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financial stability after divorce

5 Steps To Achieving Financial Stability After Divorce

financial stability after divorce

 

Many of us tend to focus on the emotional damage that can accompany divorce. It is important to keep in mind that divorce can have a significant financial toll as well. Women tend to fare worse than men economically after divorce, with one government study finding that a woman’s household income might fall an astounding 41 percent after divorce – almost twice as much as the reduction generally experienced by men.

There are real and significant costs associated with ending a marriage, finalizing a divorce case, and establishing separate households. Fortunately, there are steps that you can take to establish financial independence and stability after divorce. The following are some of the most important.

Steps To Achieving Financial Stability After Divorce

1. Establish Separate Accounts

Moving forward after divorce means establishing a completely separate financial life. As a result, you should close any joint bank or investment accounts that you and your ex may have together, make sure that any joint credit accounts that you and your ex had been closed or the appropriate user is removed from the account, obtain a credit card in your name only, and make a list of your individual assets and debts.

When you open your own accounts, be sure to set up a savings, money market, or investment account where you can begin building emergency funds and achieving other savings goals.

2. Set a New Budget

Once your divorce is final and the dust has settled, it is time to set a new budget, which might look substantially different from your prior budget during the marriage. In order to do so, you should first determine your post-divorce income.

If you are working, find out exactly how much you will be making every paycheck, and do not forget to include income from alimony (maintenance) or child support. Next, determine how much you need to maintain the lifestyle you would like and see if the numbers work out.

You may find yourself pleasantly surprised with your post-divorce income or realize that you may need to find another job or cut financial corners in certain areas. For example, keep in mind that as a single person, you probably do not need as much space as you did while you were married.

You may be able to significantly reduce your housing payment and utility bills by moving into a smaller apartment or house. Once you have a budget that works, try to stick to it as closely as possible. It might seem easy to pay for things outside your budget with credit cards, but the balances will add up quicker than you might imagine, and you might not have room in your budget to add in credit card payments.

3. Avoid Crisis Spending

The time immediately after your divorce is over can be an extremely difficult time emotionally. For this reason, you should avoid making big financial decisions during this period. While it may be tempting to purchase that new car you have always wanted, move to a new city, or take an expensive vacation, you should hold off on these and other large purchases until you are in a more emotionally stable place.

One of the best ways to prevent yourself from engaging in crisis spending is to limit your purchases to things that are going to meet your basic needs – your food, shelter, clothing, and transportation.

4. Build Your Credit

Divorce can wreak havoc on your credit, and it’s important to start building your own credit profile so that you can truly live independently and finance large purchases like homes or vehicles. Start with being sure to pay your bills on time every month. As soon as you feel like you are comfortable with your new financial situation, open a credit card in your name and make sure that you pay it off each month.

Avoid applying for too much credit in a short period of time, however, as this can negatively affect your score. Finally, regularly check your credit score on a free site. Make sure that all of the information in your credit report is up to date and that debts are marked closed as you pay them off.

5. Seek Help from a Financial Advisor

As a newly divorced woman, you should certainly seek help from a trusted financial advisor who understands your situation. Even if you had a financial planner during your marriage, it might be a good idea to find a new one who does not know your ex-spouse.

You should start working on your retirement plans on your own immediately, and a qualified advisor will certainly have some options for you. In the event that there were retirement accounts that were split up at the time of your divorce, you should certainly look into a Qualified Domestic Relations Order (QDRO) that can allow you to move money out of retirement accounts without any tax consequences.

An advisor can help you start a new investment portfolio with a lump-sum payment or periodic payments you received as part of the divorce order.

Finally, if you have any questions about your legal or financial obligations or rights as part of your divorce, you should speak to a family law attorney in your area.

The post 5 Steps To Achieving Financial Stability After Divorce appeared first on Divorced Moms.

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What You Need to Know About Financial Settlements After Divorce

What You Need to Know About Financial Settlements After Divorce

Having to arrange a financial settlement after a divorce can be stressful, so it’s important you know the ins and outs and begin the process prepared.

The post What You Need to Know About Financial Settlements After Divorce appeared first on Divorce Magazine.

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financial advice for new single mothers

9 Pieces of Important Financial Advice For New Single Mothers

financial advice for new single mothers

 

Life is different now. You have recently been through a divorce and are now the single head of a household, which is a huge personal – and financial – responsibility. While you may still be doing many of the same things as before, you now are 100 percent responsible. There is no one to share the myriad responsibilities and decision-making.

This may be all new to you. It is also likely that you are still riding an emotional rollercoaster. Now is a good time to step back and take a deep breath. While many financial challenges lie ahead, understand that you can do this.

Financial Advice For New Single Mothers

What do single mothers have to do differently financially? To achieve financial success, newly single mothers should heed the following advice.

Just say no to credit card debt

Don’t live beyond your means and rack up high-interest credit card debt. This is one of the worst debts to have due to high-interest rates. Credit card debt should be paid off first when prioritizing bills.

Prioritize what is most important.

Take a moment (or longer) to assess your new financial life. Your family needs you to clearly understand how you can make everything work, without sacrificing too many of “the good times.” Review your lifestyle and analyze what changes and/or adaptations need to be made. Prioritize and differentiate between your needs and wants, and those of your family. Make notes. Create lists. Write things down.

Ultimately, let this “prioritization” process guide your budget. Focus on just a few practical lifestyle/financial priorities and learn to make concessions with others.

Get real with what you can afford.

Create a realistic budget. Track your spending over a specific time to see where your money goes. The goal is not to set up an austerity program that is so severe that everyone is unhappy; rather you just need to accurately understand your spending habits so you can manage and track your flow of money in an honest manner. For example, if yoga makes you happy and less stressed overall, look a reasonably-priced studio in your area or do an at-home workout.

Not spending money on yourself (within reason) can be detrimental in the long run. It is fine to put some of the focus on you. Every mom has been told that she needs to take care of herself first, so she has the energy and resources to take care of others. This applies to finances too.

Don’t try to keep up with everyone else.

Even if your lifestyle had been different previously, now is not the time to try to keep up with your neighbors and friends. As we said earlier, your life is different now. The financial decisions you make going forward will be based on a different set of circumstances.

For example, prioritize making mortgage payments and saving for (or taking) one annual family vacation, rather than putting yourself into debt to drive a more expensive car.  Even if it seems that’s what everyone else is doing, prioritizing driving the Mercedes instead of keeping up with your everyday bills will only hurt you in the long run.

Manage risk smartly.

Having only one income means it is just that much more important to protect. Obtain life and disability insurance to protect you and your family in the event the unforeseen should happen … because it can. Unfortunately, I have worked with clients who depended exclusively on one income and that person became sick and was out of work for several months.

It was both unfortunate and sad. Purchasing a cost-effective disability policy is a prudent way to safeguard against a potential loss of income.

Develop a plan B.

Planning for the future is an important component of ongoing financial awareness. Many people have asked me what is necessary for an estate plan when you have young children. At the very least set up a will. Should something happen to you, you want to have a say in who will care for your kids and where your assets will go. You do not want to be in a situation where the state determines who the guardian of your children should be – what if that is not aligned with your intent? Get it in writing.

A full estate plan is recommended (including health care proxy and power of attorney), but creating a will is a good, productive first step.

Pay yourself first.

With only one income, it may seem harder to save for retirement, especially if you envision having college educations to pay for, but it is critical to do so. Children can receive financial aid, scholarships, and loans to help pay for school, but those alternatives do not exist for retirement. Put away as much as you can into your retirement savings on a pre-tax basis and make sure to contribute at least as much as your employer matches (it’s free money!).

Don’t try to do everything on your own.

Not having a knowledgeable team of resources on your side can be the biggest disservice possible to yourself. A smart parent – especially a single parent – is aware of what they don’t know and asks for help when she needs it. This includes seeking help with your finances. Work with an advisor who places your interests first to help you make sense of the various aspects of your financial life and empower you to become educated on these topics.

Get referrals for accountants, estate planners, etc., from trusted friends or colleagues who you know have been in a similar situation to what you are facing. Building a support system will make managing finances as a single parent much less overwhelming.

Proactive Approach

Taking a realistic, proactive financial approach as a single mother is essential to your well-being and that of your family. Following the advice in this article can help you avoid unnecessary anxiety and keep your financial options open as a single parent.

The post 9 Pieces of Important Financial Advice For New Single Mothers appeared first on Divorced Moms.

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financial house in order

How I Got My Financial House In Order After An Unwanted Divorce

financial house in order

 

Tax time. As I dropped by the post office to get the right postage for the thick packet of homework to send to my accountant, I smiled to myself, confident that I had my financial house in order. It brought back memories of all the effort it took to dig a new foundation years ago, after my divorce.

I no longer get weak-kneed and shaky thinking about those months leading to the divorce. The request for a divorce came as a surprise to me. So busy with family and career that I hadn’t been attending to the finer points of our family finances—that was something my trusted husband did.

Evidently, I wasn’t attending to the marriage either.

Rather, I was full throttle busy but confident that it wouldn’t be long before we would have an opportunity to do a reset as a couple once our last child left for college.  My husband was on another page. When the last child was launched, he would also start his new chapter. And, it didn’t include me.

The shock of divorce rattled me, and I don’t rattle easily. In fact, calm is my middle name. My career track steady and upward for the entirety of our marriage, I was now close to the top of my field, responsible for business lines that were valued at tens of millions of dollars. “On the rise” is what people would tell my husband about me at the rare work event of mine that we attended together.

I wonder now if that message didn’t send alarm bells to him—a signal that we were out of sync. After all, he had married a younger woman still in grad school with no prospects, and as he was older, his career was already launched. Perhaps neither of us took stock of what that would mean later.

Silly me, I thought we were happy and about to enter that golden time in a couple’s marriage when the burden of children is lifted, careers are set, and a second honeymoon is around the corner as empty nesters take the time to find one another again.

Some must find divorce a relief after years of strife, or abuse.

I found it confusing, embarrassing and disorienting. It took me months to feel myself again and to assure myself that the kids were ok—or as ok as they could be with their world shaken. But they had new worlds to explore, going off to college was a happy and understood rite of passage.

Divorce at middle-age is not. Although more “gray” adults are divorcing now, it still hurts me when I see a couple that is celebrating their 40 plus wedding anniversary. Surrounded by children and grand-children, toasting one another with loving looks, sometimes sharing a truth about having weathered a storm or two, but toughing it out. Good for them.

Life is hard. So, when you find someone to hang onto, it is a blessing. When you lose that person, it is difficult, regardless of the circumstances. After the initial shock wore off, and I adjusted to the fact that my husband of twenty years plus didn’t want to be married to me anymore, I wanted to get out of the marriage as quickly as possible. During that period of deep hurt, I realized how little I knew about our finances.

Pulling papers together, going through correspondence, talking to bankers, and finally, my own attorney, I was overwhelmed. I needed help. Someone to take charge of my funds—once I settled out— invest them, and work with me on managing them wisely. I also needed a CPA to help me with tax planning, short and long term.

I was startled by what I didn’t know. 

It’s not like I was a princess who had waited for her prince charming to come along and rescue her. I was a smart woman who had navigated to a high-profile career with a great future ahead of me. But I had not paid attention to the essentials of investing for my own future. Why would I? My future was intertwined with my husband’s, and he was looking out for both of us, right?

I felt powerless and knew I had to take control to conquer that fear. And, I did. But it took years, and a small village, to get me to a place that feels comfortable.

How I Got My Financial House In Order

Fortunately, through the referral from a trusted friend, I found a broker who was indispensable when it came time to receiving my settlement monies and guiding me through the decision making on where to make investments. Another friend referred me to her tax accountant who turned out to be heaven-sent. To this day, she has my back and has recently helped me through the intricacies of college savings for my grandchildren.

As I leave the post office, I realize that my comfort now is due to the fact that I educated myself, took advice from trusted friends, and brick by brick learned to build my financial house on solid ground.

My lesson was learned the hard way. Married couples are partners for financial planning and the tasks should not be delegated to one partner only.  Quarterly meetings to review your financials and make adjustments as needed, with both partners conversant and supportive of the financial plan is the best practice. Things happen, and when they do, the last thing you want is to be distracted about is your financial security.

The post How I Got My Financial House In Order After An Unwanted Divorce appeared first on Divorced Moms.

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Personal, Property & Financial Information Your Divorce Attorney Will Need

Personal, Property & Financial Information Your Divorce Attorney Will Need

Once you’ve made your decision to divorce, your new attorney will need information from you in order to get the ball rolling and the divorce process started.

The post Personal, Property & Financial Information Your Divorce Attorney Will Need appeared first on Divorce Magazine.

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4 Financial Things to Consider Before You File For Divorce

4 Financial Things to Consider Before You File For Divorce

If you’re considering divorce you need to consider the financial implications of getting a divorce. Are you in a position, financially, to pay child support, or provide for your children after years of being a stay-at-home mom?

The post 4 Financial Things to Consider Before You File For Divorce appeared first on Divorce Magazine.

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Financial Infidelity is On The Rise: Why Couples Keep Financial Secrets

Financial Infidelity is On The Rise: Why Couples Keep Financial Secrets

Do you keep financial secrets from your spouse? If you do, you’re not the only one. Many Americans keep money secrets from their spouses. Learn more here.

The post Financial Infidelity is On The Rise: Why Couples Keep Financial Secrets appeared first on Divorce Magazine.

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Redesigning Your Financial Life After Divorce

Redesigning Your Financial Life After Divorce

Practical steps for handling your financial matters during the divorce transition.

The post Redesigning Your Financial Life After Divorce appeared first on Divorce Magazine.

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information your divorce attorney will need

Personal, Property, and Financial Information Your Divorce Attorney Will Need

information your divorce attorney will need

 

A lot goes into choosing a divorce attorney. I always suggest three attorneys be interviewed before deciding which to hire. During the interview process, you can learn about the attorney’s experience, their fees and get a feel for whether or not you feel the two of you could have a good working relationship.

Once you’ve made your decision, the new attorney will need information from you in order to get the ball rolling and the divorce process started. Some information is basic, will require no work from you. Other information will require time and energy and it is always best to be prepared. So, before you even start the interview process, why not get ahead of the game by gathering as much information as possible so that when it comes time to answer questions your new divorce attorney has, you will be prepared.

Below is a list of common questions/information your divorce attorney will need.

You will find this list helpful when compiling documents and materials your attorney will expect from you.

Personal Information:

  • Your full name, date of birth and social security number.
  • Contact information such as an address, landline/cell phone number, and email address.
  • Proof of state of residency.
  • Your employer’s name, address, and phone number.
  • Your length of employment and your monthly or annual salary. You should be prepared to show your attorney at least three years in income tax returns.
  • Your spouse’s full name, date of birth and social security number.
  • Contact information for your spouse such as an address, landline/cell phone number, and an email address.
  • Your spouse’s employer information, address, and phone number.
  • Your spouse’s length of employment and salary.
  • If the attorney will be serving your spouse with divorce paperwork they will need to know where you want this to take place. At your spouse’s work or place of residence?
  • The date and place you were married.
  • The name of your spouse’s attorney if he/she has one.
  • The name of a marital therapist you and your spouse visited with times and dates.
  • A list of the marital problems that led to divorce if any involve alcohol or drug abuse, religious differences, infidelity or sexual incompatibility.
  • The full names, dates of birth and social security numbers of any children born during the marriage.
  • Which parent the children now reside with and whether or not a custody dispute will be part of the divorce process.
  • The full names, dates of birth and social security numbers of any children from a previous marriage.
  • If you pay child support, how much you pay. If you receive child support, how much you receive.
  • Whether or not your spouse has children from a previous marriage. If so, how much child support is paid or received.
  • Who provides health insurance for the children born of this marriage?

Property Information:

  • Addresses of property owned jointly or separately.
  • Addresses of any mortgage companies you have accounts with.
  • The estimated fair market value of homes owned.
  • The balance on any mortgages.
  • The amount of monthly payments to a mortgage company.
  • A list of all automobiles, boats, motorcycles, trailers or airplanes owned jointly or separately.
  • The year, make and model of each and who has possession.
  • The name and address of any lender who may hold the title to autos, boats, motorcycles, trailers or airplanes.

Financial Information:

  • A list of all joint and separate bank accounts, savings accounts, C.D.’s, Credit Union accounts, Savings Bonds and Stocks and Mutual Funds.
  • How many debit cards you have for each account and the names on those cards.
  • A list of any credit card accounts you hold jointly or separately. The names on the accounts and the balance due.
  • Information about retirement accounts, 401K’s and other investment type accounts.
  • Disclosure of any life insurance policies, whose life is insured and for how much.
  • A list of names of those who owe you money. How much they owe and the expected payment date.
  • A list of any lawsuits you may be involved in.
  • A list of any livestock, such as cattle or horses that you may own.

The post Personal, Property, and Financial Information Your Divorce Attorney Will Need appeared first on Divorced Moms.

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Why Hire a Certified Divorce Financial Analyst®?

Why Hire a Certified Divorce Financial Analyst®?

Even if you think you’ve kept finances separate, there are laws and divorce negotiations that may have financial implications. That’s where hiring a Certified Financial Analyst® (CDFA®) can ease the burden.

The post Why Hire a Certified Divorce Financial Analyst®? appeared first on Divorce Magazine.

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