Divorce is always a stressful situation for any person going through it. One of the major factors that impacts how stressful a divorce can become are the financial realities of the person’s situation. It simply is not possible to run multiple households on the same income that you used to use to run one household and maintain the same standard of living. Here are some tips that can help you prepare financially for your future while going through a divorce:
(1) Set a realistic budget.
You may need to re-evaluate your current budget. If you will be paying child support and/or spousal support, consult with an attorney or do your own research to find out, ballpark, how much money you will be paying each month. This will help you see what your new net income will be subsequent to the divorce. You may also want to consult an accountant or tax consultant regarding the implications of a different tax filing status and how that will affect your withholding. If you will be receiving support, find out how much you are likely to receive, and for how long. You may need to start applying for jobs, or looking into educational programs to build your resume and job prospects. Find out how much these programs will cost, and how long they will take you.
(2) Re-evaluate your current living situation.
Chances are that if you are divorcing and have not relocated out of the marital home that you will need to do so. It simply is not possible to run two households on the same budget that you used to run one. Looking at your budget, income and expenses, determine realistically if you will be able to afford to live in the same place after paying our or receiving child support and/or maintenance, and plan for the future. Look for potential places to live that are within your budget. Don’t forget to allocate moving costs, furniture costs, and deposits or down payments.
(3) Spend money conservatively.
Realize that in any contested divorce matter, your finances become an open book. If you are spending money that has a marital purpose (i.e. an oil change for your car, or, paying the mortgage, or, purchasing medication, groceries, paying for little league, etc.) and you have always made these payments or purchases during the marriage, it is probably going to be viewed by a Court as being a purchase done with a marital purpose. The alternative would be spending funds outside of the marital purpose, which in some cases becomes classified by the courts as “dissipation of the marital estate” and must be reimbursed. These sorts of payments are for things that are not done with a marital purpose. For example, if you have only driven a $20,000 vehicle throughout the marriage and decide to purchase a $100,000 vehicle, or, taking a girlfriend or boyfriend on vacation, buying them expensive gifts, going out for lavish meals, etc.
(4) Plan for allocation of attorney’s fees and costs.
It goes without saying that if you are in a contested divorce situation and you wish to have counsel, you need to pay their fees. Attorneys have the ability to withdraw from representing you for numerous reasons, including if you do not pay your bill. It is important to budget for these fees since most attorneys require an advanced payment retainer and will not wait to be reimbursed by your spouse or marital estate.