsheet123.com, Excel Templates, Budgets, daveramsey.com, or others for details budgeting templates. These ensure you track the range of expenses people often forget but must allot.
Also create a list of items you will need to purchase to set up house. Whether you remain in the current property or head to a new place, you will need to replace what the other person takes. You don’t have to get everything at once. But, a realistic picture ensures you make decisions from knowledge not guessing. This helps ensure viability post-divorce.
Concentrate on the future. Making good decisions in divorce requires an eye to the future. While many “just want out,” that focus can create years of unnecessary hardship. To avoid:
- Access your credit scores. Good credit scores open options for moving ahead solo.Whether getting one spouse off a mortgage or allowing another to get a loan for continuing education, credit matters. The best deals go to those with higher scores.
Take advantage of free credit reports to assess your credit. Check reports for mistakes or items to clear away to increase scores. Also, make sure you have credit in your own name, especially important for stay-at-home parents who might need to establish individual credit. Shop for a low-interest credit card and be sure to pay in full by deadline.
- Find a financial advisor. Remember that plumbing job you did on your own? The one it cost hundreds of dollars for the plumber to fix? Some issues require expertise. Property settlements are final. If you find yourself floundering 3 years post-divorce because you didn’t take the pension share or ask for education money to start a career, you can’t go back. A financial adviser listens to your goals and helps you create financial priorities. He then assesses how the shared resources can be used to accomplish those. This become a financial road map for negotiations. A few hundred dollars now can create long-term stability.
Be sure to find an adviser licensed in your state, critical for accurate decisions. Then, ask yourself, “Is he empathetic? Does she truly listen?” You want someone using their expertise to protect your interests in this process.
The decisions you make during divorce will shape your financial future for decades. Gather information. Understand your priorities. Create a plan. This will help ensure you move into the next phase from a position of strength. Ready to begin a new life.
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