If you\u2019ve ever gone through a divorce, as many of us have, you know that it\u2019s an incredibly difficult experience.\u00a0 What\u2019s arguably been the most important relationship in your life is about to end, or has just ended, and you\u2019re reeling.\u00a0 So many things have changed.\u00a0 You may have moved out, and found your own place.\u00a0 If you didn\u2019t, your partner likely has, and your home feels strange.\u00a0 If you have kids, they\u2019re caught in the maelstrom and need lots of support.\u00a0 Your extended family \u2013 parents, sibling, etc \u2013 have had different reactions to the news – some supportive, others perhaps not so much.\u00a0 The same is true of your friends; some have rallied to your side; others haven\u2019t really been there for you.\u00a0 Even the family pet(s) may have been pulled into the storm \u2013 you\u2019re arguing over who\u2019ll keep Lucy, the labrador retriever.\u00a0 However, though you may not know it, the biggest challenge you face is the financial impact of divorce.<\/p>\n
Probably the biggest and most obvious question you\u2019re facing is where to live.\u00a0 If you\u2019ve been in your current home for any length of time, you may be attached to it, because it provides comfort and stability during a tumultuous time.\u00a0 If you have kids, you\u2019ll likely be even more motivated to stay in the place they consider \u201chome\u201d.<\/p>\n
But you should ask yourself if it\u2019s prudent to remain in your home from both a practical and an economic perspective.\u00a0 Do you need as much space, now that you and your spouse will be living separately?\u00a0 Can you actually afford to live in the house, and also pay for all of the other expenses in your life?\u00a0 If you keep the house, you\u2019ll be responsible for the mortgage payment, property taxes, homeowner\u2019s insurance, all of the utilities, and ongoing maintenance (e.g. replacing appliances, painting, the roof, windows, etc.).\u00a0 These costs can obviously add up fast, and they may amount to more than you think.<\/p>\n
You should ask yourself if owning a home even makes sense.\u00a0 For the better part of a century, the American government has promoted home ownership as the foundation of the \u201cAmerican Dream\u201d.\u00a0 But is it? \u00a0Home prices have risen dramatically over the past several decades, particularly on the coasts.\u00a0 If you combine this with the fact that real incomes have mostly been stagnant over the same period, you should consider whether you may be better off renting.\u00a0 You might find this tool<\/a><\/strong> from the New York Times helpful, as you consider the trade-offs.\u00a0 The cost of housing is probably the biggest and most immediate financial impact of divorce.<\/p>\n As you come out of your divorce, one of the first things you\u2019ll need to do is figure out how you are going to get health insurance for you and your children.\u00a0 Is your ex-spouse going to cover the kids on his employer-provided plan?\u00a0 If you were on your spouse\u2019s employer-sponsored health plan before you divorced, you\u2019ll have the opportunity to continue that coverage under COBRA<\/a><\/strong> for as long as 36 months.\u00a0 The problem with health insurance under COBRA is that it can be very expensive, because it\u2019s not subsidized by an employer and lasts only three years.\u00a0 It always makes sense to explore other options in the private health insurance market.\u00a0 If you live in Oregon, you might be eligible for tax credits for plans available through the health insurance marketplace.\u00a0 If your income is lower than $1,396 a month, you might qualify under the Oregon Health Plan and pay no premium.\u00a0 California residents can buy coverage on the health insurance exchange, or in the private market.<\/p>\n Health insurance isn\u2019t the only insurance that needs your attention, though.\u00a0 You need to consider life insurance, as well.\u00a0 You should make sure that there is enough insurance on your ex-spouse to replace spousal support and child support payments, should he die prematurely.\u00a0 The court may require your spouse to carry life insurance to protect these payments.\u00a0 Make sure you own the policy.\u00a0 If your ex-spouse stops paying the premiums, you can intervene before the policy lapses.\u00a0 You should also consider life insurance on yourself, particularly if you have dependent children.<\/p>\n If you\u2019re working or returning to work, remember that your income should be insured.\u00a0 You can do this through disability insurance, which can be obtained through your employer and\/or in the private insurance market.\u00a0 If you become sick or hurt and unable to work, you want your income to continue.<\/p>\n Insurance can be confusing, and buying it can be expensive.\u00a0 We recommend working with an insurance specialist who can help you understand what type(s) of insurance you need, how much coverage you need and how long you\u2019ll need it.<\/p>\n If you have kids, your divorce will likely be very hard on them.\u00a0 It may be smart to get some professional counseling help to guide your kids through this challenging time in their lives.\u00a0 You\u2019ll want to protect them, and give them as much stability as possible.\u00a0 We often see parents use money as a tool to help their kids feel better.\u00a0 They\u2019ll buy them things (phones, video games, televisions, sports equipment, etc.) to try to help take away the sting of a broken family.\u00a0 Unfortunately, this usually only provides temporary comfort.<\/p>\n A better strategy is to first figure out what your income is, and then plan your spending.\u00a0 Will you receive alimony?\u00a0 How about child support? Will you work?\u00a0 Are there other sources of income (e.g. from rental property or a family business)?\u00a0 Add it all up.\u00a0 How much of it do you need to set aside for your retirement?\u00a0 How much for your kids\u2019 education<\/a><\/strong>?\u00a0 What\u2019s left for spending today on you and the kids?<\/p>\n Unfortunately, most people approach this the other way around.\u00a0 They spend according to their needs and wants, and then save what\u2019s left over, if anything.\u00a0 You definitely want to take care of your kids.\u00a0 The best way to do this is develop a plan that will minimize the financial impact of the divorce on them.<\/p>\nInsurance:\u00a0 What kind? How much? How long?<\/h2>\n
Contact us today to learn how a Certified Divorce Financial Analyst\u00ae\u00a0<\/span>can help guide you and answer your financial questions before, during, and post-divorce.<\/a><\/span><\/strong><\/h2>\n
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Kids: How do I insulate them?<\/h2>\n
Income:\u00a0 How do I support myself?<\/h2>\n