Protecting Your Financial Health Before, During, and After Divorce
When you get divorced, it's probably going to feel like every part of your life has been blown up, and picking up the pieces and putting them back together might seem impossible. However, you're going to want to make plans that will allow you to succeed as you move on from the end of your marriage, and one of the key parts of doing so is making sure you'll have the financial means to provide for yourself and your children.
Financial Preparations for Divorce
As you prepare for divorce, you'll want to gain a full understanding of your family's finances, including the income you and your spouse earn and the assets you own, including your house, your cars, or other valuable items. You'll also want to document all of the debts that you owe, such as your home mortgage, balances on credit cards, student loans, auto loans, or any other liabilities.
The divorce process isn't cheap, so you'll want to make sure you're ready before taking this drastic step. When hiring a divorce lawyer, you'll most likely need to put down a retainer of several thousand dollars, so setting some money aside in preparation for this expense is a good idea. Of course, if your spouse has already filed for divorce, you won't have this option, so you may need to scramble to gather the necessary funds, or your only option may be to pay attorney's fees using a credit card. Some attorneys do offer financing options and monthly billing.
Maintaining Stability During Divorce
As you proceed with the divorce process, you'll need to begin separating your finances from your ex. Rather than depositing your paychecks in a joint account, you may want to open your own separate account, and this will allow you to begin managing your monthly income and expenses. However, to help maintain stability for you, your ex, and your kids, temporary court orders may be issued that will require you to pay a certain portion of your income to your ex, or you may be required to pay certain expenses related to your children or your home.
As you work through the process of dividing your marital property, you'll want to be sure to understand how the decisions you make will impact your finances in the years to come. For example, you and your ex may each plan to keep the car you primarily drive. However, one car may have a significant loan that still needs to be paid, while the other car may have been fully paid off, or one spouse's car may be several years old and may need to be replaced soon. In addition to determining how to divide assets in a way that addresses any difference in value between vehicles, a person's name may need to be taken off of the loan for their ex-spouse's vehicle, ensuring that their credit will not be affected if their former partner defaults on the loan payments.
You'll also want to understand how decisions about your family home will affect your ongoing finances. If you wish to keep the home, you'll need to be sure you can afford the ongoing mortgage payments, as well as the costs of utilities, upkeep, and property taxes. If you're planning to move out, you might want to wait to do so until the divorce has been finalized and the final decisions about the home have been made. You'll want to make sure to obtain documentation that releases you from the mortgage. If your name remains on the home's title or the mortgage, this could not only impact your credit, but it could affect your ability to qualify for a new mortgage in the future.
Since the financial decisions you make during your divorce can have far-reaching consequences that may affect you years or even decades in the future, it's crucial to work with an attorney during this process. Your lawyer can help identify any issues that could cause problems down the road, and they can ensure you meet all of the requirements for separating your finances from your spouse, allowing you to get a fresh start.
Planning for Success After Divorce
As you begin your post-divorce life, you'll want to create a budget that will allow you to provide for yourself and your children. Make sure to document all sources of income and all possible expenses, including child support and/or spousal support. If it looks like you might struggle to cover your ongoing costs, you should look at where you can cut back and save some money, such as cooking meals at home rather than going out to eat. While you might feel like you should spend money on your kids to ensure they are happy when they are with you, quality time is often better than lavish presents or expensive activities. Finding fun, low-cost things to do together can ultimately improve your relationship, and maintaining financial security will help you avoid stress and allow you to be the best dad you can be.
