Along with the emotional upheaval of a divorce, a relational split comes with massive financial disadvantages. Even wealthy couples often struggle to get their finances in order after a divorce. Those living on more limited assets and income may find it extremely challenging to get established and live comfortably.
However, this time does pass. It is only a transitory period, and with the right tips, you can get your finances back under control. For more personalized assistance with your divorce, call Olmstead & Olmstead at 703-361-1555.
Catalog Your Debts and Assets
It’s important to know exactly what you’re working with as you begin the next chapter of your life. Your divorce agreement should explicitly spell out which assets and debts you keep, as well as which ones remain with your ex-spouse.
Go through and make a comprehensive list of those that you keep, adding information like value, remaining debt, monthly payments, and so on. The assets list will give you a good understanding of your net worth, and your debts list will let you know what type of monthly payments you’ll need to make.
You may also want to make a list of debts that your ex-spouse is supposed to take over. If they stop payments before taking your name off the debt, your credit could be harmed and you’ll need to take them back to court.
Close Old Accounts and Open New Ones
Ensure that all joint accounts, including checking, savings, and credit, are closed. Create your own accounts that are solely in your name. Technically, you can stay at your current bank, but many choose to start over at a new bank. This is because smooth-talking ex-spouses have been known to talk their way into accessing a new account by targeting inexperienced tellers or tellers who know you two as a couple. Starting over at a new bank prevents this from happening.
Check the Beneficiaries on Your Accounts
Retirement accounts, bank accounts, and life insurance policies all have named beneficiaries. Make sure you switch these over so that your ex-spouse doesn’t inadvertently end up owning your assets when you pass. In fact, you may want to make this part of a complete overhaul of your estate plan.
It’s important to review your estate plan after any major life change, and divorce certainly counts as one of those. You’ll want to make sure that you are providing for your children and family members, rather than your ex-spouse.
Create a Thorough Budget
This is easily one of the most important things you can do after a divorce. Whether you are going from a two-income household to one or learning how to live off of alimony, you need to know your limits so you can reach your financial goals.
Start with the list of debts you created earlier and add categories for everything else you spend money on in a month. Tally up your sources of income. When estimating, estimate your debts a little higher than you expect and estimate your income a little lower than you expect. This should give you a little bit of wiggle room. Don’t forget to budget for retirement, emergency funds, and long-term savings.
Keep an Eye on Your Credit
You may think that your ex-spouse can’t do anything to your credit now that you are divorced. Unfortunately, a fair number of people have been shocked to find their ex-spouse taking out lines of credit in their name or running up credit cards that they should no longer have access to.
As long as they know your Social Security number and any security questions that lenders may ask, they can still do quite a bit of damage. The credit bureaus do offer free credit monitoring, allowing you to check for new accounts or unexpected balance increases each month.
Get the Support You Need with Olmstead & Olmstead
Divorce is never easy, but you can give yourself some room to breathe with an experienced divorce attorney. We’ll help you navigate this process, decide what’s most important to you, and negotiate on your behalf. Schedule a consultation now by calling us at 703-361-1555 or filling out our .