Divorce is a difficult process to go through on a psychological and emotional level, but it can also be a financially draining process. Whether a separation comes out of the blue, or a couple comes to the arrangement together, several steps need to be taken to get the financial separation underway. We spoke with a number of financial and relationship experts to learn the essential steps to take when dealing with breakups and finances.
Establish your own accounts.
If you find yourself newly single, Ilene Davis, CFP advises establishing your own banking and credit card accounts, especially if you were previously using joint accounts. It’s important to begin establishing credit on your own again and depositing your income in your own account. But, she warns, if there are still joint bills that need to be paid, “make sure money is available to pay mortgage, insurances, utilities, etc.”
Budget, budget, budget.
It might be the last thing on your mind, but it’s important to start creating a budget. “Start compiling your personal budget needs carefully and accurately,” Financial advisor Rosemary Frank explains. Christian Denmon continues, “One of the parties will likely be moving into a new place, and expenses will be high.” Create a budget now to help you adjust to loss of one income and the addition of new unexpected expenses, like moving costs.
Get professional help.
Don’t be afraid to get professional help to help you sort out the details, and don’t be afraid to ask questions. Relationship coach Toni Coleman explains, “Make a list of ANY financial questions or concerns you have that you can bring to your lawyer. Too often folks will overlook something that is not addressed and it leaves a big problem. One such situation that I have seen repeatedly is when one person gets the house but both are still on the mortgage. The other person no longer has any ownership, but is on the hook for the debt.”
Revise your beneficiaries.
“Don’t forget to change beneficiaries on retirement plans, insurance policies and other legal agreements,” Tina B. Tessina reminds readers.
Keep track of your financial docs.
Before moving out, make sure that you gather essential documents for your records. Christian Denmon of Denmon & Denmon advises, “If you have access to the documents now, be sure to gather them, make copies, and preserve the financial records.” You’ll want to hold on to these documents for your own records anyway, so be sure to make copies, or obtain the originals before the moving-out process begins.
Remember, you might have to make sacrifices.
While adjusting to one income, you’ll probably have to make sacrifices here and there. “Your standard of living is negotiable,” Gary Polmateer of Red Argyle reminds us. “You just might have to forgo dining out for a few months. It’s okay and you’ll get over it. No one’s going to judge you.”
If you find yourself struggling to make ends meet after adjusting to one income, it could be time to hold a yard sale. “I sold anything I could to avoid going into debt,” Gary Polmateer details. “I sold tools, collectibles, and even did some odd jobs to avoid having to borrow. The few extra thousand I was able to fundraise was a few thousand less debt I carried after.”