Malleo Financial Services

Michael A. Malleo 

Phone: 201-321-7041

mike@malleofinancialservices.com

 

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Acknowledgement – Certifying that a signer personally appeared before the Notary, was identified by the Notary, and acknowledged freely signing a document.

 

Malleo Financial Services is a proud member of ALTA (American Land Title Association), the American Society of Notaries, and the National Notary Association (NNA). We're also a Fidelity National approved closer. 

 

FIDELITY APPROVED CLOSER
FIDELITY APPROVED CLOSER

 

*The opinions expressed on this website are strictly those of Malleo Financial Services, LLC and not those of ASH Brokerage Corp.., or any of our affiliates.

 

*Malleo Financial Services LLC cannot and

will not give any tax or legal advice.

 

Adjusting to Life Financially After a Divorce (Part 1 of 2)

There's no doubt about it--going through a divorce can be an emotionally trying time. Ironing out a divorce settlement, attending various court hearings, and dealing with a variety of mixed emotions can all weigh heavily on the parties involved.  In addition to the emotional impact a divorce has, it's important to be aware of how your financial position will be impacted. Now, more than ever, you need to make sure that your finances are on the right track. You will then be able to put the past behind you and set in place the building blocks that can be the foundation for your new financial future.

 

Assess Your Current Financial Situation

Following a divorce, you'll need to get a handle on your finances and assess your current financial situation, taking into account the likely loss of your former spouse's income. In addition, you may now be responsible for paying for expenses that you were once able to share with your former spouse, such as housing, utilities, groceries, tuition, and car payments. Ultimately, you may come to the realization that you're no longer able to live the lifestyle you were accustomed to before your divorce.  Don't worry, there's no need to panic.

 

Establish a Budget

A good place to start is to establish a basic easy-to-follow budget. One that reflects your current monthly income, and typical monthly expenses. In addition to your regular salary and wages, be sure to include other types of income, such as dividends and interest. If you will be receiving alimony and/or child support, you'll want to include those payments as well.

 

As for expenses, you'll want to focus on dividing them into two categories: Fixed and Discretionary. Fixed expenses include things like housing, food, and transportation. Discretionary expenses include things such as entertainment, vacations, etc. Keep in mind that you may need to cut back on some of your discretionary expenses until you adjust to living on less income. However, it's important not to deprive yourself entirely of any enjoyment. You should build an occasional reward (a yoga class, or a monthly dinner out with friends) into our budget.

 

Reevaluate and Reprioritize Your Financial Goals

Your next step should be to reevaluate your financial goals. While you were married, you may have set certain financial goals with your spouse. Now that you are on your own, these goals may have changed (significantly). Start out by making a list of the things that you now would like to achieve. Do you need to put more money towards retirement? Are you interested in going back to school? Would you like to save for a new home? You'll want to be sure to reprioritize your financial goals as well. You and your spouse may have planned on buying a vacation home at the beach. After your divorce, however, you may find that other goals may have become more important (such as making sure your emergency fund is adequately funded).

 

Take Control of Your Debt

While you're adjusting to your new budget, be sure that you take control of your debt and credit. You should try to avoid the temptation to rely on credit cards to provide extras. And if you do have debt, try to put a plan in place to pay it off as quickly as possible. The following are some tips to help you pay off your debt:

 

• Keep track of balances and interest rates

   (Call the card company and ask for an interest rate reduction.)

 

• Develop a plan to manage payments and avoid late fees

   (Set up automatic payments.)

 

• Pay off high-interest debt first

 

• Take advantage of debt consolidation/refinancing options 

 

Protect and Establish Credit

Since divorce can have a negative impact on your credit rating, consider taking steps to try to protect your credit record and/or establish credit in your own name.  A positive credit history is important since it will allow you to obtain credit when you need it, and at a lower interest rate. Good credit is even sometimes viewed by employers as a prerequisite for employment. Review your credit report and check it for any inaccuracies. Are there joint accounts that have been closed or refinanced? Are there any names on the report that need to be changed? You're entitled to a free copy of your credit report once a year from each of the three major credit reporting agencies. You can do a quick internet search to find more information.  

 

To establish a good track record with creditors, be sure to pay your monthly bill payments on time (this has very high impact on your credit score); and try to avoid having too many credit inquiries on your report as well. Such inquiries are made every time you apply for new credit cards. Also, only purchase items with your credit card that you know you can pay off within one or two billing cycles.  Your "Credit Utilization" (amount of your available credit that you use) also has a very high impact on your credit score. It is best to keep your total balance below 30% of your total credit limit (as in don't use more than 29%). Example: If you have a credit card that has a $10,000 limit, then do not keep a running balance of more than $2,900. 

 

Ultimately, you're goal should be to become debt-free as fast as possible, and to build up assets.

 

 

For a free consultation, please contact us for an appointment.

 *This blog is strictly the opinion of Michael A. Malleo and not those of

ASH Brokerage Corp., nor any of our affiliates.

 

Malleo Financial Services LLC cannot and will not give any specific tax or legal advice.

Please consult your tax professional or legal professional for such advice.