By Robert K Mohr – Content Strategist @ Truece
Separation. Divorce. Whatever it is you’re going through, it’s the end of something you were sure would last forever. It is one of the most gut-wrenching experiences a person can go through, with few highs and many lows. That sense of losing control of your life can be overwhelming, but there are things you can do to gain back some of that control and get your feet back under you. Here, we’ll be helping you through the financial issues that may arise as a result of your separation.
That sense of being out of control can be overwhelming, but one thing you can always control is knowledge. And as they say, knowledge is power. It’s a great idea to meet very early on with an attorney or a mediator to understand the laws of the state you live in. And encourage your significant other to do the same. Once you both understand the laws of the state you live in, the easier discussions around support payments and other financial particulars will go.
Put Together a Separation Agreement
Once you both know the laws of your state, and how they apply, put together a separation agreement. Whether you work through an attorney or craft one you mutually agree upon, it’s important to have in writing the financial expectations during the separation. The agreement should address who’s responsible for what: mortgage/rent, car payments, school bills. It should clearly lay out support payments for a child and a significant other, if applicable. Whatever is in there is up to both of you, as long as everything is explicit and it satisfies the laws of your state.
Make a Financial Plan
Now would be a good time to sit yourself down and get a clear picture of your financial life. It may seem like a slog, especially during this rough time, but taking care of this early could save a lot of headaches later. So make a high level accounting of what you own and what you owe. Also, make sure you have passwords/permission/access to all of your shared accounts (if you have to, make a copy of the hard drive or at least the pertinent folders if shared financial information was stored on one computer). Often old records will come into play, and if one significant other assumed “custody” of the family computer, you may have no way to access those old files. Think old Quicken files, Turbo Tax records, etc. Which leads us to Number 4:
Build and Protect Your Own Credit
It would be nice to think your separation will be all rainbows and butterflies and healthy, mature conversations. But in reality, it may not be like that at all, so make sure you start thinking selfishly, especially when it comes to your finances. So consider possibly closing some joint accounts, like a credit card account. Remove yourself as an authorized user on accounts you’ve shared. Or at the very least, agree which ones you’ll be in charge of maintaining and paying off (and add that to the Separation Agreement). Think about changing your passwords on accounts in your name that you’ve shared. And a great idea would be to sign up for credit monitoring/protection services. There are a ton out there, so find the one that’s right for you, but you want a service that’ll let you know if something weird is happening to your credit life.
Think About Taxes
Separations can go on for a long time, so it’s very likely that sometime during your separation, tax time will rear its ugly head. Be prepared ahead of time. Mutually decide how you want to handle it. File as married? Married but separate? Not married? And what do you do if you owe money? Reach out to a tax expert/attorney and figure out the rules in your state. And make sure your significant other does the same, so again, you’re both on the same page knowledge-wise. Definitely do not wait until the last minute on this one. A little bit of planning ahead can eliminate would could be another bump in the road.
Prepare for the Long Haul
Remember that part about separations going on for a long time? Statistics say that the average length of a separation for those relationships that end in a divorce lasts THREE years. So it’s REALLY important to make sure you deal with the financials right away. Don’t fool yourself into believing that the dissolution will happen quickly so you don’t need to deal with financials. Anecdotally, one man thought his separation would end quickly, so moved out and let his wife stay in the family home. For four years, the wife lived in the house without paying anything toward housing payments, while the man, on top of house payments, paid child support.
Finally, Start Thinking about the Next Stage in Your Life
Even if you expect to be granted alimony or spousal support, it’s never too soon to start planning for financial independence. Use this is a catalyst for going back to school, getting a real estate license, finding a new job, etc. One divorced dad used his divorce as a springboard for starting his own business. What dreams did you maybe set aside for the relationship? Dust those off and get busy creating a new life for yourself.
We hope these tips help you in some small way. If you have more financial suggestions, please leave them below. Sharing is caring…..