A common refrain heard among many people post-divorce is the shock and surprise of living life as a single individual and how hard it is to afford the same lifestyle as during the marriage. Rather than wait until after divorce to determine your financial needs, you should examine these issues in depth carefully prior to your divorce so you can feel comfortable in your post-divorce life.
The first step in keeping it real financially is to sit down and list what you own. What are your separate assets? What are your marital assets? What is their value? What are your sources of income? How long will these income streams continue? Not only will this help you identify what you would like to keep as a divorce settlement, it will help you determine if your spouse has hidden or dissipated any assets.
Next, what are your debts? How much do you owe for your mortgage, in student loans, in credit cards and other obligations? Run a credit check on your name and see if you may have hidden indebtedness you did not realize existed.
Now that you have your assets and liabilities, you can determine your net worth, which is simply your assets minus liabilities. Do you and your spouse have a positive net worth? If so, the key will be making sure you can divide this net worth so both of you leave the marriage in a position to stay on the positive side of the ledger. If you have a negative net worth, you need to determine how you want to use the divorce to allocate and/or reduce your share of the loss.
It is time to review your expenses and lifestyle choices. Begin by writing down all of your expenses during the marriage and identifying who paid what. After you have a complete list, go through and see which expenses will carry through to post-divorce life and in what amount. Some expenses will go down for you, others will go up. As you do this, ask yourself how reasonable and necessary each expense is, and what you could do to reduce or eliminate unnecessary expenses.
At this point you now have a clear picture to take to your attorney with regard to your financial realities, both in the present and post-divorce. You can determine which assets you require, which debts you can handle, and what expenses are reasonable. And you can discuss realistically with your attorney different solutions to any financial difficulties, and whether you will require spousal support, or whether you will be forced to spend some of your marital assets to start yourself fresh post-divorce. You can have different options and different paths going forward; putting it all on paper makes it much easier to keep it real and decide which path makes the most sense.
If you have questions about keeping it real financially during divorce, contact us – we can help.