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Divorce is without a doubt, a scary affair. Usually, it’s not because of the thought of ending up alone, but because of the significant detail of financial stability after separation.
Most people lose what they’ve worked so hard for in the marriage. They may have to part with their investments, home or even business.
Some even don’t know where to start from because they were not so keen on their finances. They thought their financial life is secure.
While you’re married, you split bills and share responsibilities, so life’s one big bed of roses.
After the divorce, your expenses are most likely to skyrocket while your income decreases. You may avoid this if you decide to live a frugal lifestyle.
If you’ve been receiving in the marriage, the first question you might ask is how you’ll survive financially.
This is especially true if you’re not receiving any support from your former spouse.
I’m not going to lie to you that keeping track of your finances is a piece of cake. But, I’m going to assure you that there’s still hope.
You can bounce back on your feet again and live your life to the fullest after the divorce.
There are tonnes of stuff that you can do to safeguard your financial future. Here are some practical ways to build financial stability after divorce.
1. Be Aware of Your Finances
You’re in charge of your finances now. That’s why it helps to always update yourself on them. It’s crucial that you have copies of retirement account statements, income returns, and bank statements, to mention but a few.
If you’ve got all the current copies, that’s great. But you’ve got to up your game a bit. Go to the next level. Dig deep for copies from previous years as well. If you can trace them to the time that you were married, the better.
After securing all these documents, you’ve got to get into studying them. Learn them from the first to the last page.
This helps you further your understanding of your finances. You also get to know areas that need correction. Plus, you get to figure out the cost of all the assets.
Don’t be in a rush to get the whole thing over with. Remember, it plays a huge role in the rise of your financial life.
If you’re having a hard time, there’s no shame in asking for help. Consulting friends and relatives is alright, but they may not be of much help.
Consider consulting an expert. Not only will they help you understand stuff better, but they’ll help you know the exact cost of your assets.
Additionally, they might help you identify other assets that you may have left out.
Often, values placed on assets are just estimates. You’ll do yourself a massive favor by seeking help from business evaluators. You can consult other professionals, depending on your need.
Don’t settle for references only. Carry out all the research you need before choosing an expert, and you’re good to go.
2. Consider Selling Assets that are Hard to Maintain
It’s human nature to want the best in life. Getting that fancy car and luxurious home is a dream come true.
Or is it? It might seem to be so at the beginning, but with time you’ll realize that they are unnecessary expenses.
You don’t have to wait until then. Go through the assets. Identify those that you think will need high maintenance and sell them. It may be difficult but think of it as a long-term investment.
And, the good news is it’s got a couple of benefits:
- You can make more profit on the sale.
- You decide on the selling price.
- You save yourself a whole lot of headache.
What’s more, if you look at things positively, you can get better assets with the money you make from the sale.
An asset such as a home has a potential of raking in unbelievable profit if you play your cards right.
Quick tip: don’t sell all your assets. Have one or two with you for safety reasons. You never know the outcome of the sale. And whether or not you’ll end up with your expected cash.
If you can, put the house, car or any other asset on sale first. You may sell everything else once you’re financially stable if you wish.
You could also consider renting them out if you wish to make some quick cash. Either way, you’re sure to get a huge financial boost.
3. Consult a Professional Divorce Lawyer
The worst mistake you can make is splitting with your spouse without knowing what you’re entitled to. It’s even worse if you own most of the assets.
Even if your spouse is a lawyer, don’t be too quick to trust their deal-making decisions. They might decide to shortchange you obviously because you’re not in good terms.
You may not know your way around the law maze, but you’ll be better off having some basic law knowledge or better yet, hiring a qualified divorce lawyer.
Most people give this option a second or third thought because of the financial aspect of it. How much you’ll spend on hiring one should be the last thing on your mind.
Focus on your long-term goal. There are a couple of lawyers who offer their services at reasonable prices.
If you’re still thinking twice about a divorce lawyer, picture this: you make a deal with your spouse. Later on, you find out that you got less than you deserve.
Chances of getting a great deal are very slim. Changing what’s written on the agreement once you’ve made the deal with your ex is almost impossible. If you’re fortunate enough to get a second shot, it might take longer than usual.
Besides, a divorce lawyer can help:
- When you’re not in the right emotional state to handle the divorce process
- To ensure that your divorce follows the rules of the county and state you are in
- In the asset-splitting process
- If your spouse decides to get a divorce lawyer
- To come up with a strategy that safeguards your kids’ future
4. Keep Taxes in Mind
Having a fair share of your property comes with loads of responsibilities. The main one is setting aside cash to pay taxes. Be sure to figure out the tax requirements associated with your assets. The more assets you have and the money you make, the higher the tax you’re expected to pay.
It’s important to understand that you don’t pay taxes on all your assets. If you choose to cash out your green in a retirement account, you’re required to pay tax. Chances are you might pay a penalty as well.
On the other hand, cashing out your money in a savings account doesn’t require you to pay taxes.
If you’ve got kids and are receiving cash from your former spouse, consider the nature of the payment. This determines if you should pay taxes.
If it’s for child support, you’re by no means required to pay taxes. Alimony or maintenance payment requires you to pay taxes.
It might sound confusing if you’re new to it, but with time you’ll get the hang of it. Those are just some of the instances where you’re required and not required to pay taxes.
Don’t have a clue about taxes and all the details associated with it? Don’t worry. There are plenty of experts to help you out.
Alternatively, try reliable tax software such as TurboTax, to do all the work for you. While you can get all the help you need, it’s essential to be in the know of the entire taxation process. Negligence will cost you in the long run.
5. With a Clear Mind
Divorce can take a toll on you no matter how strong you might be emotionally. If you’re among those who have little or no control over your emotions, don’t go through the divorce process on your own.
You’re prone to make decisions that will affect you negatively in the end. For instance, deciding while you’re angry might cause you to demand more than what you’re supposed to get. This is in terms of assets.
Making decisions while you’re emotionally fragile is harmful. It might cause you to give up more than what’s rightfully yours.
There are several ways to save yourself from both disasters. First, hire a financial planner or anyone with your best interests at heart to advise you.
Second, go for therapy. It’s not just about sitting down and having a chat. Therapy helps you gain control over your emotions.
It also enables you to get rid of any toxic feelings that may hurt you if you bottle them in for long.
Your self-esteem might drop after the divorce. Or, you might lose your sense of direction on life. Therapy helps. The more you open up, the more capable you are to see things clearly.
You’re also able to come up with a goal. A goal can help boost your confidence and guide you on the direction that you should take afterwards.
Most importantly, therapy gives you a new pair of eyes. Not literally of course. It helps you to see your challenges in a different and more positive light. With this kind of change, overcoming your fears is a walk in the park.
6. Identify any Debt and Sort it Out as Soon as You Can
It’s easy to get caught up in the process of getting what rightfully belongs to you. Most times, debts aren’t given the attention that they deserve, and the results are disastrous.
If you and your spouse are young, you may not have to worry about jaw-dropping debts. Chances are your credit card debt isn’t that high. However, if you’re older, you may have more debts.
There’s no telling how many of them you may have to clear. From medical bills, mortgage or even vehicle loans, the list is endless.
To be on the safe side, have a look at your credit report. It’s a great way to know how many debts you have. Thus, you’ll pay for them at once and move on with your life.
If you had a spouse who overspends, they might have spent some cash in your name without your knowledge. The credit report will reveal it to you.`
One of the greatest drawbacks of debt from your former spouse is your credit will suffer a blow. This happens if they don’t pay it on time.
You may have found out about it and taken them to court. But, even if the judge rules that they should clear the debt, any delay from them is an inconvenience to you.
Some states require that you pay half of the debt, whether or not it involves you. Another way that you can clear debt is if you agree to pay it in full. The catch is you get more assets.
You and your former spouse might decide to clear the debt 50-50. Whichever option you take, what should matter is that you don’t start your new life with any debt.
7. Make Some Adjustments On Your Budget
A new life needs a new budget. Gone are the days when you could splurge cash however you wanted. Life as a single person requires less spending and more saving. If you don’t have a job or a source of earning some income, now’s the time to get one.
Even if you’re enjoying support from your ex-spouse, learn to spend cash reasonably. It is a wise decision.
Adjusting your budget may seem hard, but it isn’t. All you should do is identify the new income you have without the support.
Then, list all your expenses. To make things easier, start with the basics; food, bills, and housing. If you’ve got kids, school fees is another expense to include in your budget.
Next, find out how much you spend on expenses. This helps you to come up with a budget that works for you.
Finally, merge your income with your expenses. This part is tricky for most people. The trick is to cut on costs in a way that will accommodate your new income.
Remember to review your new budget as often as possible, preferably at the end of every week. Maximum should be monthly.
If you spend more than what you intended, you’ll have to decide whether to readjust your budget. You could also consider cutting on expenses.
You’re most likely to spend more. You’re used to it after all. But it shouldn’t be an excuse. Which area do you spend more money on? Is it on pizza or shopping?
Wherever it might be, identify it and make the necessary changes.
8. Learn All You Can About Money
According to society’s standards, you may have plenty of money but do you know how to spend it? Do you have a guide on how to spend it? If not, getting into some serious money lessons will be a great idea.
A wonderful place to start is your personal finance. Have a look at investments. Learn what it is if you don’t know and make a point to try it on a profitable venture. Learn how to make a budget if you have no idea how to make one.
Does the word ‘insurance’ ring a bell to you? It’s one of those things that you must have. Make it a point to understand everything there is to know about health and life insurance. If you (and your kids) aren’t covered yet, insurance should be a priority.
For starters, you must know the price of your home and other assets.
How long it will take to go through the money lesson boils down to how much wealth you’ve got. If you have plenty of investments or a booming business, it’ll take you a while to know everything about them.
If you’ve got a retirement account and house for assets, learning might take you a month, or a few weeks minimum.
Learning about your money has got its perks. With a great financial sense, you can stabilize your finances by:
- Identifying a lucrative opportunity and grabbing it.
- Earning more money than you originally had.
- Achieving a high credit score.
- Setting aside cash for future emergencies.
- Paying all your bills before or on the required payment date.
9. Be Strong Even When You Want to Give Up
Divorce seems to be a great way to part ways with your former spouse once and for all. Many people think that it takes a few minutes.
The truth is it can take up to a week. There’s so much to take care of.
When there’s a delay in the process, it’s likely that you might become impatient. All of a sudden, your assets and other privileges you’re entitled to may not seem to be too important anymore.
You feel that you can do just fine without them, right? Wrong! If you’ve gotten to that point, the best thing to do would be to take some time to reconsider.
If possible, spend some time alone and give it as many thoughts as possible. Which would you prefer? To divorce and struggle to get on your feet again, or to hold on and get the divorce as well as your rightful assets?
When you think of it that way, you’ll realize that impatience was driving you all along. It’s okay to feel this way, but you should never let your emotions to control you.
How do you remain strong even when you feel that you can’t take it anymore?
- Stay calm.
- Listen to some soothing music.
- Surround yourself with your friends or family.
- Voice your concerns.
- Rest as often as you can.
- Keep yourself busy.
Most importantly, you need to realize that such issues have a procedure to follow. And, even if the divorce doesn’t happen as fast as you want, it will happen eventually.
10. Seek Advice From a Financial Advisor
Handling finances may be overwhelming especially if you don’t have the necessary experience. A financial advisor can help you not to make rash decisions.
They have the skills to suggest steps that will grow your finances and keep you on the right track.
Having them in your team can be of benefit to you in a number of ways:
They Help You to Prioritize
If you’re planning to have another wedding or buy another car or house, your financial advisor can help. They assist you in identifying more pressing issues and focussing on them. This minimizes wastage.
They Can Explain the Impact of Current Market Events on You
Financial markets change a lot. They can either affect your investments negatively or positively. A financial advisor can break down the details on market events. This helps you make an informed financial decision always.
They Can Help You to Adjust Your Financial Plan
With an advisor, you don’t have to worry about rectifying your plan in case of an unexpected event. They can come up with a new plan that’s in line with your new lifestyle.
They Have Connections That You Need
Even if they may not be of help in all areas, financial advisors make up for it. They connect you to other professionals, such as an accountant to help you with tax issues.
They Can Assist You to Create an Emergency Fund
Setting aside money for a rainy day can be hard if not impossible. A financial advisor can study your finances. And, they can help you start an emergency fund no matter the cash you may be having.
A Divorce Shouldn’t Be the End of the Road for You
There’s so much to enjoy in life even after you’ve gone through a divorce. It will hurt if you truly loved your former spouse, no doubt, but hey, that shouldn’t take away your joy.
Most importantly, divorce shouldn’t cripple you financially. You’ve got what it takes to survive on your own.
If you were feeling stuck and depressed, the tips above provide simple guidelines. You can use them to be in charge of your finances and multiply them.
You survived without your ex-spouse and you definitely will even after the divorce. Have an optimistic attitude, don’t let the situation affect your mood and go for it.
Financial success will be your portion. Believe in yourself, and you’re sure to make it. I wish you the best of luck.