Divorce is a major life event that can derail every aspect of your life while you get it sorted out. Your finances will likely take a significant hit while you work through your split, but that’s temporary. By planning ahead and being honest about your finances, you can take control of your financial situation and plan for life after divorce.
If you’re still reeling from the decision to divorce and you’re not sure what your next step is, it’s time to talk to an attorney who can advocate for you along the way. Call Pence Law Firm at 304-345-7250 to set up a time to talk with one of our experienced attorneys.
Get a Full Picture of Your Financial Situation
This part may be painful, but it is unavoidable if you want to get your money under control. You need an unbiased view of what’s going out, what’s coming in, and what you have left over at the end of each month.
You can start by calculating your sources of income for each month. This obviously includes any income from employment, but may also include child support, alimony, or side gig work. This is where it’s important to be honest—if your ex-spouse is ordered to pay $1,000 in child support but has only made two payments in the last six months, it’s wise not to count on that money coming in each month.
You can also keep track of fixed and flexible expenses. Fixed expenses include rent, mortgage, student loans, and other payments that are the same every month. Flexible expenses may include groceries, gas, utilities, and fun money.
In addition to looking at the monthly payments you have to make, create a list of your debts, how much is owed on each account, and your current estimated payoff date. This will be important if you want to pay off your debts more quickly.
Develop a Realistic Budget
You already have the framework for a budget with your list of income sources and expenses. Now you can tweak it to fit your life a little better. Perhaps you have three streaming services on your expenses list and you know for a fact you only watch one. You can cut the other two and trim them from your budget.
Maybe looking at the numbers made you realize that you’ve been dipping into savings every month and you need to cut back on discretionary spending. Your budget should account for monthly expenses, as well as those that pop up occasionally or annually—for example, vehicle registration, vehicle repairs, home repairs, and vet visits. Ensure that you are making contributions to savings, so you have an emergency fund.
Leverage Assets and Account for Liabilities
If you were granted a share of marital assets in the divorce, you may have what you need to improve your financial situation. If you took ownership of an investment property, consider finding ways to make more money from it—perhaps your ex-spouse hadn’t increased rent in five years, and the current rent is far below market value. Maybe making a few small updates would drastically increase what you bring in each month.
This is also a good time to look into insurance policies. Your needs as a divorced person may not be quite the same as the needs of a married person. You might be able to trim back some of your policies and add the money you save to your monthly budget.
Take some time to plan for the debts you were left with after the divorce. While you can make minimum payments until everything is paid off, you may want to come up with a more aggressive repayment plan.
Think About Future Plans
Whether your goals are preparing for retirement, funding your children’s college accounts, or starting a new business, don’t put those plans off for “someday.” If you’re already in the middle of financial planning, make space for those goals in your current plans.
Navigate Your Divorce with the Help of Pence Law Firm
Divorce is never easy, but having a compassionate and experienced attorney by your side can help you minimize the stress you face. Schedule a consultation with our team now by contacting us online or calling us at 304-345-7250.