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4 tips for your finances during a divorce

One of the impacts that a divorce has on a person is financial. Divorce is an expensive prospect, not only because of the cost of the legal proceedings but because you are going to have to take on the expenses of an entire household on your own income.

Even if you are the one to move out of the marital home into a smaller place, you will still have to carry the financial burden on your own. Fortunately, there are ways to prepare for this during a divorce.

    Preparing for independence

    The end of your marriage is the perfect time to make other life changes. One of these might be reclaiming your finances. There are several things you can do now that might help you far into the future, including:

    1. Close all joint credit lines

    This prevents your ex from running up credit balances that you will be responsible for. You and your ex might have to work together to determine who will take care of which bills so that you can have the balances transferred to individual accounts instead of remaining in the joint one.

    2. Watch your credit report

    Your credit score might change after the divorce due to the change in the debt-to-income ratio. If you had joint credit that your ex is responsible for and that isn't transferred into individual accounts, you will take hits on your credit if they don't pay the bills on time.

    3. Set your budget 

    Calculate your take-home income and enter all of your expenses into a budget. This gives you an idea of where you can make cuts and where your money is going. Remember, some expenses like attorney fees and court costs are temporary.

    4. Check payable-on-death designations

    Chances are good that your ex is listed as the person who will reap the benefits of your financial accounts if you pass away. Some people might choose to leave it this way so that person can have the funds to care for the children if they pass away. If you don't want your ex to have the money, change the designations. Insurance policies, investments and bank accounts are all likely going to have this set.

    Keeping a level head

    You also need to look at the property division process to see what you can do to benefit your financial situation. Don't fall into the temptation to look at the overall value of things.

    Instead, balance that with the upkeep cost and other expenses of each asset. You might find that some just won't work with your new financial situation.

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