Breaking up may be hard to do, but navigating divorce can seem impossible. It’s a road full of emotional, legal, and financial pitfalls: the chaos is stressful, painful, and even frightening. For now, let’s talk about the financial aspect of divorce and the importance of understanding the realities of it.
Suddenly feeling overwhelmed and don’t know where or how to start? If you haven’t been the money manager in your marriage, this can be even more of a challenge but not impossible to learn. The first thing is to understand why having a firm grasp of your finances is so important.
When you get a divorce, the main things that must be decided fall into four categories: marital or community property division; your debt division; if there are minor children from the marriage a custody and parenting plan must be determined; and the amount of child or spousal support calculated. Of the four core issues, three have a financial basis. Until you have a clear idea of your finances, you won’t be able to make sound decisions. And, whether you live in a community property state or one where the principle of equitable distribution is how property is divvied up, you must be prepared.
Another financial hurdle to consider is the actual cost of getting a divorce. Today there are many options, from doing it yourself and filing your state’s pro se forms, to each of you hiring an attorney and potentially battling it out in court. There are also collaborative law and mediation options to consider that fall somewhere in between the bare bones, DIY divorce costing a couple hundred dollars or less, and the average $20,000 to $30,000 and up a couple can spend doing it the old fashioned, adversarial way.
The financial realities can quickly set in and you may need help along the way. Whether it’s with the financial planning, counseling for the emotional upheaval that comes standard with most divorces, or the financial concerns of running two households when there used to be one, don’t hesitate to seek a professional’s help.
So, what’s next? We’ll explore how to get started in Part II: Financial Dos and Don’ts During Divorce.