Getting a Divorce? 5 Ways to Ensure It’s Not a Financial Disaster

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Divorce and Money

Divorce and Money

By: Raine Parker

Although we never like to think or talk about it, divorce is an all too common occurrence to which no marriage is immune. If you are considering a divorce or are currently going through with one, emotions are probably running high and out-of-control. Of course, divorce is a devastating experience, but approaching it as level-headedly as possible will ensure that you don’t make mistakes that could spell doom for your financial future. Here are a few tips:

1. Make a realistic budget and determine how your standard of living will change and what you can do to adjust to these changes.

It’s pretty much unavoidable if you are getting a divorce and living separately – two households are more costly to maintain than one. As such, your standard of living will likely be negatively impacted after the divorce. If you aren’t used to working with a budget planner, work with a financial planner who specializes in divorce to determine how you will live afterwards and what you can do to close that standard of living gap, whether it’s getting a higher paying job, selling assets, or moving in with a roommate.

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2. Close all joint bank accounts before the divorce and begin opening separate ones.

It’s important to close joint bank and credit accounts before your divorce is finalized since it helps avoid sharing debt unnecessarily. You’ll still have to pay off anything left in the joint account once it’s closed, but the sooner you close the shared account, the better off you’ll be protecting your assets in the end. Also, opening separate accounts while the divorce is still in the process of being finalized is advisable, especially for those who haven’t had to build credit on their own.

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3. Check your credit report before the divorce.

It’s important to check your credit report from all three credit reporting agencies before you begin divorce proceedings or while you are in the process of getting one. This is simply because if there are any mistakes or disputes, you’ll want to settle them before the divorce is finalized to avoid any headaches or hassles later on.

4. Sell your house and other valuable items or property if it’s financially prudent.

It’s very common for women to want to hold on to the house for emotional reasons. However, if it’s not financially feasible, if you’ll struggle to make payments or are persuaded to keep the house in exchange for something else more pragmatic like retirement savings, think with your head and not with your heart. This goes, too, for any other assets that have substantial financial value. While this is easier said than done, you don’t want to be in a position where you’ll be ruining your financial future simply because you can’t let go.

5. Be fair. Compromising instead of arguing could save you thousands in legal fees.

Figuring out all the financial details during a divorce is complicated enough. When you have substantial animosity toward your spouse, you may duke it out in court, racking up thousands of dollars in legal fees. If you can settle matters privately, it’s best to take this route, or else you’ll end up with way more debt and money worries than it’s worth. Also, try to be fair to your spouse. As much as you may initially want to turn a divorce into an all out war, the financial consequences for your spouse could be crippling, leaving you with a sense of life-long guilt that will be difficult to reconcile later down the road, especially if children are involved.

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Divorce should always be a final recourse, not only because it’s costly but because it’s emotionally taxing as well. Still, divorce can sometimes be the best or most feasible option for all involved. If you try your best to be wise, educating yourself about the future consequences, both material and emotional, you’ll come out of the whole ordeal with secure finances and a new lease on life. For more information on divorce and money, be sure to check out this book: “Divorce and Money: How to Make the Best Financial Decisions During Divorce.

This guest post was contributed by Raine Parker, who writes on the topics of accounting degree.  She welcomes your comments at her email: raine.parker6@gmail.com.

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