Get Financially Organized For Your Divorce
By Tracy McKenny, CFP, CDA, Accountant
The divorce papers have been filed. Your attorney is asking for all kinds of financial information and documents. You're panicked. You were NOT the spouse responsible for getting the tax returns filed. Yes, you paid the monthly household bills, but not responsible for the investments, taxes, or long term planning. What do you do?
You begin the journey to financial independence.
For those of us that don't know the difference between an IRA and a Roth IRA, it's time to take baby steps to grow your financial knowledge, and gain financial aptitude. This may not be your natural strength nor may not have much interest in finance. Nevertheless, knowledge reduces fear and knowledge gives you power.
If you want to be on a level playing field with your financially savvy spouse, and not completely dependent upon your attorney to negotiate a fair deal, here are some steps to take during the divorce process:
1. Before the divorce is filed: Take copies of all investment, banking, life insurance, employee benefit statements that come in the mail. Any financial documents or statements that come in the mail, or you have access to, make a copy. Organize them in a notebook. (Buy a 3" notebook and a 3 hold punch from the local office supply store.) Include copies of your tax returns, any assets, any debts.
2. Organize your monthly bills and expenses. This may seem overwhelming at first, but lets break it down.
- Create a basket, folder with pockets - some system to get your bills organized when they come in the mail or email.
- Buy a plastic file box from an office supply store along with a box of yellow hanging files and filing folders. Label them Jan 2010 to Dec 2010. The plastic file box is portable.
- When your bills are paid, put the receipts into the appropriate file folder.
- Keep a journal in the car for cash expenditures. Or put your cash from the ATM into a new envelope every time. As you spend it, write on the envelope the amount and to whom.
- Now to track how much you spent for the month: Get out your credit card statement(s), your check register, your online bill pay, your cash envelope/journal, and hand write it on paper. Total it up. You've just completed your first monthly expenditures report.
- If you don't like the manual method, check out the program Quicken or use a spreadsheet. Quicken allows you to download your data from your checking account, and credit card statements to make it faster to track your expenditures. Once a month, at a preset time (usually end of month), download your data into Quicken and manually type in cash expenditures. Run the Quicken Reports, and file it for reference.
3.
Look for a personal financial class at your local community college or university extension. Often your city will have financial classes. Baby steps - take one class.
4. Ask your friends/family for any recommendations for a personal financial advisor. At this point, you may not have money to invest, but make an appointment anyways to get acquainted with their services. Can they help you complete a budget? Can they help you invest your money after the divorce? What is their investment philosophy?
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Set your default internet site (when you logon) to finance.yahoo.com or www.motleyfool.com. Just start to become familiar with the stock market.
- If you need consulting on the financial aspects of your divorce, look for a Certified Divorce Financial Analyst.
