Many people focus on emotions and support when they are looking to divorce. How will they get through it? Who will their friends support? What happens to children and the assets? There are so many things that people think about and yet the one thing they forget to consider is the financial impact of an impending divorce. Here are six things for you to consider as you decide on this major life change:
Over 20 states require a separation period before you can begin divorce proceedings. Often this leads to moving into a new residence. This can mean purchasing a home or renting an apartment, which translates into a new mortgage or rent and deposit. But it doesn’t stop there, here are more expenses to consider:
- Movers or moving van rental
- Deposits for setting up electric and water
- Paying for your own cable (or dish) and internet
- New furniture and appliances
- Renter’s Insurance
The Need of a Lawyer
If you are lucky enough to not have any assets to divide or custody to work out, you may not need a lawyer. Many, however, have assets and children and a lawyer becomes a necessity. Divorce lawyers are going to cost you a pretty penny. You can minimize the cost by working through your proceedings as quickly as possible. The longer you go, the more you fight over assets and custody, the more expensive the lawyer. It will be in your best interest to call around and ask about retainer fees and hourly rates.
A New Vehicle
If your marriage featured a one-car home, you are going to need a new vehicle. When adjusting your budget for these new expenses, you are going to have to figure in new car payments. If you prefer to buy a used vehicle outright, you will need to save and plan for this expense.
An Insurance Adjustment
Believe it or not, a divorce could hurt you in terms of insurances. Auto insurers often offer discounts for multiple drivers on a policy. Health insurance rates could go up for the same reason. Life insurance can even be adjusted. Do check into all your insurance interests to find out what the impact will be on your bank account.
With a change in the household, your taxes will most likely change. Moving from married and filing jointly to single (or head of household) can put you into an entirely new tax bracket. Additionally, there must be planning on who can deduct for dependents, which will affect your tax bracket. And if you will be receiving alimony? That’s taxable as well! It will be a great benefit to you to ask a CPA on how to best handle and adjust to your new tax status.
If you have a gym membership or a cell phone account based on your marriage, you may be dismayed to learn that your bill is about to go up. Services for groups often offer a discount that will benefit a family unit. Once single, rates will go up. Shop around to find the best deal you can, now that you are on your own.
Divorce is one of the more difficult experiences one can get through. The end of the relationship is wrought with so many emotions and new experiences. Adding in financial stress is just one more headache to deal with. In the long run, you will be a stronger and a better person. It just takes some hurdles to get there!
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