{"id":15497,"date":"2024-04-13T14:45:33","date_gmt":"2024-04-13T19:45:33","guid":{"rendered":"https:\/\/blog.eztaxreturn.com\/?p=15497"},"modified":"2024-04-19T17:29:47","modified_gmt":"2024-04-19T22:29:47","slug":"rebuilding-your-financial-life-after-divorce","status":"publish","type":"post","link":"https:\/\/staging.eztaxreturn.com\/blog\/rebuilding-your-financial-life-after-divorce\/","title":{"rendered":"How Do I Start Rebuilding My Finances After Divorce?"},"content":{"rendered":"\n

The information in this article was last updated April 2024.<\/em><\/p>\n\n\n\n

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Not everyone who says \u201cI do\u201d goes on to live happily ever after.  Studies show that 35 to 50 percent of U.S. marriages end in divorce.  The rate is even higher for those who choose to remarry.  Going through a divorce can leave your finances in shambles.  Especially if you stayed at home while your spouse worked.  Here’s the blueprint for rebuilding your finances after divorce.<\/p>\n\n\n\n

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Untangle the finances<\/strong><\/h2>\n\n\n\n

Traditionally, when couples get married they merge their finances and open joint accounts.  Now that the relationship has ended, you need to cut ties financially.  The first step to rebuilding your finances after divorce is separating bank accounts, credit cards, car loans and anything else that was in both names.  You don\u2019t want to be responsible for any debt your ex racks up once you choose to part ways.  Review your joint accounts and have them closed or transferred to the appropriate person’s name.  While you’re at it, don’t forget to update your beneficiary information.  If you’re not on good terms, there’s no sense in them getting your money when you croak.<\/p>\n\n\n\n

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Cover your basic necessities<\/strong><\/h2>\n\n\n\n

When it feels like your entire world has crumbled, it can be hard to decide which pieces to pick up first.  A lot of people don’t think straight when their emotions are running high.  They’re so caught up in how they feel that they run out and do things they end up regretting later.  Play it safe for now and just cover the basics.  You need a roof over your head, food on the table, clothes on your back and a way to get to work.  Everything else you can figure out over time.<\/p>\n\n\n\n

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Create a financial plan<\/strong><\/h2>\n\n\n\n

Once the smoke clears and you see which accounts and debts belong to you, start working on a budget.  You\u2019ll need to create two lists; one for your income, the other for your expenses.  Now that you\u2019re going from two incomes to one, you probably won\u2019t be able to afford your old lifestyle anymore.  If you\u2019ve done the math and this proves true, it’s time to downsize and start cutting unnecessary expenses.  Depending on how large the gap is you may need to find a better paying job or work a side gig.  If you crunch the numbers and have money to spare, use the extra funds to build your savings or pay off debt.<\/p>\n\n\n\n

Note:<\/strong>  Even though your ex may be required to pay alimony<\/a> and\/or child support<\/a>, you don\u2019t want to rely solely on their income.  If they decide not to pay because of financial troubles or out of spite, you’ll be screwed.<\/p>\n\n\n\n

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Start saving consistently<\/strong><\/h2>\n\n\n\n

Everyone needs to have at least six months of living expenses tucked away for a rainy day.  The best way to build your savings fast is to pay yourself first.  There are two ways this can be done.  You can have your employer direct deposit your pay into two separate accounts.  A certain percentage can be deposited into your savings and the rest will go into your checking account as usual.  The other option is to setup automatic transfers with your bank.   In both cases, the key is to keep your hands off the money.  Just let it sit there until you really need it.<\/p>\n\n\n\n

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Check your credit<\/strong><\/h2>\n\n\n\n

Now that your financial situation has changed, it\u2019s a good idea to check your credit.  You need to know where you stand so you can start the rebuilding process.  You\u2019re entitled to a free copy of your credit report once a year from Equifax<\/a>, Experian<\/a> and TransUnion<\/a>.  FYI, joint accounts will still show up on your credit report unless you close or separate the account.  It\u2019s not enough to just say who owes what.  If your ex decides not to pay their debt but both names are on the account, both of your credit scores will suffer.<\/p>\n\n\n\n

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Report any name changes<\/strong><\/h2>\n\n\n\n

Once the divorce has been finalized, some people decide to go back to their maiden name<\/a>.\u00a0 Those who choose to do so must inform the proper authorities of the change.\u00a0 Most important is the Social Security Administration for a new Social Security card.\u00a0 If you don\u2019t let them know, you\u2019re going to have a hard time when you try to do your taxes.\u00a0 The name on your tax return must match what the SSA has on file, otherwise they won’t accept it.\u00a0 From there, you need to go the DMV for a new license, title and registration.\u00a0 Next, you’ll want to notify:<\/p>\n\n\n\n