A divorce can destroy an individual’s finances for years to come. The average cost of a divorce ranges anywhere from $4,000 to $15,000 or more. On top of that, it’s likely you’ll be left paying child support or spousal support, which can rapidly drain your savings.
With so much at stake, it is imperative to take whatever steps you can during the divorce process to help secure your financial future.
With that in mind, here are five tips before, during, and after your divorce that can help you get back on your financial feet.
Minimize attorney fees
One of the most costly aspects of divorce is mounting attorney fees. However, there are some basic steps guys can take to minimize these costs.
For example, if your attorney is paid by the hour, you can help them out by doing the leg work in collecting financial documentation such as pay stubs, bank statements, and mortgage statements.
Try to stay on point when communicating with your attorney. Avoid contacting them to vent or discuss things that aren’t legally relevant, and condense communication by sending one email with all your emails rather than multiple emails with only one or two questions.
You should also take time during your first meeting with your attorney to discuss things you can do to reduce fees. Let them know it’s important to keep your case as cost effective as possible. A good attorney will work with you to minimize costs as much as possible.
Make sure you’re not paying too much support
It is inevitable that your financial obligations will increase after a divorce, especially if you have kids. The last thing you want is support payments higher than you can afford as arrears can quickly accumulate and you’ll soon find yourself in an unending cycle of debt.
Have your attorney run support guidelines to calculate an estimate of how much support you’ll have to pay for any children and your spouse. There are also child support calculators online that can help you estimate how much you’ll have to pay. Use these figures as you begin to plan your post-divorce budget.
If your financial circumstances change after divorce and you suddenly find yourself unable to make the payments, it is incredibly important to be proactive in filing for a support modification.
Protect your credit
Divorce also poses a huge risk to your credit score, and if you’re not careful you can get stuck with a crushing amount of debt.
Go through your credit report and separate and freeze joint accounts the best you can. Make sure your ex is removed as an authorized user on non-joint accounts. If you have any joint loans, refinance whenever possible as creditors can still come after you if your ex is awarded a major asset and falls behind on payments.
You can also work with your attorney to include provisions in your settlement that protect your credit in the future. For example, if your spouse is awarded the home, you could add a provision that requires her to refinance the house within two years or else it must be sold.
Enlist the help of a financial advisor
In addition to an attorney, one of the most common experts retained during a divorce is a financial advisor to help sort out the various financial intricacies involved in most divorce settlements.
Financial advisors can assist in the divorce process in a myriad of ways. To start, they can help you prepare for a divorce from the very outset. They can help structure the settlement in a tax-advantaged manner and assist in the division of retirement benefits. And they can help you sort out your estate after a divorce.
“From helping to determine the value of a business to forecasting future income potential, financial experts are a crucial professional to include on your divorce team,” said Cordell & Cordell Principal Partner Joe Cordell.
Maybe while you were married your wife handled the household finances. Well, in your post-divorce life, it’s no longer possible to take a hands-off approach to budgeting.
You need to know exactly how much money you have, where your many is going each month, what debts you owe, etc.
Keep a detailed account of your income and expenditures and determine precisely what you can and can’t afford.
There are a plethora of free online apps and resources to simplify this process and help you stay organized.