When you're divorcing: Top six tips to avoid financial disaster
By Jamie Cook, CLF, ChFC, CDFA

Divorce is an emotionally draining experience for most people who go through this major life change. In the midst of a multitude of feelings and fears, it's difficult to focus on finances. Knowing what to steps to take will help any person facing divorce to prepare with information and action and to circumvent money woes during an already stressful time.

• Your new budget -- For some people, the word "budget" is a negative term. But when you are divorcing, understanding your new expenses is essential in negotiating your settlement. A cash flow analysis will help you fine-tune your lifestyle beyond today's immediate concerns. Get professional advice from a Certified Divorce Financial Analyst. Your analyst will help break your finances into five categories:
  1. Savings
  2. Debt payments
  3. Fixed expenses
  4. Variable / Fixed expenses
  5. Discretionary expenses

• More information on divorce and financial distress: Taking Control Your New Financial Identity Surviving Divorce During Recession

  Negotiate a reasonable settlement -- Understanding the short- and long-term consequences of a settlement is critical for your peace of mind. The negotiation should be fair for both parties. You do not want to return to court to renegotiate your settlement. The emotional and financial toll of second legal engagement can be extensive.

• Can you afford to keep the family home? You may want to think twice about keeping it. The cash you will receive through selling the home may help you move into a smaller, more affordable home. Creating a new future with a new home can enhance your emotional well-being along with your bank account.

• Make a list of items -- You may not get everything that you want in a property division. Make a short list of the items that you must have. Be prepared to compromise on other property. Understand that it could cost thousands of dollars to fight over an item. The more money spent battling and accruing legal fees, the less money you have toward your financial future

• Retirement assets: Protect yours -- A Qualified Domestic Relations Order, also known as a QDRO, is a domestic order that creates or recognizes the existence of an alternate payee's right to receive or assign the rights to a portion or all of the benefits payable to a participant under a retirement plan. Get an expert to help in this very important asset.

• Debt is a killer -- Get a copy of your credit report and close all joint accounts. You also should close all accounts that you don't use. Debt is a huge burden and keeps many Americans from achieving financial freedom. Use credit sparingly and pay the balance off each month or in a timely fashion.

Divorce is undeniably painful, but it shouldn't be crippling to a couple's finances. Be prepared and be realistic, and you and your family will be less pained by money issues in the future.

Jamie Cooke, CLU, ChFC, CDFA™ is a Nevada financial coach and Certified Divorce Financial Advisor.

For more articles on the financial issues of divorce, visit http://www.divorcemag.com/articles/Financial_Planning.

Tuesday, May 15
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Out With the Tragedy: Turning Divorce into a meaningful experience
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