Divorces are financially challenging affairs for most people. The financial cost of the divorce itself is usually a large, unplanned expense. You may find yourself in a new and difficult financial situation than the one you had before the divorce.
You may be new to running your household budget. Your income may be reduced by child support, spousal maintenance, or the loss of income-generating assets. You may have lost some of your retirement assets, changing your retirement savings goals. You may have gone from a two income household to a single income household. Or you may have substantial debts that you can no longer afford on your own.
Adjusting financially to your new situation may be a process that continues long after the divorce.
Financial Recovery Starts during Your Texas Divorce
Probably the single most important thing a divorce attorney can do to help you survive your divorce and get back on your feet after your divorce is to help you negotiate property division with your financial needs in mind. Property division is not just about splitting everything in half. It’s about getting what you need (and what you want) as you exit the marriage.
A divorce lawyer who strategically approaches your divorce with a long term plan will provide a level of service that cannot be met doing your divorce by yourself or with the help of a Texas divorce lawyer that offers a lower level of service. I believe clients are better off exiting a divorce with the right financial tools than just letting clients get whatever they can get and then trying to piece their new lives together with whatever they end up getting.
Budgeting after a Divorce in Texas
Whether you budgeted for the household before your marriage, you now have the burden of budgeting for your new household. In most cases, both people leave a marriage in worse financial shape than during the marriage. Most people find that their post-divorce income does not meet the expenses of their pre-divorce lifestyle.
Cutting back on some of those expenses is usually necessary. If you have been awarded child support or spousal maintenance, you may want to rely on that income in your new budget but you should be cautious about relying on those sources of income because you may not see that money right away (or ever) from your ex-spouse.
Filing Bankruptcy after a Divorce in Texas
After filing a divorce, many people decide to file for bankruptcy to wash out their past debts, especially when substantial debts are left behind. In some cases, it can be strategically wise to declare bankruptcy after a divorce. Sometimes there is no other reasonable choice.
However, many people make a bee line for bankruptcy without fully understanding the effects or considering other options. Bankruptcy will extinguish many forms of consumer debt but it does not eliminate secured debts on your home or car. It also will not eliminate medical bills, student loans, child support obligations, spousal maintenance and many other debts.
Bankruptcy can have a negative effect on your ability to obtain a new job (some employers will not hire you if you have a recent bankruptcy) and it will have a negative effect on your credit rating that can increase the cost of insurance and the interest rate you can receive on new credit.
You run the risk of making your finances worse over the long term if you cannot reduce your existing debts through bankruptcy. You may have other viable options, such as debt settlements and debt consolidation. Filing bankruptcy is not the end of the world but it also isn’t a total free pass on your debts.
Selling Your House after a Texas Divorce
In most divorces where the couple owned a house, at least one of the spouses wants to keep the house. It’s very understandable. You may want to keep the house so your children have a stable home. There is a strong social attitude favoring home ownership. However, home ownership is expensive, especially if you have a mortgage outstanding on the house.
Most homes are bought based on income that included both spouses. Even if you make substantially more than your now-ex-spouse, you may still not have the income available to finance the mortgage, taxes, insurance and repairs.
It may not be easy to make the decision to sell your home and go back to being a renter but financially it may free up some of your income to cover other expenses. You will not be better off if you decide to keep a house you cannot afford and lose it to foreclosure. This is a serious topic and one to discuss with your Texas divorce lawyer.
Downgrading Your Vehicle after a Texas Divorce
Along with the social pressure to own a house, there is also a strong social pressure to purchase a large vehicle. That is especially true in Texas and you don’t have to drive very far down the street to see a number of large pickup trucks mixed in with SUVs and the occasional minivan. These vehicles, while luxurious, are expensive to purchase and expensive to drive, especially with current gas prices. You may love your vehicle but if you are underwater you may want to downgrade to a cheaper vehicle. Of course, vehicles these days do not keep great value. You may not be able to get a lot of value out of selling your current ride.
Dating after Your Texas Divorce
At some point your emotional wounds will heal and it will be time to jump back into the dating world. Moving on emotionally is a key part of healing after the divorce; but you need to be careful about how that affects your current budget. Many men feel a need to pay for everything on every date (and some women expect as much); but even relatively cheap dates can add up to a severe strike to your budget, especially when you factor any secondary costs, like buying new clothes, babysitters and transportation costs.
Don’t be afraid to date within your budget and split some bills. The social obligation for men to pay for everything is far less than it might have been the last time you were single. Dating during your divorce can create problems with the divorce so this is also a good topic to bring up with your divorce attorney.
Keep Your Wild Side in Check
After what might have been years of an unhappy marriage and months (or years) of tension from the divorce, many people decide it’s time to get wild and party a lot. There’s nothing wrong with enjoying your newfound freedom so long as you keep within your budget. It’s really easy to spend $50 a night just going out drinking. Not to mention all those secondary costs involved, just like dating.