Divorce Finance 101: How to Recover Financially from Divorce

Almost 40% of marriages in the United States end in divorce.

While during this difficult time emotions are cared for – all too often people neglect their finances.

The emotionally turbulent time leads to bad decisions at a difficult time. Divorce finance is added to the list of regrets.

If you foresee that you will experience a divorce, how can you protect yourself?

Here are 5 steps that you can take to survive a divorce financially.

Create a Financial Plan

Navigating the tricky waters of divorce is tough, particularly if you have no experience. Sitting down with a pen and paper and planning the finances of your new life may be the very last thing that you want to do. However, it may be the very best.

Arrange to see a trusted friend or a financial planner. This is someone who can think dispassionately about your situation. They may be able to hold you back from making irrational decisions and help you to see blind spots.

They can even help you structure your payments to the point where you can see the light at the end of this financial tunnel.

While restructuring your financing, you may see a need to raise finances quickly. In this case, the sale of an asset, such as a house, may help you meet the divorce fees quickly. If this is the case, we would like to meet with you.

We buy houses in an expedited fashion, to enable you to get the cash you need as quickly as possible.

Control Your Spending

The line from the song “I’m gonna do the things, you wouldn’t let me do” can seem to be an attractive prospect. However, after splashing the cash, you may have to learn a hard lesson. That now with a single source of income, repayments will be harder to meet.

You may have to sacrifice other things in life to finance that impulse purchase. Bad spending can easily become a habit, becoming harder and harder to get out of.

Avoid Alimony Evasion

Divorce is a painful time, and alimony payments can be a reminder of that pain every month. In a rush to escape the pain, some are tempted to quit their job and live off borrowed or saved cash to avoid this.

However, this is significant evidence of short term thinking that needs to be avoided. Learn to manage the alimony payments. In coming months you will be glad you retained your source of income.

Don’t Cash in on Investments

As humans, we see the urgent and not always important. You see the urgency of paying divorce fees as quickly as possible. Giving up investments can seem like the easy way out. However, try to think with the long term in view.

Try to retain investments until they reach maturity. In 10 years you may thank yourself for looking for alternate sources to finance the payment of divorce fees

Know Your Tax Laws

In the past, the spouse paying alimony would receive a tax break. This meant that the receiver would pay the tax. Since the Trump tax changes came into effect, however, this has changed.

Now the alimony provider pays the tax. Often the spouse paying the alimony is in a higher tax bracket and so feels the burden even more. This adds difficulty to an already difficult situation.

Don’t Be a Divorce Finance Victim

When the divorce is finally realized, you will have the freedom to start again. By making good decisions during the divorce proceedings, you can enjoy your new life without a financial hangover.

By making sober-minded decisions and getting the help, you need you will be able to plan your next step without financial burdens.

Speak Your Mind

*