Wednesday, July 20, 2016, PM | Leave Comment
There are few things as devastating as a divorce. It takes you on the emotional roller coaster, and turns your life upside down.
Before you know it, you’re faced with preparing piles of paperwork, calculating child support, dividing assets, getting back on professional tracks, etc.
This is a costly endeavor, which can make more impact on your finances than recession and market crashes. So, how to end the marriage on your terms, and without breaking the bank?
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The art of planning
The moment you realize divorce is inevitable, start collecting all the financial documents. These are among the most important items that will make a difference in the days to come.
They include bank and credit card statements, wills, trusts, loan documents, tax returns, retirement account balances, etc.
It’s advisable to go back five years, keep your eyes open for suspicious withdrawals, as well as any tax returns for incomes you do not recognize.
Also, bear in mind that a capital loss carry-forward or charitable contributions could cost you an arm and a leg.
Getting hold of all the technical and legal detail is overwhelming, especially when you’re emotionally on the edge.
Most often, people turn to divorce attorneys, certified financial experts, and mental health counselors.
Don’t hesitate to seek these trusted advisors —this will help you steer clear of common divorce settlement mistakes.
Namely, many people go for splitting assets without considering the tax implications and incentives. That is how a wife who secures the property ends up being unable to afford it down the road.
Assemble a budget
It’s essential to evaluate your new financial picture and come up with a written budget, which encompasses new expenses and expected income.
Those who decide not to move will have the same utility, transportation, and housing costs, although other expenditures, like insurance, increase.
Think in the long term, don’t overlook a single asset, and be prepared to make some lifestyle changes. You might have an urge to keep the same standard of living, but that must not drag you underwater.
Save time and money
You want the divorce procedure to run like clockwork, and fortunately there are many ways to ensure this.
Some people are not aware that much of the process can go down online, which saves a great deal of time and money.
For example, the services of California Divorce Online allow you to conduct this process as painlessly as possible.
The attorney will prepare the case and deliver it to you online. Clients answer simple questions via the internet, after which Petition and Dissolution are also produced. This leaves you enough time to sort out other matters.
Next, pull a copy and review your credit card report, and work hand in hand with an attorney to identify any debt you’re not responsible for.
Furthermore, remember that your credit score could plummet after a divorce, something that poses a grave danger.
So, if some of the accounts are not in your name, apply for your own credit card ASAP. Use it to make immediate purchases and create a more favorable payment record.
Remember that incurring debt and amassing interest rates can swallow a big chunk of your budget.
Major financial decisions
The prudent approach, however, implies that you should call off or postpone any big purchases. They may seem like a way to soothe your grieving soul, but until you’re back on your feet, you’re better off displaying frugality.
So, moving to a new place and selling your real estate is out of the question unless it makes financial sense to do that.
When emotions take over, the caution is thrown to the wind, and financial plans collapse like a house of cards.
Ignorance is not bliss, or at least it tends to turn into a curse faster that lighting.
No loose ends
Financial issues don’t only add fuel to the fire, they are the big fire that needs to be put out, promptly.
Preparations and planning will take you al long way on this draining and traumatizing journey. Note that no one is supposed to walk away with a liability that is not theirs.
Fight for what is yours and take control of the whole ordeal. Don’t act rashly and make costly mistakes out of despair or spite.
Part your ways with spouse and mitigate the financial shock with calculated, educate decisions.