However, when a couple come to the end of the road, a spouse, particularly the one who is being left, should "get started," which means prepare for a divorce.

Sometimes, usually for financial reasons, couples live together after they agree the marriage is over. Sometimes, one spouse (usually the one who wants out) has seen a lawyer before announcing his or her intentions. Sometimes, even after the couple agree to end the marriage, neither moves out simply because he or she does not want to surrender any ground.

If a couple continues to live together as roommates, there may be risks. At the least, the couple should try to agree on a DOS -- a date of separation. Depending upon the jurisdiction, this date is very important. It establishes a date after which the spouses are individually responsible for their debts and it is important in the division and distribution of assets.

When the decision to end the marriage has been made, a spouse should gather every piece of financial information about what the couple own and what they owe, both as a couple and individually. On the asset side this includes, but is not necessarily limited to, the following: checking and savings accounts, mutual funds and money market accounts; real estate records, including the marital home and second homes and unimproved land; personal property, such as automobiles, furnishings, collections (art, stamp, coin); stocks, bonds, annuities, retirement plans, including pensions and profit sharing; accrued vacation time, medical savings accounts; other valuable personal property, life insurance and season tickets. On the debt side, this includes, but is not necessarily limited to, records of credit cards, vehicle loans, mortgages and home equity loans, promissory notes, student loans and other debt.

Put another way, divorcing spouses need all the financial information that they would have used if instead of divorcing, they were going to a financial planner to plan their golden years.

Sometimes, one spouse (usually the husband) manages the finances, so the other spouse may be a loss when it comes to collecting financial records. Needless to say, divorce works better if the spouses, regardless of their differences, cooperate with each other and gather and share financial information in good faith. When one spouse (usually the husband) is secretive about financial records, the other spouse (or his or her lawyer) generally suspects that he is hiding marital assets.

Once a couple have decided to divorce and even before one of them files for divorce, they should close joint credit accounts, and put the creditors on notice that they are in the process of getting a divorce.

After the couple has filed, they will need to set to work on the marital settlement, which is the division of property, and decide, among other things, whether to file joint or separate income taxes. A couple can file jointly for any tax year that they are married, including the one when their divorce is pending, but not for the tax year the divorce became final.

Despite the advances associated with the emancipation of women of the last generation, stay-at-home mothers whose contributions to the marriage have not been economic often find themselves at a disadvantage when their marriages end. Getting legal and professional help earlier is a good idea. At this stage, the stay-at-home mother may need to obtain court-ordered spousal and child support -- at least on a temporary basis. The stay-at- home mother who has been out of the work force also must reestablish credit in her own name.

In the process of getting a divorce, the spouses must come to terms with the fact two households are now being supported by the income that formally supported one. At a minimum, this means establishing a budget.

Once again, the budget -- which may include temporary spousal and child support -- is easier to make if both spouses cooperate.

See also DOS; Secretion of Assets; Permanent Separation;

Your Suggestion

1. Surviving Divorce: Financially Where to Start
   If you’re getting ready for, or going through a divorce, there are important financial preparations to make. Step number one is to make a budget of your expenses and income, and compare how the two balance out. This fundamental building block can be the first step to regaining control over your situation and restoring calm, at least to part of your emotions. Once both the expenses and the income have been determined, then it is time to compare the two. This is the critical point that often helps you work towards solutions. Once you find a way to balance your income with your expenses, financial balance returns.
   Contributed on 11/19/2007 by: Paragon Wealth StrategiesJacksonville, FL[Total Submissions: 14]

   Category: Financial Planning  (Applicable in All States)
2. How to Create a Budget
   With a budget, the easiest place to start is by listing your fixed expenses: cost of rent or mortgage, utilities, phone, cable, etcetera – all of the things that are regular expenses that are virtually essential to day-to-day living. After listing all of those items, then list the variable expenses – these are items such as entertainment, eating out, shopping – the items that aren’t necessarily required but are normal expenditures during the month. The expense side of the budget is only part of the equation. It is also essential to list out your income sources. Look for dollars from employment, from the other spouse as an initial arrangement for supporting the kids, investments, or perhaps rental income. The big question is – are there enough funds to meet the budget, or is there a shortfall?
   Contributed on 11/19/2007 by: Paragon Wealth StrategiesJacksonville, FL[Total Submissions: 14]

   Category: Financial Planning  (Applicable in All States)
3. Budget Shortfall
   If you are getting ready for, or are going through a divorce, and feel that dollars are tight, you should realize that you are not alone. Be careful of falling into the trap that many people encounter: knowing that money is short and continuing to overspend. This won’t help solve the problem; in fact it makes it far worse. What will help rectify the situation is tightening up the budget. Think of it like a diet – it’s rarely pleasant at first, but it is possible, and often it can have beneficial impacts in the long run.
   Contributed on 11/19/2007 by: Paragon Wealth StrategiesJacksonville, FL[Total Submissions: 14]

   Category: Financial Planning  (Applicable in All States)
4. Need a Financial Diet?
   The first step if you discover the need for a financial diet is to look back at the variable expenses – the shopping, eating out, home or personal items, and the “fun” money. You need to take a hard look at these expenditures and ask yourself: are these necessary? Do you really need that $4 dollar cup of coffee at your favorite coffee shop, or do you just enjoy it and find it more convenient? Do you really need to shop or buy things for the home, or is it just a habit that you enjoy? The reason that budget cuts in divorce are hardest is because they require us to cut out the things that added enjoyment to life – at a time when emotionally we’re probably already short on positive experiences. But rest assured, sooner or later in life there are often ways to gradually add those enjoyment aspects back in.
   Contributed on 11/19/2007 by: Paragon Wealth StrategiesJacksonville, FL[Total Submissions: 14]

   Category: Financial Planning  (Applicable in All States)
5. Are Fixed Expenses Really "Fixed"?
   Some simple ways to attack the budget problem are to look at some of those items we called fixed expenses, and see if the entire expense associated with them really is “fixed”. For example, if the household has cable television, how many of the channels in the package are really watched? Could the cable package be downsized to something more economical that still provides most of what is actually used? Another good example might be your home phone service – are all the features really used, or are there call forwarding, multiple lines, or other services that really aren’t needed. Adjusting services like these may only save $10 or $15 dollars each, but added up these savings can be significant.
   Contributed on 11/19/2007 by: Paragon Wealth StrategiesJacksonville, FL[Total Submissions: 14]

   Category: Financial Planning  (Applicable in All States)

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