- Not enough cash
- Expenses go way up as soon as the divorce process starts.
- Legal fees
- court costs
- therapist bills
- supporting two households
- and many others
- Expenses go way up as soon as the divorce process starts.
- Set aside funds that you will need during your divorce. Divorce Attorneys don’t like to take checks from joint accounts since the other spouse has the right to cancel that check.
- Not enough preparation.
- Divorce is one of the most difficult life transitions that you will go through. Be prepared. Read books on the subject, consult with a financial professional to determine the feasibility of the process.
- The timing of your divorce is important. There are benefits to being over the 10 year, 20 year, and 30 year thresholds with regards to either social security or spousal support in Texas.
- Get your ducks in a row before you announce your plans. Get a new or newer car. Get all of your checkups for both you and your kids. Get any dental work done that you have been putting off.
- Make copies of all the important financial records for the last year. Further if you suspect your spouse is siphoning off money to an unknown destination like a girlfriend or off-shore account. This would include, but is not limited to bank accounts, credit cards, brokerage accounts, 401k, pensions, life insurance, deeds, trusts. Think of it this way. If has a $ sign associated with it, in any way, then make a copy of the statements.
- Make copies of any document that would help you prove your separate property, or dis-prove someone else’s. It’s up to the party claiming separate property to prove it.
- Make copies of your spouse’s business records. This could be helpful in determining their true income, or show you where they are hiding assets.
- Overlooking assets. Don’t overlook any assets—half of everything is yours! Even if you don’t want an asset, it can be used to trade for something you do want.
- Inventory safe deposit boxes; track down bank and brokerage accounts; review pay stubs, retirement plans, and insurance policies.
- If your spouse’s business generates a lot of cash, engage a forensic accountant to look for telltale signs of additional income. Don’t overlook hobbies or side businesses that might have expensive equipment or generate income
- Ignoring tax consequences.
- Should you take monthly alimony or a lump sum? Should you take the brokerage account or the retirement plan? Should you keep the house or sell it now? Who should pay the mortgage until it sells? Don’t ignore the hidden tax costs of divorce in making these decisions.
- Your situation may require some calculation by an accountant to determine if you are really getting the best deal. And, if there’s a chance that your past joint tax returns omitted income or overstated deductions, you may want to seek an indemnification clause to protect yourself if the IRS decides to audit.
- Ignorance is bliss. During divorce, ignorance is certainly not bliss—instead, it can be very, very expensive.
- Don’t be a passive observer of your own divorce. Doing as much as you can by yourself will help you recover more quickly from the divorce because you will have a healthy sense of control over the process, be focused on practical things, and be working with your ex to get things done.
- Also, taking an active role in the negotiations will help you to reach a better settlement than “letting the attorneys handle it.” You will have less conflict and litigation after the divorce, better compliance from your ex, and better sharing of information about the children. Your attorney may give you legal advice, but all of the decisions are ultimately up to you.
- Mixing money and emotion.
- During this trying time, it’s easy to confuse your feelings with the facts. Try to be as dispassionate and businesslike as possible.
- View your attorney as a paid professional rather than a friend or confidante. When your grief is overwhelming, go home or to a friend’s house, not to your attorney, who is billing you at his normal hourly rate.
- Make property division decisions based on your own long-term best interest, not out of revenge. It won’t make you happy to declare war on your ex. Make an effort to bring the divorce to a successful conclusion with as little rancor as possible. A nasty divorce benefits only the attorneys.
- Not fighting for what’s yours.
- Women tend to be supportive and sensitive to the needs of others, to build bridges, and to “make nice.” These tendencies often get in the way during divorce. Divorce is about survival, not making friends.
- You have to insist on getting what you need and deserve. Even if you hope that you will eventually be able to reconcile with your ex, don’t bend over backwards to make it happen.
- Stand up for yourself and get your share. If you reconcile, that’s fine. If you don’t, you’ll still be able to take care of yourself financially.
- Not taking control.
- Going through a divorce can sometimes make you feel like the captain of a leaky boat on stormy seas—there seems to be a new crisis at every turn. Use this time of upheaval to start taking control of your life.
- Vow never to worry in the dark—if you can’t sleep, turn on the light, pick up a pencil and paper, and write down your worries. Then, you can go back to sleep and deal with them first thing in the morning. Also, try to get a lump-sum whenever possible so you control the cash.
- Listen to your attorney, but make your own decisions. This is your divorce—so take control of the process!
- Not being ready for the worst.
- During divorce, prepare yourself mentally for the worst that can happen. How will you cope if your children get sick? If you have to move in with your parents? If the divorce lasts for years and you lose all of your money? If your ex remarries within two weeks, moves to Tahiti, and/or refuses to pay any support? Plan for the worst so what actually happens will seem easy by comparison.
- Don’t panic and let your fears rule your life. Face them, and take control.
- Not developing a career.
- Many women put their careers aside to concentrate on their families. After divorce, you will probably need to figure out a way to support yourself and your children.
- Divorce is an excellent time to get some career counseling at the local job center, university, or community college.
- Prepare for the expense of tuition and books while you get your career on track.
- Remember: there’s nothing like new knowledge and a fulfilling career to bolster your self-esteem.
- Not getting good professional advice. Right now, you need all the help you can get!
- Divorce can be very complicated, so don’t try to do it all yourself.
- Hire an attorney who can give you excellent advice—even if he or she isn’t the most inexpensive.
- Engage a forensic accountant if you think there might be hidden assets.
- Find a good therapist to help you emotionally.
- Hire a divorce financial professional to help determine the best settlement options for you. Don’t skimp now on matters that will affect the rest of your life.
Getting Your Financial Life Back On Track After Divorce
Divorce is a financial drain. After divorce, you will need time to rebuild financial resources. Begin now to squirrel away funds that will be available for emergencies, vacations, etc. Those funds will see you through tough times, and nothing rebuilds security like that good green poultice “cash.”
Separate money and emotion
As you work through your grief and anger and mourn lost dreams, don’t let money issues cloud your perspective. Life may not be fair, but don’t descend into depression with each check you write or re- ignite your anger if your support check comes late. Accept your financial situation, know your legal remedies, and pursue them with dogged detachment.
Focus on finances
It’s hard to be optimistic about a shaky financial future. If you are disoriented financially, this is the right time to get a grip on your financial life. Sharpen your pencil and get busy creating new financial plans for your future. Once you know where you are going, you can look forward to the future rather than back to the past.
Get your career in gear
If your career opportunities are not what you would like, get off your duff and make some changes. You are beginning a new life, and it’s time to move ahead rather than wallowing in the past. Take some courses, prepare a resume, explore the opportunities in the marketplace. Turn around, fact the future, and barge ahead. You’ll be surprised what you can do.
Tie up loose ends
Get your financial house in order. Rewrite your will, change the beneficiaries on your insurance policies, review your retirement plan documents, clean out your financial closet and get rid of worn out investments. Straighten your files and square things away. You can’t move ahead if you are tripping over your financial shoelaces.