Getting a divorce is not merely emotionally stressful. It can also be devastating for your personal finances. It’s crucial that you take an accurate accounting of your financial well-being at the front end of the process or it could jeopardize your future earnings and retirement.
The failure to address potential financial consequences can be especially devastating for those undergoing a so-called “gray divorce,” or those splitting up after age 50. It’s important for each spouse to make sure they can afford their new life alone.
Set up a post-divorce budget
Divorced couples in New Jersey and elsewhere usually discover that living separately costs much more than living together. Knowing what your monthly expenses will be is vital, especially if one spouse has been paying the bills and managing the family’s budget. Figure out what your immediate costs will be including:
- Car payment
- Rent or mortgage
- Insurance costs including health, auto, renters or homeowners
- Everyday expenses such as groceries and gas
Financial advisers say to wait for a few months before tackling long-term costs such as saving for retirement or college for yourself or your children.
Dealing with marital debt
Creditors (and the courts) consider debt created while a couple was married to be the responsibility of both parties. If you share debt with your soon-to-be-ex, the best solution is to eliminate it before the divorce is finalized. It can be hard to keep up with loans and credit card payments when your new situation is already more expensive.
Debts that can’t be paid off before the divorce may be assigned to one spouse or the other. This creates a sticky situation. When one spouse isn’t keeping up with payments, it may affect the other spouse’s credit rating and finances. It should be outlined in the divorce agreement whether your name will stay on the account (to make sure the bills are paid) or removed entirely.
Once you’re divorced, remember to update important documents to reflect your new status:
- Update mortgages and car titles
- Update wills, power of attorney and health care directives
- Remove ex-spouse from credit card authorization
- Open new bank accounts in your name
- Change passwords for online accounts
- Change beneficiaries for insurance policies and retirement accounts
Have contingencies in place and seek professional advice
You should make sure you have a backup plan in place if something unforeseen happens, such as an ex-spouse becoming disabled or they stop paying support. For some, that means including a claim on life insurance or an estate.
Seeking the advice of an experienced New Jersey family law attorney can help you plan for your new life and work to protect your financial health before, during and after your divorce becomes final.