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June 13, 2018
Unbiased Financial Information Provided by Financial Finesse
Divorce can be one of life's most stressful ordeals. Trying to make clear-headed, well-informed financial decisions while going through this very difficult time can be an overwhelming challenge. The good news is that divorce provides you with an opportunity to start over both emotionally and financially.
Below are a few tips to help you achieve financial security and independence after a divorce.
Protect and prepare yourself
In marriage, both partners often understand and work together on financial items like budgeting, filing taxes, making investments, and managing debt. Once it's clear that divorce is the final decision, you are going to want to take some basic first steps to prepare for life after divorce.
Work to Get a Fair Settlement
Divorce proceedings can be very painful. In the rush to "get it all over with" and move on with life, some people don't get everything they are due. Carefully consider the financial consequences of all decisions you make during divorce proceedings. Do not willingly give up what you have a right to receive, particularly if you have custody of your children. Their financial future depends on it!
Also, be careful about receiving too much of your settlement in property or investments you can't easily sell (also called "illiquid assets"). Your primary residence is an illiquid asset. This means it is not converted to cash easily. If you have too much in illiquid assets, you may find yourself without enough cash to live off of. Many times, people find themselves having to sell homes, cars, etc. in order to meet their ongoing expenses. And when you sell a house, there will be closing costs and possible tax implications.
Adjust Your Budget Based on Your Settlement
After making it through those first legal steps of the divorce, you will need to start preparing for your financial future. You may be taking on added expenses as a result of your divorce--or you may have additional income and assets. Here are some of the more common ones:
Keep meticulous records of everything having to do with your divorce. Make arrangements to pay any bills left over from the divorce or marriage and if you are receiving (or paying) any alimony or child support, keep copies of any checks you have paid or received. Make sure you have an accurate accounting of all payments either paid or received. If any payments are to be made through a wage garnishment or through the courts, keep all documentation and keep the employer and/or the court clerks advised of any address change.
Hang in there. In the long run, many people become wealthier after a divorce, once they are free to make financial decisions on their own. Consider this a time to start over financially--with a clean slate. And follow these tips. Years from now--when you've had time to recover--you'll be glad you made the right financial decisions.