Divorce can leave you feeling spent— both emotionally and financially. Typically, married couples co-mingle their money, assets, and investments. For many, the process of unwinding that financial bond can become complicated and painful. Disagreements about money are one of the most common reasons why couples split, which is why you want to make sure you protect your finances before filing for divorce.
Pay your Bills
Both spouses must decide what bills need to get paid and agree on who will pay them. These bills may include monthly expenses you share such as utilities, car payments, the mortgage, or rent. Whoever paid these bills before should continue paying them until the divorce is finalized. If your name is on a bill, you should continue to pay it to avoid collections or a hit to your credit score.
You will want to create a budget and start to prepare financially for a potential lifestyle change after your divorce. Learn to live within your means by examining your spending habits and try to increase your savings. Figure out your living arrangements. Will you stay in the family home or do you need to move out? Financial advisors suggest tracking your expenses for a few months before you file for divorce. You should save copies of important documents such as mortgage payments, investment accounts, and any other assets.
Monitor your Credit
If you and your spouse have joint accounts and credit cards, their spending habits can affect your credit standing. It’s a good idea to know your credit score before you embark on divorce so that you can account for any changes that may occur as a result of your spouse’s actions. You can request a free credit report at Annual Credit Report.com and because of the COVID-19 crisis, all three credit bureaus are offering free weekly reports through April 2021 to help people financially impacted by the pandemic.
Open a Bank Account
It’s a good idea to open a separate checking account that gives you access to money without the fear of being locked out of a joint account by a disgruntled spouse. You will want to set up any direct deposit for recurring payments into that account. Having control of your finances will provide you with peace of mind.
Deal with Debt
Divorce is costly and you will need to figure out how to pay legal bills and other expenses associated with ending your marriage. Be proactive about creating a plan to deal with paying your debt. You may want to refinance any existing debt or take out a personal loan to cover costs and get back on track financially. Cut unnecessary expenses and small luxuries for the short term until you have paid off creditors and have spare cash available.
Ask for Help
It can feel overwhelming as you embark on this journey towards ending one chapter of your life and beginning another. If you aren’t sure where to start, you may want to reach out to a financial advisor who can help you develop a post-divorce financial plan. A family law attorney can help you recover unpaid child support if your ex is not paying and assist with preparing financial disclosure documents. There are resources available to help get you on the right financial footing that will make the transition smoother.
by Debra Schoenberg