Prepare for a financial separation
Beginning divorce proceedings can be a painful and emotional process. While it may take time to overcome the emotional aspects of a divorce, spouses can diminish the financial stress of a separation by evaluating several components of their shared and individual money profiles.
First and foremost, divorcing spouses should examine their joint assets. This includes homes, vehicles, stocks, investments, collectibles and other items. Because many marital assets, even those that aren't held jointly, come under scrutiny during divorce proceedings, it's crucial that individuals examine state laws to determine how their assets may be split up. If the divorce is amicable, couples should consider mediation to separate their assets, as this may be a more cost-effective way to divide up belongings, according to Fox Business.
In addition, individuals should make sure they can afford the payments for mortgages, automobiles, boats and other assets on a single income, as well as the cost of insuring them. It can be helpful for divorcing consumers to enroll in housing counseling to better determine how much of a mortgage they can afford to take on.
Individuals should also examine their jointly-held debt, such as credit cards and loans. This can be one of the most difficult aspects of organizing pre-divorce finances, because spouses will need to determine who will be responsible for paying certain debts. It's crucial to get these agreements written into a divorce contract because failure to pay off credit card debt and loans will impact each individual's credit score and report equally. Even if one spouse is responsible for paying off a balance, the other individual should monitor payments and make sure the balance is being paid down.
Lastly, divorcing individuals should develop a budget to determine how much they can afford to spend on starting their lives over. Planning ahead for housing, automobiles, furniture, insurance, day-to-day living needs and retirement savings can seem daunting after years of living on two incomes. However, setting a budget, cutting back on spending and seeking out discounts and deals can help individuals keep their costs low while they plan their next move. Consulting a credit counseling agency can also be an effective way to organize finances and avoid mistakes. In addition, working with a professional can educate adults on different tools and resources to help them manage their money while they get back on their feet.