If you’re getting divorced and worried about money, then these tips may help you make the best financial decisions for you and your family.
These money tips for divorcing couples will help with the splitting of assets and liabilities — and still let divorcing couples achieve their financial goals.
Before the tips, here’s a quip from Robin Williams:
“Ah, yes, divorce…from the Latin word meaning to rip out a man’s genitals through his wallet.”
Ouch — and many husbands and wives would agree that divorce wreaks havoc on long-term financial goals and retirement plans! According to the experts at Bills.com, one million Americans divorce every year. More than 80% of divorcing couples cite “debt and financial distress” as the primary factor in the dissolution of their marriages, according to an American Bar Association survey, and studies find that most families suffer a financial decline following a divorce.
For more in-depth information on personal finance for divorcing couples, read Divorce & Money: How to Make the Best Financial Decisions During Divorce.
And, here are eight ways to make the best financial decisions during a divorces…
Divorce and Money – How to Make the Best Financial Decisions
1. Accurately assess your debts and liabilities. First, see yourself as your creditors do. Online (go to MyFico) or by phone, you can request a “tri-merge” credit report (a summary from all three major credit reporting bureaus). Make a note all of your existing shared and individual liabilities. Settle (or get a judgment) on how you’ll allocate these responsibilities.
2. Plan how to handle your home mortgage loan. If you own a home, the mortgage is likely your most significant monthly payment. Be certain you understand how you’ll resolve monthly mortgage payments, and how you’ll divide the home’s value – whether one partner buys out the other now, or the home is to be sold after children are grown. This money tip for divorcing couples involves thinking strategically about your long-term financial future.
3. Budget for bill payments, debt, loan payments, etc. Create a detailed budget, based on your new income level, and use free cash flow to pay off debts. Most people find the most efficient way to pay off debts is to first pay off smaller bills – starting with under $100 – then pay off loans and unsecured debt, such as credit cards. One of the best financial decisions you’ll ever make is to pay off the debt that has the highest interest rate first.
4. Make sure your ex-husband or ex-wife is making his or her payments. If possible, make provisions in the divorce agreement for reporting on resolution of significant debt. There are important implications for you personally if your spouse does not meet his/her end of the bargain on liabilities allocated through the divorce proceedings. You need to protect yourself — and your financial goals and future.
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You may also be interested in reading Why Are Women Bad With Money? 7 Money Mistakes Women Make.
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