How to Find Your Financial Footing After a Divorce

S.B., Gawker MediaFeb 25, 2014, 12.30 PM IST

The emotional pain of divorce can be heartbreaking-the separation of a life together and the struggles of building an independent life can be almost overwhelmingly difficult. Divorce is also one of the factors in people's financial disaster.


Divorce can be particularly difficult for single income families, where one of the spouses gave up their career and income, and now find themselves struggling to get by, often with added financial obligations, such as the cost of raising children, maintaining a home, and sometimes alimony. How exactly can you pick yourself up and get back on your financial feet after a divorce?

Immediately After the Divorce

Unexpected bills aren't something that anyone is too fond of, and while a divorce might not necessarily come as a surprise, you will need to be wary of any immediate financial responsibilities, such as finding new short term accommodation for you, any children and pets while long term arrangements are made, as well as remembering that you might soon be facing hefty legal fees for the divorce itself.
While going into debt is hardly an ideal scenario, you might want to consider a loan or overdraft facility-although if you go down that road, you'll need to carefully work out your budget so that you can repay the outstanding amount as soon as possible.

The Uncontested Divorce

Your spouses' attorney or a court appointed official will be going through your finances with a fine-toothed comb, and it's extremely unwise to attempt to hide any assets. Divorce laws vary greatly state-by-state, and while you don't want your spouse to get more than they're entitled to, you will have to take a financial hit, as well as a potentially emotional one, since joint possessions and properties may need to be sold off, depending on the terms of the divorce.
In the best-case scenario, a divorce will be uncontested, and the parties will have gone through their assets and agreed upon the division without the need for legal representation.

The Collaborative Divorce

Another form of divorce that is less messy than the all-out legal brawling is the collaborative divorce, which involves the parties dividing their assets with the assistance of legal and financial advice, but without the need for litigation and a court deciding on the awarding of funds.
Collaborative divorce can result in a new financial obligation; usually for the most financially dominant of the parties, since they might be advised to award more funds to their former spouse than they first thought was necessary. So how do you fund this type of settlement if you find yourself needing to?

Funding the Divorce and Your Post-Divorce Life

In order to pay the amount stipulated in the divorce, it might be necessary to liquidate stocks and shares, even if it's not the most market friendly time to do so. A broker will be able to assist you with this process, and will ensure that you get the best deal, despite their commission.
Try to leave your 401K or other forms of retirement savings alone if necessary, since it can be extremely difficult to replace it. To fund a $50,000 withdrawal,you'll need to allocate an extra 1% of your salary annually to replace it, if you're in your mid 30's. You'll need to allocate more if you're older.
Getting your post-divorce finances back in order is simply a matter of control. It can be exceptionally difficult to make ends meet; particularly for women who have primary custody of any children and might need to return to working life.
It's really a case of scrupulous budgeting, taking into account your reduced assets and income, and realizing that getting back on your financial feet is something that can take years.
After the Divorce: Getting Back on Your Financial Feet | One Cent at a Time
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