8 Ways to Keep Down The Cost of Divorce

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We’ve all heard the horror stories about how expensive divorce is. Unbelievably, divorce doesn’t have to lead to bankruptcy or a negative bank balance. It can be done inexpensively if you don’t rush through the process and make bad decisions. So, do some constructive planning and be sure not to make any of the following mistakes.

 

8 Ways to Keep Down The Cost of Divorce:

 

  1. Keep your expectations realistic.

    Expect money to be tight. Don’t go into divorce thinking you are going to be able to maintain your present lifestyle. Unless you are fairly wealthy you should plan ahead because there will definitely be less money to live on. And don't assume that you will receive alimony. Spousal support and alimony are quickly becoming a thing of the past.

  1. Keep the lines of communication open.

    If you have a spouse you can trust then be willing to share needed information with him/her. Don’t hold back with your attorney either. If you aren’t willing to communicate the issues it will only cost you more money because your attorney will then have to do more work. Attorneys bill by the hour and they aren’t cheap.

  2. Don’t let it turn into a War of The Roses.

    Nothing drains emotions and finances like a long, drawn out divorce battle. Be willing to negotiate and do not make it about getting all you can get. Remember, equitable, does not mean equal. You may have to settle for less than you want to save money in the long run.

  3. Stay focused on the here and now.

    Keeping your focus on the job at hand will mean keeping a handle on the financial implication of any decisions you make. It will keep you from making the mistake of accepting a depreciable asset over an asset that won’t depreciate over time. In other words, the Volvo worth $38,000 may seem attractive but the mutual fund worth $38,000 will be of more benefit in the future.

  1. Always consider implications to taxes.

    Figure in the tax cost of every financial decision you make. For instance, who will benefit more from claiming your child, you or your spouse? Or, what are the capital gains on real estate property and how much will that cost at tax time? Go to irs.gov and use the search box to do your research on different ways divorce impacts you at tax time. You don't want to pay Uncle Sam more than he is due!

  1. Don’t overlook anything.

    Make sure you have information on everything that will affect your financial future. Make a list of all assets, have copies of statements from all bank accounts, investment funds, and pension plans. Get your information together ahead of time so you won’t have to waste time at the last minute. And, make copies for yourself as well as your attorney. Have those copies at every meeting you have with your attorney. 

  2. Get rid of those joint accounts.

    Mingled finances means trouble in the future if your ex-spouse defaults on a car loan payment, goes bankrupt or becomes disabled. Cut or minimize joint accounts you have with your spouse before the divorce. It might be too late afterwards. If you can't get rid of the account then, look into getting those accounts in one spouse's name only. 

  3. Think about the effort and expense of a new career.

    If you gave up a career to stay at home with the children, it probably won’t be easy to get back into the workforce. Especially if you are leaving a long-term marriage and you haven't worked in a couple of decades. So, take into consideration what it will cost to become marketable in today’s workforce when negotiating a settlement. In some cases the more financially stable spouse will be ordered to help pay those educational costs.