To some who have never faced divorce, this appears to be a ridiculous question. The first time I was asked to answer this question for a client, I remember thinking that money is a primary cause of divorce—not a consideration.
I have found that for most women the fear of financial security for themselves and their children is so great, intensified by the recent economic downturn, they will often ask this question prior to proceeding with divorce. Asking the question is the easy part; however, without the proper resources and guidance, it can be a very difficult question to answer. The following steps should be completed in order to determine if you can afford to get divorced.
- Consult with a fee- based financial planner who specializes in divorce planning.
- Verify all debts by obtaining a credit report (from all three credit bureaus) on yourself and your spouse (must obtain his permission).
- Identify all assets of the marriage by locating current bank, retirement, and brokerage statements and wage reports.
- Locate all mortgage and real property tax documentation. Contact local real estate agent for a free home comparable report in order to determine current market value of real property.
- Compare pre-divorce income to post- divorce income.
- Determine and track household budget pre-divorce.
- Define and track realistic budget post-divorce.
- Discuss short- and long-term goals for post-divorce.
- Pay down as much debt as possible prior to filing for divorce.
- Seek employment and/ or investigate new career opportunities.
- Calculate child support and alimony payments (if applicable).
- Investigate the likelihood you will be able to purchase or lease a home post-divorce.
- Observe a few family law hearings at local county courthouse.
- Explore mediation options in order to avoid the high cost of family law litigation.
- Consult with attorney to discuss divorce laws within your state of residence.
Ladies, “Experience the Power of Planning” by following the applicable steps above. Having a better understanding of your pre- and post-divorce financial situation will enable you to make better decisions during the divorce process. Remember, always strive to be proactive instead of reactive during your divorce! Allowing your emotions to get the best of you will only prolong the process and unnecessarily increase your legal fees. Please contact Kristen Hafner, CFP®, MBA via email Kristen@financialmoxie.com or phone at 805-217-3126 for further questions.