Divorce is one of the most emotionally driven situations you can experience. It is the severing of commitment with someone you once loved and believed you would be with for the long term.
However, when approaching your finances, try your best to keep emotion out of it. This will help you make levelheaded decisions that are financially best, not emotionally driven by either party.
There are several financial first steps for divorce I recommend as soon as you know you will be getting a divorce or even if you are considering it.
Create a safety plan if needed.
If there was any abuse in the marriage, the most important first step for divorce is to create a safety plan. Download a simple fill-in one here.
Include money safety in your plan. Take time to determine if the need should arrive to leave quickly; do you have sufficient access to money that your abuser cannot cut off?
If your credit cards and all cash money is in his name or is shared with him, you may want to start some financial accounts of your own. Consider opening a credit card and bank account in your name. Start doing some side work and stashing away a little cash so that you know in an emergency you won’t be left without access to any money.
Change all your passwords.
Start with your accounts that hold your sensitive information such as credit cards, bank accounts, systems for your job, retirement accounts, and anything else with important information or assets.
Be sure to also change your pin numbers and secret words with your banking institutions in case your spouse tries to call in to make changes or remove money.
Duplicate key documents.
Make sure you have a copy of anything important. This is a great checklist created by Fidelity.
Print it out or find and make copies of as many of these important documents as you can find. It may take some detective work at first, especially if you haven’t been the one in charge of finances and important documents during your marriage.
Start by snooping through desks, files, and computers to find the information, accounts, and passwords you need.
Duplicate or back up photos.
Memories are so precious; you will not want the devastation of losing them especially if they are stored on a family device or hard drive.
If you don’t walk away from the home/marriage with that device, you don’t want the photos lost to you. Back them all up on a removable hard drive or on a cloud drive such as Drop Box, iCloud, or Microsoft One Drive. Then you can have them once the divorce is final.
Of course, you may not want to keep photos of the two of you, but the ones of the kids and any memories you do want to keep for the kids’ sake.
Ensure any mail that you want kept private is secure.
The easiest way to do this if you have not moved out of the family home yet would be to get a PO Box of your own. Change the mailing address with any sensitive information to your PO Box. A free secondary option would be to ask a trusted family member or friend to allow you to have some sensitive mail sent to their home to have them collect it for you.
If you don’t have separate banking, start now.
Open your own account and begin to have any income direct deposited here rather than your joint account.
If you would like to open a checking account. Look for a fee-free checking account. Some places to start looking for this type of checking is Ally Bank, CIT Bank, or USAA (if you qualify for membership).
I don’t think there is any reason to pay fees for a checking account unless the bank offers conveniences and services that are worth the fees to you. Simply take the time to be aware of the fees you will pay and decide if you want to pay for them.
If you would like to open a savings account. Look for one with higher earning interest. Many of the big banks today offer only a 0.1% interest for savings. Look for one that offers over 1.5%.
You can start by checking with Ally Bank, CIT Bank, or many of the big-name credit card banks offer high yield savings such as American Express, Discover Bank, and Capital One.
If you are still paying for joint household or childcare expenses, you can funnel your portion to the joint account if your ex or soon-to-be-ex is trustworthy in this regard. If he is not, suggest which bills you will pay to equal your half or send half of each bill straight to the lender/payee. Then you can suggest your spouse does the same.
This may need to be worked out with lawyers. Just remember, that if your name is on any bill and he doesn’t pay his half, then you will still be liable for the full amount. If it comes down to it, you will be better off paying in full and keeping track of what you paid for reimbursement during the splitting of assets.
Establish Your Own Credit and Separate What You Can
If you don’t have any credit in your own name or with you as the primary account holder. It is time to establish a credit card in your name. If you have strong enough credit, choose a good card that will serve you best.
If you are unsure if you have a score or what it is, you can sign up for a free app called Credit Karma. It is a helpful tool to estimate where you are with your credit score. Just remember it is not your actual FICO score, but it is a decent estimate that can help you see the general range of your score. It can also suggest credit cards that you would qualify for. This can be helpful to get an idea.
You can get your actual FICO score and a nice report including how you look to creditors at myFICO. Be aware, this will cost you a fee, but I think it is worth it if you want to know where you stand.
There may be a good possibility of a credit card in the suggestions from the app. But, if you don’t have credit established, you will need to start with a secured credit card. You will need to have at least $200 saved up to put down as a deposit on the card. This amount will sit in a savings account as you use it as your credit limit. The bank will evaluate how you have used the card in 6-9 months. If you have used it and paid off the balance regularly, they will refund your deposit and it will then be a “regular” card, not a secured one any longer.
When choosing a secured card, be sure there is no annual fee. Don’t worry about the interest rate because your intention with this card will be to use it only when you have the money to pay it off in full. Then you won’t get any interest charges. I also suggest you look for one with a reward system so you can earn some cashback on the purchases you were going to make anyway.
Sometimes the Discover It secured credit card is a good choice offering 1.5% cashback but offers change so you may want to search Google for “Best Secured Credit Card” to check for any better current offers.
If you are still married while you are trying to apply for a card. Include the household income on the application when applying. It is your income if you are married.
If you have your own cards, remove your spouse’s name from your cards and ask him to do the same. Return the cards from his account to him and ask him to do the same. Cancel the cards in his name if he refuses to return the card.
Pull Your Credit Report
Generally, you can pull a credit report from each credit Bureau (TransUnion, Equifax, and Experian) once a year for free. From July 2020 until April 2021, they are allowing you to pull these once a week to help you monitor better.
Go to annualcreditreport.com and pull one from each. If you are still married and have access to your spouse’s information, try to pull your spouse’s as well. This will help you review accounts for both of you and check for errors at the same time.
If you are already separated, don’t pull your spouse’s information without permission as this could lend itself to an identity theft charge and could complicate the divorce proceedings.
Place a Credit Freeze or Credit Lock on Your Account
If there is any reason to suspect that your spouse may try to open credit in your name or do anything to cause you issues financially, I suggest you place a credit freeze on your account if you don’t plan to make any large purchases (home or car) in the near future. If you do think you may be buying a large item on credit, then you may want to go with a Credit Lock instead.
Either of these services will keep creditors from viewing your credit to offer a loan. This would keep anyone other than you from taking out a new loan in your name.
Credit is easier to Unlock than to Unfreeze, but you can do either in the case that you want to access your own credit.
To place these protections, you will need to contact each of the three agencies at their website or by calling.
Other helpful posts:
Secure Sentimental Items
Divorce can get emotional and people can do things they regret later. Keep any sentimental items safe from harm (loss, damage, or sale) by removing them early on.
If the sentimental items carry monetary value, keep track of what was removed because it will need to be declared and included when splitting assets.
However, if the sentimental items were gifts from others to you alone, they are yours and not marital property. They are also your personal property if they were inherited from a family member left to you specifically.
Hide these sentimental items in a storage facility, lockbox at a bank, or at a friend or family member’s home.
Wrap-Up of First Steps
Friends, I know this can be one of the most difficult times in your life. However, I hope to walk you through helpful steps to protect yourself and get what is justly yours.
If you have questions now, please don’t hesitate to post them in the comments below. I will answer all I can here or create posts to address ones that require more explanation.
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