Getting It Together Before a Divorce
The financial issues surrounding a divorce are some of the most important and lasting items than need to be examined and addressed, hopefully before anyone starts filing papers in court. If you are considering a divorce, you’ll need a good picture of your financial obligations and assets before you start dividing things up. You’ll need to organize your financial paperwork, including all bills, bank statements and any other permanent records related to money. It will be much easier to evaluate your current situation after you have assembled and organized all of your financial documents, this will also permit you to start thinking about an effective budget for the future.
Assembling all your permanent legal and financial records includes any bills that become permanent legal records after they are paid, like tax returns and house payments. You’ll also need to gather permanent legal records like birth certificates, bank statements, passports and retirement account info and separate them from your actual household bills.
Once you begin the process of assembling your household bills means separating the paid bills from the unpaid, the new bills from the old. Make separate categories like house payments, credit card bills, car payments, grocery bills, and utility bills should all be sorted and stored in one place where you can access them easily. Once you have thrown out all the junk bills you don’t need, you’ll have less clutter to deal with too. Categorize, organize and store your records so that you or your attorney can find it easily and quickly later.
Once the bills are in order you can look into creating an estimate of your monthly spending based on what it cost in the past. Keep an ongoing record of what your current costs are too. By comparing the estimate to the actual amounts spent you will have a good indication of a realistic monthly budget. The process should also point out any areas where you might be spending more than you need to. After you have created a rough budget you can start thinking about reducing your spending in areas where you can make cuts. Fixed monthly bills like your house payments or groceries will still have to be paid, but you can probably reduce your energy consumption without too much trouble by turning off lamps and taking shorter showers. Reducing non-essential spending in areas like restaurants, movies, entertainment, and clothes shouldn’t impact your lifestyle too terribly. It is possible in some cases to reduce your fixed monthly bills by renegotiating them, depending upon the utilities provider. If your bills are paid on time you will avoid any extra costs in penalties though. Consolidate your credit cards into one or two accounts that have the lowest interest rates and terminate credit cards you don’t use anymore.
Last but not least, anyone considering filing for a divorce might do well to create a separate bank account containing enough cash to cover living expenses and unforeseen emergencies. Life is full of unexpected surprises and many of them require cash. The rough spots are always easier to handle when you have a little cash set aside in advance.