Coping With The Financial Fallout Of A Break-up

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Self

Here are 7 tips to ensure your family's financial survival during a break-up.

Divorce is tough--especially when you have children. As a parent, you not only have to cope with your own emotional turmoil, but you also have to ensure that your kids aren't caught in the crossfire. Dividing assets, working out custody arrangements, and trying to remain amicable throughout the whole ordeal is draining. It is important, however, that you don't let the chaos around you distract you from achieving a very significant goal--ensuring that you and your children will be able to survive financially.

Here are a few tips that will help you ensure that both you and your kids are able to keep your heads above water when the storm clears.

1. Keep an eye on your credit

Your future ability to obtain credit relies on the state of your credit rating. That is why you must keep a close eye on it. Contact Equifax or one of the other main credit reporting agencies and ask for your credit report. Check for any errors and have them corrected. Also, apply for a "disassociation," separating your credit from that of your ex-spouse's.

2. Close joint accounts

The last thing you want to do is pay for your ex's new single lifestyle. In order to protect your assets, close any joint bank accounts and credit cards immediately. Ask you financial institution to check for unused or dormant accounts too. And, be sure to inform your bank of your impending divorce.

3. Open accounts of your own

It is time for you to open new bank accounts of your own, preferably at a different financial institution than the one that held your joint accounts. Make sure that you have a separate account for checking and savings. You should also apply for credit cards in your own name.

4. Splitting assets

Some assets are obvious--the bank account balances, the home, cars, and valuable antiques--but don't overlook the importance of the pension. While you may feel attached to the marital home, you need to take a step back and look at it objectively. Mortgage payments, property tax bills, insurance, and maintenance can become a financial noose around your neck if you are cash-strapped.

In many instances, you may be better off to kiss the big house goodbye, downsize, and take a share of the pension instead--especially if you don't have a retirement plan of your own.

5. Know what you owe

Make sure that each and every debt--no matter how small--is factored in to your divorce agreement. If you haven't assumed responsibility for a debt, get your name off of it. When all is said and done, you should not have any debts bearing both of your names.

6. Make a budget
Once you know how much your new income and financial liabilities will be, it is important for you to devise a monthly budget. This will keep you and your family on track and enable you to earmark a portion of your budget for savings. With all of the financial onus on you, you will need to ensure that you have a substantial cushion--at least enough to cover expenses for six months--in case an emergency arises. For some helpful hints, check out these budgeting tips for single parents.

7. Rename your beneficiaries

Don't forget to ensure that your ex-spouse is no longer your beneficiary on investments and insurance policies. Also, you may need to make changes to your will.

While you're in the throes of divorce, things may seem grim. But don't lose hope. You can get through this. And with some careful planning, you and your children can continue to enjoy a financially secure and happy life.

What financial advice can you offer someone who is in the middle of a divorce?

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