Divorce is a life-altering event. Whether you initiated the divorce or not, the process changes your life. While mistakes are a part of life, there are some to avoid when going through a divorce. This is part two of a three-part blog series where I dive into three common mistakes people make in the legal process to dissolve a marriage.
Mistake #2: Not being prepared.
Not being prepared is one of the worst feelings. In a divorce though, the repercussions can be catastrophic if you are not prepared. Sadly, people not having a grasp of their financial situation is all too common in a divorce. If you do not know what you own or owe, it will be hard for you to develop a plan for where you want or need to be at the conclusion of your divorce.
Preparation helps you garner some control
A divorce often brings transitions in routine, changes to living and financial circumstances, intense emotions to weather and a lot of decisions that must be made. Thus, it is not a surprise that people feel stressed and overwhelmed when they are going through a divorce. Even if you did not see the divorce coming or do not want to be divorced, being prepared will help you immensely. You might also feel like you are in more control during a period that feels so out of control.
Preparation can involve simple steps
There are some simple ways to prepare. Here are a several:
- Understand what you own. Inventory your property by creating a list of what you own and your possessions. Some property may be titled in your name, your spouse’s name or jointly (ie. vehicle, home, bank or retirement accounts). List everything regardless of whose name title is held or if the property is a possession like a dining set. If you have documentation that supports the value of your property, make a copy and keep that with your list. Keep in mind that what you paid for something may not be what it is worth today, but a receipt or invoice might give you a starting point. If you feel overwhelmed by listing every spoon or blender, focus on the bigger-ticket items.
- Understand what you owe. Become familiar with your debts including mortgages, loans and credit cards. Create a list of debts identifying the creditor (ie. the financial institution or person money is owed to), balance and purpose of the debt (ie. vehicle loan). Review statements for any debts and keep copies with your list. If you don’t have access to statements or your spouse is in possession or control of your finances, do your best to list out what you think you owe. You can also obtain a free credit report online at www.freecreditreport.com. Review your credit report to make certain you know all the debts listed for you.
- Understand your monthly cashflow. Make sure you understand what money you and your spouse have coming in and what money is going out each month. If you aren’t clear on the income you or spouse bring in and what expenses are being paid each month, you need to be. Divorce often involves changes to living situations and who pays monthly expenses or how they are paid. So, take the time now to get familiar with your cashflow. A great place to start is your bank statement. Look at the debits, credits and checks paid. If you don’t have online access, head to your local branch and request the statements.
- Develop plans. As noted, divorce involves change. Burying your head or remaining in denial will be a significant disadvantage. It’s best to begin planning for the short and long-term. Give thought to where you will live during and after divorce, how you will pay your monthly expenses, where you and your kids (if any) will find emotional support and the list goes on. Finally, embrace flexibility. Adjustments to plans are common in divorce.
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