3 Things You Need To Know About Your Finances And Divorce
You have probably heard that after a divorce, there are people who are in worse of financial situations that they were before they were married. This unfortunately is pretty common, but in some cases it can be avoided. If you know how to organize your finances before the divorce, you can help to keep yourself financially afloat even if you are separated. Here are some tips.
1. Get Out Of Debt
One of the biggest mistakes that people make is not getting out of debt before they get divorced. If you have lots of consumer debt, you need to do everything you can to pay off those credit cards before you divorce. The reason for this is that, just as the judge will divide your estate, they will also divide your debt. This means that even if both of your names are on a credit card, one spouse may be in charge of making the payments. If your spouse doesn't make the payments on time, it could hurt your credit, and you could be on the hook for the interest, late fees, and so much more.
This is why it is better to just get rid of any debts that carry both of your names, even if it means taking severe measures, like a second job until the debt is paid off.
2. Downsize Your Lifestyle
Another mistake that people make is thinking that they can do the same things they did before the divorce. Remember that before the divorce you had the same income between the two of you, but you only had to pay for one family. You shared a house, cars, insurance, taxes, and so forth. After the divorce you will have to pay for two houses, you will split your insurance policies so that you no longer get a bundling discount, and so much more. Your expenses will rise after the divorce, so this is why it is best if you can downsize your lifestyle so that your expenses are less. If you don't, you could easily become stretched very thin.
3. Account For The Split In Retirement and Investments
In many states, it is a down-the-middle split for the divorcing couple when it comes to the estate. For instance, if you receive a pension from your job, your spouse will get half of it. This will be effective unless they get remarried. If you don't account for these changes in your retirement and investment accounts, it could be devastating.
By understanding these things, you can protect your finances during a divorce. For additional information and for legal advice, contact a divorce attorney at a law firm such as Bineham & Gillen, PLLC.