The old joke that the only people who win in a divorce are the lawyers doesn’t have to be true. There are some simple yet important steps that you can take to ensure that you weather and recover from a divorce in a quick and painless manner. This is another example of the fact that in finances, the most important thing is a little planning and some hard work. After a divorce, one of the most frustrating aspects is rebounding financially. Fortunately, with some research and hard-earned common sense most people can not only recover financially from a divorce, but end up better off than when they were married. Here are five of the bet tips for weathering a divorce.
Make a realistic budget, and be sure to include and of your needs, and some of your wants. The realities of suddenly supporting a two household existence can sneak up on some people who are going through a divorce, but it doesn’t have to be that way. Some expenses will inevitably double, like you cable bill, and potentially you cell phone bill, but if you build a thoughtful budget, you will be able to start your new life with your eyes wide open.
Separate everything from your former spouse. This is especially important for liquid assets, such as joint credit cards, savings accounts. There are three key reasons that this needs to be a priority. First, you don’t want a soon-to-be ex draining the account, secondly you might be held responsible for any liabilities such as run up credit card bills, and thirdly, it will protect your credit rating. Going through a divorce is financially draining enough, but you don’t want to damage your credit rating as well.
It’s important to take a lesson from the recent economic woes in Europe and remember that austerity isn’t the answer to everything. If you are headed for a cash flow crunch, then cutting down on expenses is a useful tool. However, if you are going to be adjusting to a post-divorce life with substantially less money, then it is going to be hard to save your way out of trouble. The silver lining here is that there is no shortage of ways that you can earn a little more money in the current economy. Think about your hobbies and see if you can turn one into a part time job. If you enjoy crafts, open up a store on Etsy. If you like kids, spend some time babysitting. If you play an instrument, give lessons. If you enjoy gardening, you can sell some vegetables at a farmers market, or get a part time job at a nursery.
Conduct an asset spring cleaning. Divorce is an event that can facilitate an emotional and even a spiritual transformation, and it can be useful and cathartic to do the same thing with your ‘stuff’. There are some obvious items that can be donated or sold, especially if you are selling your house; but there are some other assets, like you wedding dress that you might want to donate to a charity that helps low income brides afford a dream wedding. You might want to look into selling your diamond ring as well. Getting rid of excess or unneeded things can be extremely cathartic, and profitable as well!
Finally, and perhaps most importantly, take ownership of your financial situation. If you took the time to create a thoughtful budget, which largely has to do with expenses, then do the same for your assets. Understand the value of your house. Perhaps there are some weekend projects that you can do to increase the value of your home before you sell it. Research and understand any retirement accounts, brokerage accounts and savings account that you have. Things can become exceedingly complicated, especially around retirement accounts from previous jobs, but in the long run you will have much more piece of mind and a lot more confidence if you understand and maximize the potential of these accounts. The best way to get started on this task is to create a personal balance sheet, listing all of your assets, and any liabilities you might have.
Divorce can be challenging, but it doesn’t have to be ruinous. Take control of your financial life, and you can weather and rebound from divorce quickly, and potentially even profitably!
Julia Lawrence thoroughly enjoys spending time researching and writing about diamonds, jewelry and pop culture! When she isn’t hard at work writing blog posts for The Diamond Lining, she spends her time wither with an absolutely adorable Mini Golden Retriever: Jake, and her husband: Mr. Julia Lawrence.