I'm Newly Divorced
The best way to plan for life after divorce is to do so before your divorce. If you're not yet divorced, contact a qualified independent advisor (yesterday) to ensure that your settlement is equitable.
If your marriage recently ended, know that your financial life will soon change dramatically. (If you've been divorced for a while you already know this.)
The most obvious, immediate, and significant example of this change is that you will likely have less money to spend; this is because your old household income will now support two households rather than just one. The cumulative total of rent/mortgage, furniture, utilities, etc., could be as much as double.
However, with a healthy mix of compromise, planning, and sound advice, the changes might even be for the better.
A few pointers to get you started:
- Always keep detailed records of all financial transactions involving your ex-spouse. This includes everything before, during, and after the divorce proceedings; as well as alimony and child-support payments, whether you're making or receiving them.
- Also with regard to support payments, be sure to look ahead and plan for any changes in these payments (for example, after your kids graduate). If you need to get training to support yourself in the future, the time to start is now, not then. Alternately, if you're thinking about starting a business to support yourself, you might consider learning to ropes now, while you have an income, rather than later, when you won't.
- Protect or build your credit rating. Ensure that all joint bank accounts, credit accounts, charge accounts, etc., are closed. Decide which ones are necessary and reapply in your own name. Pay in full every month.
- Prepare a budget for yourself. Be sure to anticipate not only recurring daily, weekly, and monthly expenses, but also those that occur every few months or every year. Base this on your needs, not your wants.
- Prepare a list of financial goals: College for the kids, retirement, a vacation home. Start saving regularly for each, even if only a few dollars a month.
- Perhaps in the settlement, you ended up with the house. Typically, the motivation for this is emotional or sentimental: A beloved home has value beyond the financial, after all. Please keep in mind that this emotional decision might not make a lot of financial sense: The home's cash value is tied up in the property, which usually makes it a good long-term investment but not very helpful when you've got bills to pay. Further, with maintenance and repairs, a house can cost more in the long run than it yields in value. If you do decide to sell, be sure to consider the impact of capital-gains taxes.
Financial Sources has a team and a wider network that can help you through this difficult time. We can help you answer the big questions, like:
- Should I keep the house?
- Will I have enough money to send my children to college?
- Will I have enough money to retire?
- What lifestyle will I be able to afford?
- How much will it cost to learn marketable skills?
Contact us today to get started.