Going through a divorce can be
a very rough time for the people involved. There are many ways that
your life will change after divorce, financial being but one of them.
And unless you have a solid prenuptial agreement that gives you a high
settlement, your lifestyle will surely not change for the better.
However, by taking control of your financial life, you can ensure that
you get through a divorce without too much heartache in your pocketbook
at the very least. Here's some advice below.
Financial Planning During A
Divorce:
1. Division of property:
Different states have
different laws regarding division of property during a divorce. Know
the laws in your state and then decide whether you’ll be financially
better off by keeping some property or selling it off. The amount of
money that is exempt from capital gains tax is much higher for married
couples that single individuals. Thus, you may end up with more money
if you sell off property before being divorced.
2. Child support and
alimony:
If you have custody of your
children then you may be entitled to child support as well as alimony
(spousal support). If possible, try to reach an amicable settlement
with your spouse without involving the court. This way you can save a
lot of money on lawyers and court fees. If you do need the services of
a lawyer and are strapped for cash, try and look for someone who does
pro bono work and will be able to help you. Make sure that you know all
your rights during the divorce so that you can get everything that you
are entitled to.
3. Credit rating:
Your credit rating can take a
hard hit during a divorce, especially if it is a nasty one. With a
lower credit score, you will find it very hard to get credit on good
terms, which may add to your financial hardships. Thus, maintaining a
good credit standing should be top priority. Here’s how you can ensure
that:
-
If you and your spouse
have any joint accounts or credit cards, either close them or get
them separated. If you don’t do this, then your credit score will
take a beating if your spouse defaults on any payments.
-
Scrutinize your credit
report and ensure that all the accounts listed in your file are
indeed yours. If there are any errors, take steps to get them
corrected or removed immediately.
4. Work situation:
If both spouses were working
before the divorce, it will be easier for you to get by financially as
you will still be earning a salary. However, you will have to get used
to managing on a single income as opposed to before the divorce. Thus,
you should create a personal budget (made easier by using our free
personal budgeting software) and see where all you can cut costs. If
possible, try and find some avenues to increase your income by taking a
part time job or increasing your work hours. Having a garage sale and
yard sales are still great ways to make some money. You can sell off
all the stuff that may represent less than fond memories of former your
spouse and make good money by doing so.
5. Qualified domestic
relations order (QDRO):
This is an order that entitles
you to a share in your spouse’s pension, if such pension qualifies for
equal distribution. Thus, if your spouse is receiving any pension, you
should find out if you are entitled to a share in it and then get the
QDRO order from the court.
Thus, by proper financial
planning, creating a personal budget and saving money wherever possible,
you can get through a divorce, at least with your finances intact.