It is very important that you start the process of figuring out your future living and financial situation as early in the process as possible. What ever you do, do not wait until your divorce is final!

My clients that have started to focus on their upcoming future at the start of the divorce process have clearly made the most successful transitions and made the best choices when negotiating their Marital Settlement Agreement (MSA).

You will want to begin making a list of all the expenses you know you have now and think of what additional expenses you may have once you finalize the divorce. Don’t worry, you don’t have to know all of them but having a list you can start with is important. 

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2.  What Does  A Real World Budget Look Like?

First, let me explain what a “Real World” budget is. If you have ever filled out a budget sheet before you are aware it does a great job of hitting all major expenses (house payment, gas & electric, car payments, credit card payments, etc.). What is missing are the “Real World” expenses that we so easily gloss over.

Below are a few “Real World” expenses that will help to get your mind working to think of others you can come up with:

- Presents, specifically, the gift wrapping, bows and cards can add an additional $3-$4 per present. A $25 present now becomes $28-$29. This may seem minor but over the course of a year that could easily add up to hundreds of dollars depending on how many you give.

- Kid’s Birthday Parties. Parties can add up fast, special super-hero birthday plates, napkins, cups, balloons, table clothes, cakes, hats, giveaways, soda, chips, and on and on. An event like this could easily add up to $300-$500 if you are not careful. That is anywhere from $25-$40 per month for a budget.

- Entertaining at the house. Just like the above example, if you host a get together it will end up costing you more than a fancy steak dinner.

- Conveniences. This can hit you from so many different angles. Buying a drink every time you stop for gas, snack packs at the grocery store, fast food and just to name a few. The extra dollars spent here add up to hundreds, if not thousands of dollars a year.

- Having Pets. This list could get really long. There are studies that show some families spend more money on their pets than on kids. Trips to the vet, food, toys, grooming services, I think you get the picture.

Hopefully after the five examples above you can get a better picture of what I am talking about. I challenge every one of my clients to map this out. Give this some serious thought as it will make a huge difference when coming up with the amount of money you can expect to leave your checking account each month.

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3.  How Does Divorce Affect Your Credit?

In the last postcard you received, we discussed how important it is to start the process of thinking about your “real World budget. Now it is time to talk about your credit.

Your credit rating carries with you in so many aspects of your life now that you have to protect it with every ounce of energy you have. Credit determines interest rates you pay on your loans, the premiums you pay on your insurance policies, whether you get cable service, and your ability to get hired for a new job just to name a few.

There are five key components that make up your credit score:

- Your Payment History (35%). Late payments, bankruptcies, collection accounts and other negative items can damage your credit rating. Making your payments on-time helps your score.

- The Amounts You Owe (30%). Your credit rating takes into account the amount of money you owe on all your accounts, the number of accounts with balances and how much of your available credit you are using. The closer your balance is to your limit, the lower your score will be.

- Length of Credit History (15%). The longer you have been in the credit system, the more points you will get towards your credit rating.

- New Credit (10%). Having creditors request an “inquiry” into your credit will cause your score to lower.

- Type of Credit Used (10%). You get a higher credit rating if you have a mix of credit, credit cards, auto loans, mortgages, student loans, etc. If you only have credit cards you do not get as high of a rating.

This is the most important step I take with my clients, hands down. We spend the most time here to make sure we have a good idea how divorce will affect your scores. Should your score lower it could affect the rates you pay for interest and insurance.

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4.  Avoid Costly Credit Card Pitfalls

Your credit cards and how they are held is really important to know. I believe the status of your credit card holdings should be addressed very early on in the process of preparing a Marital Settlement Agreement (MSA). Let’s identify the 3 statuses:

There are 3 ways your credit cards can be held:

- Individually held credit card. This means you applied for and were approved to have the credit card in your name only. This is how you want your credit cards to be held.

- Jointly held credit card. This means you applied for and were approved to have a credit card with someone else, probably your spouse unless you co-signed for someone else. This account needs to be closed so you don’t have to worry about your spouse having access to it in the future. Credit card rights take precedent over divorce law. The credit card company doesn’t care if the state says it is your spouse’s card, you agreed to pay it back so you are on the hook if it is not closed.

- Authorized User status. This means you were added to the credit card account by another person to have “authorized use” of it. You did not apply to have the credit card. All it should take is a call from your spouse to have you removed from the credit card. This is easier than when a credit card is held jointly.

My recommendation is to have your attorney include a plan of how to handle each credit card in the MSA. If you are handling your divorce on your own, you will want to make sure you include actions steps to protect yourself from potential problems down the road.

This is the step can be complicated which is why I incorporate it in with the credit review. You have nothing to worry about with your individual accounts. You will want to take action on all Joint and Authorized User accounts. You want to have a clean separation once the divorce is final and ultimately end up with all individual accounts.

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5.  Should I Stay Or Should I Go?

One of the biggest stresses is, are you going to stay in your current home or are you going to move to a new place. Let’s discuss what you should be thinking about:

If you own a home:

- If you are staying in your home you will want to start thinking about the timing of refinancing the house into your name, will you need any cash from the property to pay off your spouse, and when is the right time to do refinance. It is possible to refinance your home prior to your divorce being final. This can be a great option to allow you to move on more quickly. Please use a true professional that understands the divorce process. You can get taken advantage of if you don’t look out for yourself.

- If you are leaving, you will want to start the process of being pre-approved as soon as possible. You will need to see what is possible so you can put the numbers into your “Real World” budget and see if you can stay in the same community you currently live. Once again, find a true professional so you don’t get taken advantage of.

If you rent your home:

- If you are leaving you may want to talk to your landlord to discuss deleting your name from the lease. You don’t want to be responsible for a rent payment should your spouse decide not to make the payment. You may want to discuss this with an attorney to be sure your strategy is on point.

- If you are going to stay you will want to check the terms of the lease so you know exactly when your lease is up and how much notice you need to give to get out of the lease when it comes to an end should you want to then move.

Planning on where you are going to live is such a big part of your new life. Take time to think it through and weigh all the positives and negatives.

This is the step can be very involved and I highly recommend you get a true professional that you can trust to give you rock solid advice. Don’t let anyone pressure you into a decision. My clients that I counsel with ask lots of questions to determine what is in their best interest, as well as the kids should you have any. Please do not get taken advantage of here. There are a number of professionals that say they know how to help you going through a divorce when they don’t. Find someone with experience.

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6.  I Want A Qualified Professional.

In the last postcard you received, we discussed how important it is to make sure you put some serious thought into your future living situation. Now it is time to talk about the most important questions you need to ask when dealing with a mortgage professional, whether you want to buy your first home or you have financed homes in the past.

Going through a divorce makes getting approved for a mortgage more complicated. I can’t stress how important it is to make sure you use a true mortgage professional that has experience in dealing with divorce cases. So, here are the questions you should ask:

- How long have you been in the mortgage business? You don’t want to end up with someone with very little experience to help you through this very important and delicate time of your life.

- How many divorce cases have you worked on in the past 12 months? If there is any hesitation be careful. Someone with experience should be able to give you a range off the top of their head immediately. I deal with anywhere from 5-15 per month as an example.

- Who are some divorce attorneys you have worked with on divorce cases? You want to know if they are in really “in the trenches.” As an example, I have worked with over 80 divorce professionals in town, with the number ever growing.

- When is the best time to close on a mortgage when going through a divorce? If they give you an answer without knowing anything about you, RUN! There is no “standard” answer here. I typically do not make a recommendation until I have spent some time with my clients to fully understand each person’s individual situation.

Choosing a qualified mortgage professional is crucial to making sure you get the proper advice and to avoid being taken advantage of.

This is the one time I would encourage you to give us a call. We have been dedicated to women, like yourself, and helping them make a successful transition through as difficult a time as a divorce. Whether you want to buy your first house or have financed a home before, we would be happy to share our experience to make sure you have the best experience possible when financing a home.

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Thank You, Thank You, Thank You!

Over the last couple of months I have shared with you some of the most important tips you can use to give yourself the best chance of making a successful transition through your divorce.

As I am sure you can understand there is only so much detail I can provide you on a postcard. That is why I put together the online videos and free recorded messages. It allowed me to go into more detail and make the messages a bit more personal.

The service I provide to women, like you going through a divorce has become a true passion of mine. I want you to make it through it not feeling taken advantage of. I want you to make it through successfully. That is why I put so much time and effort into it.

Here are 3 questions I would like you to ponder:

- When your divorce is final what is your desired outcome, financially?

- How will you feel when you achieve it?

- How will you know you made it through successfully?

I ask you these questions because these are the questions I asked myself when I went through my divorce. Answering these questions are what allowed me to clearly define how I was going to make a successful transition.

Although my divorce was very difficult for me, I truly made a successful transition. I have an amazing life. I have the best outlook on life I have ever had. I am blessed to have people who genuinely care about me now in my life. YOU can have all of that too.

Thank you for taking time to read through all of my messages to you. Should you want to make a successful transition, like I have, then I would encourage you to call us today so we can help you make that happen.

We are here for you. You can contact us in one of two ways:

- Contact me at my Brookfield office, 262-754-8400

- Contact me via email, Kevin@HelpingWomenGoThroughDivorce.com