If you are going through a divorce, one essential change that many couples may not think of is making changes to their car insurance after divorce. While many married couples have a joint auto insurance policy, once a couple is divorced, you will need separate policies. As soon as one person moves from the home address that’s listed on the policy, that person must notify the auto insurance plan of their new address.
Because a move often occurs during separation, this rule can affect your car insurance during separation. According to Everquote, it is essential to get both spouses’ approval to cancel an insurance policy. This is because both parties must start a new auto insurance policy on (or before) the date that the old one has been canceled.
These changes are not optional, and there can be a penalty for not reporting divorce to car insurance agents. It can be helpful to discuss divorce and car insurance with your divorce lawyer. When a joint auto insurance policy is canceled, and each person gets a new policy, one or both people may see a change in their premiums due to their inability to qualify for safe driving discounts.
While divorce can be a messy, expensive, and emotionally draining experience, anyone who is going through a divorce can make all sorts of plans, backup plans, and more to keep their personal and financial life cohesive. During a divorce, and after it too, a person can follow a variety of financial instructions to keep their finances in good shape and ensure that they maintain a comfortable lifestyle without going bankrupt or taking on risky loans. Your divorce lawyer might help you determine which tax-deductible legal fees can be claimed most effectively for your personal taxes, too. Take note that when it comes to tax-deductible legal fees, the law does not actually specify which legal fees are tax-deductible, and which are not. But fear not: when it comes to tax-deductible legal fees, child custody, family law, and even selling your wedding ring, you will have many options, and being aware of them can take you far.
Child Custody
Custody of an under-18 child might be bitterly contested during your divorce, and you might shell out for a child custody lawyer to represent your interests. The child’s other parent may well do the same, and these might involve some tax-deductible legal fees that can help you with tax season later on. While every case is different, and nothing can be guaranteed here, it may be typical for the child of the divorce to end up with a parent who has a stable income and has not demonstrated any abusive or otherwise irresponsible behavior (such as heavy drinking or drug use). This is certainly a factor to keep in mind, especially if you’re trying to weigh the pros and cons of hiring a child custody lawyer and the tax-deductible legal fees that would follow. How strong is your case to win custody of a child, or more than one? If you determine that your odds are poor for some reason, you might even forgo the very idea of hiring a child custody lawyer, and avoid the issue of tax-deductible legal fees entirely. Some divorcing parents might take this route if they would urgently need the money for other purposes, and/or they find it very unlikely that they will win child custody.
Auto Finances
It is likely that you own a motor vehicle, such as a sedan, a pickup truck, or even a motorcycle. Such items may be contested in a divorce, and you might either end up gaining your ex’s vehicle or lose yours to your divorcing spouse. Cars and trucks represent a lot of money in both the short and long term, and tax-deductible legal fees are not the only money matter that will affect your bank accounts or tax payments. So, what are you to do?
In some cases, the divorce did not turn out well for you, and you are going to need to free up more money for certain expenses. For example, you still owe a fair amount of money on a car and paying off that auto loan may be easier once you factor in tax-deductible legal fees come tax season. This will certainly call for having a lawyer by your side, and you might also claim child support expenses on your taxes to free up car payment money. But if that does not work, or if you simply choose to, you may opt to sell your current vehicle and purchase a car from a local dealer. You might choose a new, smaller car that is more fuel-efficient and is old and used, so it is cheaper to finance. And if you are now the only person in your household, you hardly need a vehicle with enough room for an entire family. A petite, two-door car might be all you need for the time being. Having a good credit score can help you get approved for an auto loan, and finance that new vehicle of yours. Or, you might move soon after the divorce, and simply rent a car until you relocate. Try choosing a car that depreciates slowly in value, since your fees on that car will be lower if that is the case.
It might be that your financial state is now better, and you might be tempted to purchase a newer, fancier car. Even if you can afford this, it may be a good idea to exercise caution and make sure that you buy something that easily meshes with your current expenses and allows you to save up money. You no longer have your spouse’s income in the household, after all. Good discipline is key to a healthy financial life, and just because you can afford something, does not mean you must buy it. “Living below your means” is a common financial strategy today.
Housing and You
A divorce might also impact where you live, and you might end up moving somewhere else, near or far. Aside from tax-deductible legal fees and auto payments, you may also have either rent or mortgage payments to consider, and this is something to take very seriously.
First, let us suppose that you are downsizing. If you can no longer afford your current house, or if you simply have more room than you need in there, you may choose to move to a smaller house and buy it. That, or you might begin renting apartments, either in the short term (until your finances recover) or as a long-term housing condition. An affordable apartment can act as a bridge between an old residence you can no longer afford, and finding a smaller residence that you can indeed afford for yourself. Your lease in an apartment might be as short as six months, or as long as five years. There is no rush; try staying in an affordable apartment for as long as necessary until you can build your financial life back up. Such as getting a new and better job, selling off your old items, saving up money, or improving a bad credit score.
Home improvement can also be done at this time, either because you got money in the divorce and you can afford to remodel, or you are going to sell it and want to make the house more attractive to buyers. It is well established that investing in remodeling work on a house greatly improves its performance on the real estate market, with a high ROI (return on investment) for nearly any remodeling job. The kitchen and master bathroom are popular rooms to remodel, but you might also pay for window replacement, repairing the roof, putting on new siding, and more.
If your finances are in good shape after the divorce, you may choose to “start fresh” and find an attractive new home to live in, such as newly constructed homes. These houses are in top shape and could be a desirable place to build a new life in, especially if you have one or more children with you. Of course, you should still take basic home purchasing steps at this time, such as consulting real estate agent and using CMA software to determine the average price for a “typical” house that you see. Also, be sure to conduct a personal tour of a house to get a feel for it. If you have children with you, you may want a house that is close to good schools, parks, and other features.
Healthcare
Don’t forget your basic health because without it you might be quite unhappy, unable to perform your job well, or will struggle to think clearly. It is strongly suggested that someone going through a divorce resist the temptation to use drugs or alcohol, since such substances are not only a needless financial drain, but might harm your general health or even cause behavior that worsens the situation further. Sitting on the couch all day with a wine bottle does not fix anything.
Instead, you may continue to see your doctor, sleep on a regular schedule, eat healthy food, and engage in light to moderate exercises, such as brisk walks or bicycle rides. Besides, exercise can help clear your mind and cheer you up, no medication necessary, and this is pretty relevant for a divorcee. You might feel more optimistic about saving up money or consulting your lawyer about tax-deductible legal fees if you’re keeping a clear head and moving your body. You could even work to improve your image, such as visiting your dentist for teeth whitening, or losing some weight while exercising and eating better. A divorce is painful, yes, but that does not have to reflect on your body. Respect and care for your body, and it can make for a good emotional anchor.
Pets
This is a fairly straightforward topic during a divorce. Children are more complicated beings to care for during divorce, such as making child support payments or contesting who will live where. But laws and finances are not so strict or absolute when it comes to pets. It is relatively easy to determine if you can afford to (and want to) keep your pets during this time, from a dog or cat to birds and fish, or even reptiles. Some pet types are more expensive to care for than others, but animals such as cats, dogs, birds, and small mammals can act as emotional support, like an official ESA (emotional support animal). If your new residence allows pets, your own pet can double as an ESA, a fine companion to have. You might even invest in that pet, such as dog training classes. Or, if you did not have pets earlier but want a new companion, you could buy one, and that is a fine time for dog training classes, too. And if you cannot afford to keep a pet, there is always the option to give it to an animal shelter or give it to a trusted friend, neighbor, or family member who can take it in.
General
The following financial tips are useful not only for a divorce, when your finances are tossed into a whirlwind but in life in general. If you have been somewhat careless or sloppy with your finances, there has never been a better (and more urgent) time to become more financially aware and literate. Doing this can save you a huge amount of money, and spare you from making unpleasant decisions to avoid bankruptcy.
One piece of advice is to adjust your very mentality on spending money. Speaking broadly, the human brain is wired on a reward system, and a person gets a chemical rush of dopamine when they get something desirable. In today’s world, such things are typically money, social media or cell phone updates, playing video games, playing with a pet or your child, or being with a loved one. Your brain has been geared to see money strictly as a way to make you happier, and that means spending it on anything and everything that you like. Having a discretionary budget is one thing; going wild with cash is another, and it can get dangerous since you’re only listening to the dopamine.
To better manage post-divorce finances, make an effort to consciously associate the saving of money with satisfaction and happiness, rather than the spending of it. Of course, spending money on essentials such as rent or car payments is one thing; but spending too much on leisure items is another. Train yourself to be much more wary of leisurely spending, and carefully think “Do I really need this?” You might be surprised how often the answer comes up “no” if you give yourself enough time to consider it. Resist the dopamine chase, and instead take pride in saving money responsibly and watching your savings grow over time. This is especially true if you are living in an apartment and waiting to save up enough to move into a new house, and that savings account should be your pride and joy, not a new convertible car.
Another idea is somewhat related to the first: track all spending. In the rush to spend money, such as the savings from tax-deductible legal fees, you may not even realize how much you are spending and cutting into future savings. Young adults are especially prone to this, who have significant amounts of spare money for the first time. A good idea is to keep a spending log, either on paper or on a computer spreadsheet, and be acutely aware of how much money you spend, and what you spent it on and when. Organize the chart however you need to, with categories such as rent or mortgage payments, auto loan payments, lawyer fees, healthcare fees, and the like. Add other sections for leisurely spending that you habitually do, such as money for a sports club, outdoor hobbies, or anything like that. Also, keep a log of how much money from each paycheck goes toward savings.
Tracking your expenses and savings like this can diagnose any bad spending habits that you have, and make them very clear when otherwise they are invisible. It can also help you accurately determine how much money to allocate and budget for different spending categories.
