Divorce is a messy process, not just emotionally but financially. There are many costs associated with divorce that are often unanticipated, causing more stress to those involved. If you know what to anticipate, you can prepare your finances so you won’t take as big of a hit when the divorce is final. Here are five ways you will be effected financially during and after your divorce.
Often the first financial burden of a divorce comes from splitting the household into two. Upon divorce the cost living almost doubles instantly while the shared income usually stays the same. The couple has to go from having one household to having two once a partner moves out. So while the couple pays for two households, the utilities, bills and other household expenses also double.
Diving Assets and Debt
During divorce debts often have to be divided. It’s sometimes tricky to find out which debts belong to whom. Often both parties will request a credit report from all three of the credit reporting agencies to find out which debts belong to one person and which ones are shared. In a non-amicable divorce, sometimes one person will rack up debt in order to get back at their spouse.
Assets must also be divided in a divorce. Often assets that were acquired by one person will divided equally between both of them. Exactly how the assets are divided will depend on the state.
Child support payments are usually decided based on the income earned. On average, child support payments are around $5,000 a year. Often, however, the full amount of child support is not paid. Typically child support payments received are around $3,200 a year. Spousal support also is a factor. Alimony can vary greatly depending on the state. It is based on income. Alimony is more often granted to women. In some states the question of spousal support does not even come into play unless the couple had been married for over 10 years.
Start Up Fees
There are a good amount of extra expenses that can accrue from the costs of starting the new life where both individuals will live apart. According to the experts of Cheap and Fast Divorce, who provide clients with cheap divorces, you need to take into account things like putting a down payment on a new residence, utility deposits and the costs of moving and childcare fees. Clients often don’t account for these types of expenses because they haven’t come around to the idea of starting a new life on their own, or without their spouse. These types of fees can start to add up on you, so have a plan and budget out the necessary money needed to start over after divorce.
As the divorcing couple divide their assets, another important factor to consider are the tax implications of the capital gains that accrue. One must be thoughtful enough to prepare for such factors, as failure to do so can result in negative consequences. Tax time can be difficult for those who are used to having their spouse take care of taxes. If your spouse always handled the taxes, it is time you learn the facts and requirements surrounding taxes so you can be prepared.
As mentioned, those going through a divorce have plenty to deal with. Not only will you be struggling emotionally during a divorce, but you will also be dealing with legal issues, and will no doubt experience serious changes at this time. Although it will be difficult to think about your finances at this time, it’s an integral part of moving on and becoming successful as well as happy after a divorce. If you were used to your spouse dealing with the finances, enlist the help of a financial adviser to give you advice on how to get your finances in order and the best way to proceed after your divorce.