What Can I Do to Financially Prepare for Divorce?

• Try to Settle All Financial Issues

Find out what your rights and obligations are with regard to child support, or spousal support or both; and how the division of assets, and liabilities can be handled. These are all financial issues that must be resolved during divorce. Keep in mind that you may need help to work out a settlement that is fair and equitable for both parties. Consulting a divorce financial advisor is also a good idea. They can analyze your specific financial situation and give advice on ways to improve it that can be included in your settlement agreement. 

• Prepare a Budget

During divorce, you may have the same household expenses with a reduced income. Make a list of all your monthly expenses and track even the small ones. Then compare the list to your monthly income.  This can make it easier to decide what to cut back on.

• Control Your Debt

It’s important to keep debt at a minimum. It’s not a good idea to use credit cards to make required payments. Doing this may cause long-term financial problems, as well as difficulty in providing for your family.

• Continue Paying Your Bills

Arrange all bills from most to least important and continue paying as many as possible. Bills that are the most importance are mortgage or rent, real estate taxes, health insurance, essential utilities, credit cards, car loans, and income taxes.

• Secure Credit and Close Joint Bank Accounts

Having a good credit score will help make financial transactions easier. To protect your credit, and your money, close your joint bank accounts and credit cards. Identity theft is a concern, as those with access to Social Security numbers, credit cards, and other information can make unauthorized charges, obtain loans or commit tax fraud.

• Increase Your Credit Score

If you have a low credit score, it’s not impossible to repair it: Pay your bills on time, try to pay- off existing debt, and be extra careful with credit cards. If you have little or no credit, open a checking and saving account and apply for a credit card. When you consistently make payments and pay your bills on time, you can apply for an installment loan (for example: an auto loan, personal loan, or mortgage). This will usually raise your credit score.

• Plan for the Future

Think about your plans for the future. Do you need to stay in your present home?  Will you be able to afford it? How much have you saved for your retirement? Do you or your spouse have any marital investments to split?  Also, don’t be afraid to explore alternative career or job options. Doing this type of financial planning for your divorce can help make your transition to single life much easier.