The monetary effects of a divorce can be even more crippling than a downturn economy. While a poor market could lead to a financial loss of approximately 30 percent, divorce can clear out half of your assets. Even divorces where both parties agree to split everything down the middle can result in a loss of future income. But with the right strategies, you may be able to lessen the damage and turn your financial future around.
7 Financial Strategies to Consider When Going Through a Divorce
Divorce is a terrible thing. It’s difficult for both parties, even if you’re strongly for it. Divorce creates emotional strain, financial strain, and a mountain of new responsibilities to take care of. To help you through this process, take note (and take action) on the items below.
Implement a New Budget
You probably implemented a family budget based on two incomes for expenses, savings and to ensure you pay down debt you owe. But now that you’ll soon be single, you want to revise your financial planning. Assess your income and any expenses that you’ll be responsible for such as food, clothes, transportation, housing, insurance and child costs.
If there is any money left over, you’ll need to put in a savings account. The money saved can be used for emergencies. If you’re going to get a divorce settlement, a financial advisor can help you plan for a secure future.
Enlist the Assistance of the Experts
Divorce can be challenging, especially when you’re dealing with child custody and dividing assets. You can enlist the assistance of the experts with a simple click at http://harshbergerlaw.com/divorce-attorney/. A divorce attorney will be able to listen and guide you through the various steps of divorce. An attorney also can file the necessary paperwork and stand up for your financial rights. This ensures that you get your fair share of the settlement. Since divorce can cause emotional upheaval, you may need the assistance of other experts such as a therapist or counselor. Through regular sessions, you’ll be able to find assistance dealing with your emotions.
If you’ve decided to go through with a divorce, you’re going to need to get organized. You can help your divorce attorney by collecting important financial documents such as tax returns, banking statements, retirement account documentation and credit card statements. If you own a home, you’ll also want to have your dwelling professionally appraised to determine its current value. Although the most recent years of information are important, the courts may require you to go back as far as five years. This could also determine if your partner was funneling money well in advance of your filing. You may also want to recheck your tax returns for income that may be unfamiliar to you.
Review Your Credit Report
Going solo may sound scary for an individual who has been married. But you’re going to need to take a proactive approach to your finances. You can begin by pulling your credit report and reviewing it. Credit Karma is a great free resource for this.
To ensure that you’re not responsible for debt that was incurred during your marriage, you want to investigate the document for accounts or loans that you don’t recognize. Your attorney will help see that you’re not responsible for liability that isn’t yours before the divorce is finalized.
Establish Your Own Credit
Depending on the state of your finances, there are reasons your credit score drops after divorce. You can help reduce your credit score reduction by establishing your own credit. Begin by applying for a credit card in your name only. Use the cards for purchases that you have money for such as groceries, gas and other necessary items. But use the card wisely. You want to be able to pay the total off in full at the end of the month, so don’t rack up large sums of debt. Paying the card off in full also alleviates any interest charges.
Revise Account Beneficiaries and Estate Documents
Estate documents, wills and insurance beneficiaries may have been placed in your spouse’s name. You’ll want to change the names of the documents in case something happens to you. Instead of your ex getting your assets, you’ll want to have your children, parents or other family members replace them.
You’ll also need to update your power of attorney information as quickly as possible to ensure the right person is making health care decision for you if you become incapacitated for any reason.
Wait to Make Big Decisions
The end of a marriage is emotional, and you’re going to need time for it all to sink in. Before you move cross country and sell your dwelling, give yourself time to adjust. People going through a divorce tend to make rash decisions. If you want a bright financial future, you want to give your emotions time to heal. There are ways you can survive being frugal on a new budget without depriving yourself of living.
The emotional turmoil of a divorce may seem crippling, but it will eventually fade. To ensure you keep your financial head above water, you want to make smart decisions. The above strategies will help you protect what you currently have and prepare you for a monetary secure future.
I know it’s a tough time, but please take to heart the above financial strategies to consider when going through a divorce.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.