Getting a divorce is not just emotionally taxing, but can be very expensive unless you end up in an uncontested and amicable divorce. While divorce affects all areas of our lives, minimizing the financial damage throughout the process is possible. By doing something to free yourself of the financial troubles, you can easily start rebuilding your world when the divorce is over.
If you’re planning on getting a divorce, or you’re starting the divorce process, you can get our free e-book entitled “10 Things You Should Do Before You Even Think About Divorce” by clicking here.
If you are already divorced or facing a divorce and you’re currently hurt by your finances, then following the steps below may help resolve your financial issues.
1. Get a copy of your credit report. You can get a free credit report every 12 months or every time you have been denied credit in the United States. Credit status in the U.S. is tracked by three credit bureaus: Experian, Equifax and Transunion. It’s recommended that you get your credit report and score from each of these credit bureaus. Your credit score is generally based on the length of time you have had credit (the longer the better), the amount of the available credit you’re using (the lesser the better), and whether you’re paying your bills on time. Check for errors on your credit report. If you find any, you may submit a dispute with the credit reporting company to fix the error. Also check if there are judgments or collections on your account. If the payable amounts are small, it’s best to pay them off and then you can negotiate for that information to be removed from your report. If you and your spouse have reached an agreement to take care of certain debts, check if your name is on any of the debts that your spouse is responsible for paying, and do something to have your name immediately removed from the list.
2. Apply for credit card using your name alone, because you need to establish credit of your own (in case most of the credit is in your spouse’s name). For joint credit accounts, either party can request for closure of the accounts. You may be able to have the card put in one of your names rather than closing the account, which can hurt your credit score. However if this isn’t possible, you may reapply for credit based on your own earnings and credit score.
3. Make your own budget. Oftentimes in marriage, only one spouse manages the finances and pays the bills. You need to determine your income and bills for each month. You also need to include emergency purchases in your budget such as leaky pipe repairs and buying new tires for your vehicle.
4. Make changes to your life insurance policy. If you don’t have your own life insurance, get a policy for yourself. You may also consider designating a new beneficiary for your policy. Update your will and any health directives you may have to finally remove any authority of your spouse.
5. Start saving for your retirement. Oftentimes in marriage, only one spouse has saved for retirement. It’s important to start saving for your retirement in your account.
While picking up the pieces after a divorce is a daunting task, you can get your financial health back by doing the right things, which will prepare you for a long-term financial freedom.
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