Divorce is a difficult process, emotionally and financially. Before you blindly step into the mess, there are steps you can take to empower yourself by getting your finances in order. Taking the following steps can help make things run more smoothly and even lower your eventual legal bills by being ready for what's to come. According to a recent FoxBusiness article, the following five tips are some that every soon-to-be-divorced couple should pay attention to for help making it through the process:
1. Evaluate your assets
The house is the biggest asset that most couples possess but there are still usually many more that qualify as marital assets that will need to be divided. People often forget about pensions from past jobs or stock options and deferred compensation plans. Such assets have values that are paid out in the future, not always simple divisions today.
2. Weigh your debt
To begin, prepare a summary of the last 12 months of all credit card and utility bills as well as personal and jointly held loans. Such a history will help you decide who should take on which debts. It's important not to take on responsibility for debt associated with property you don't control. For instance, if you are responsible for paying the car loan, you should be the one driving the car. This helps eliminate a lot risk and being liable for the actions of a soon-to-be former spouse.
3. Run a credit check and history
Everyone should conduct an annual credit check with all three agencies. Knowing where your credit stands prior to divorce can help prevent headaches down the line. It's possible that you'll discover a credit card or line of credit that you never knew existed, correcting inaccuracies (or preventing fraud) is important.
4. Track how much you spend
Taking stock of your spending habits and creating a realistic budget for your post-divorce life is crucial. Understanding that your old income will now be used to support two households is important. The same amount of money is now going to pay two rents or two mortgage payments, thus lifestyle adjustments will need to be made. People often underestimate how much they spend and putting everything down on paper forces couples to face the hard truth.