Divorce can be so financially devastating that we’ve observed it often goes hand-in-hand with bankruptcy. Of course, the financial implications of divorce aren’t the only reason divorce and bankruptcy are so closely related. Often, severe financial problems are the reason why the marriage is ending in the first place.
Whatever your situation, you’ve got serious challenges ahead. You’ve got to do everything you can to protect your financial future.
Here are some ways to do that.
Get all your records in order.
Not knowing what’s going on with the family finances is the kiss of death for your future finances. It’s also a very common mistake: in most families one spouse often handles every aspect of the family finances while the other spouse remains oblivious.
Getting your records in order (while taking the time to study them) is one of the surest ways to understand the total picture of assets and income before going into your divorce.
As a side benefit, having all your records in order also helps you save money when you walk into our offices. It reduces the amount of time we have to spend on discovery and allows us to make some accurate determinations of what the courts might see as an equitable divorce settlement right from the get-go.
This allows us to make a realistic offer to your ex. If your ex has a decent lawyer as well he or she will know a realistic offer when they see one. It may be that any remaining issues come down to nitpicky tweaks, which is far cheaper and less heart wrenching than a battle which stretches out for years.
See also: How to Lower the Cost of Your Divorce.
Close joint accounts, and do it quickly.
While you don’t want to withdraw money from them until the divorce is finalized and the money’s been divided up, you’ll also need money of your own during the divorce process. It’s definitely time to open your own accounts, close down joint credit cards, and start obtaining credit in your own name.
If the money in your joint account is your only source of income because you were a homemaker, consult with us before making any moves. You will need your own money to live on, but you can get into a lot of trouble making overambitious withdrawals. Let us look at the big picture before you make any moves.
Try not to go to war.
Letting your emotions rule over your divorce decisions is one of the most financially devastating things you can do to yourself.
Fact: Pennsylvania is a no-fault divorce state. Fault-based divorces exist, but they’re rarely worth pursuing.
Fact #2: We’re experienced enough that we can usually ballpark what a judge would want to do. It usually just makes sense to create a settlement that adheres as closely to what that would look like as possible.
Unless extreme circumstances such as spousal abuse are in the mix somewhere, it’s usually better to just take a deep breath and treat the whole thing with all the dispassion of the dissolution of a business, which means trying to keep the process equitable for both of you. You can easily end up outspending the value of your assets by fighting over them too hard and too long.
Budget early and accurately.
Your budget is going to change after a divorce. Your income will drop. You might need to downsize into a smaller home, or even an apartment. Certain luxury expenditures might become a thing of the past.
Resign yourself to living within your means. While divorce decrees are meant to help you maintain something close to your old lifestyle, the operative word is “close.” Some spouses will have brand new checks to write each month for child or spousal support. Some spouses may have support that’s only temporary.
Planning for the new normal is the smartest way to proceed.
But don’t despair. Downsizing doesn’t have to be awful. In fact, some people find it feels pretty good.
Make changes to your retirement strategy.
If you were the major contributor to a retirement account, take note. You’re probably going to lose a portion of your retirement account to your spouse. There’s not much you can do about this.
However, you can adjust your retirement strategy to start saving more aggressively so you can get back to where you need to be. If you were on track, you’re not on track anymore, so this is ultimately going to be necessary.
If you are the spouse who has received a retirement account you can’t afford to be complacent either. Now is the time to start building on that foundation. Work with a financial advisor to come up with a strategy.
Bonus tip: don’t go into divorce without a lawyer.
Yes, hiring a lawyer costs money. But you’ll lose way more money if you don’t have one. There are major mistakes you can make during the legal process that can cost you big. Don’t believe Internet websites that tell you divorce is as easy as printing some forms and paying a filing fee. Nine times out of ten people who make that decision live to regret it.
Don’t take chances. Instead, take advantage of our free consultation. Secure your future by putting a highly experienced divorce team on your side. Contact Sadek and Cooper to get started today.