FINANCIAL CONNECTION

Split ends

Steps needed in order to move forward after a marriage has ended

by SUZE ORMAN

Ending a marriage is considered the second most stressful life event, surpassed only by the death of a spouse. And when you’re stressed, it becomes much harder to make clear-eyed decisions. Yet that’s what divorce demands: lots of decisions in the here and now, many of them financial, that will play out for years to come.

Here is some advice on how to move forward with confidence.

Consider professional help

There are ways to do it yourself when filing for divorce, but it can be very smart to lean on professionals to help guide you. A divorce need not be contentious.

One option is for you both to work with a single mediator. Ask your personal network for recommendations, or use the online search tool of the Academy of Professional Family Mediators (apfmnet.org).

Another option is collaborative divorce, where you each have your own lawyer, but all four of you agree to work together to reach an agreement.

Get your finances in balance

Even if one spouse agrees to take responsibility for paying off jointly held credit card debt as part of the divorce agreement, the other spouse is still liable, and that can lead to problems. You should both do balance transfers to new individual cards. Once the joint card balance is zero you can close it down.

If you have a 401(k), a qualified domestic relations order (QDRO) is necessary. If your final divorce agreement entitles you to a portion of an ex-spouse’s 401(k) or pension, you need to file a QDRO with each retirement plan to ensure you get what you are entitled to.

Be home smart

If you want to keep the house, make sure after the divorce is finalized that only you own the house. If you don’t have the cash to pay off the mortgage, you’ll need to refinance to a new mortgage with you as the sole owner.

Even if you qualify for a mortgage on your own, you must also consider the cost of property tax and insurance. If your housing expenses will stretch your budget so thin that you can’t afford to save for retirement, consider selling now and moving to a home that gives you the ability to build the financial security your older self will need.

My one-year rule

In the immediate aftermath of any loss, what you think and feel will likely be very different from your perspective months from now.

My advice: When possible, don’t make any big decisions in the first year after divorce. You can use that time to educate yourself, financially and emotionally. Too often, recently divorced people jump into financial decisions that they don’t really understand or aren’t sure about. That is being unkind to yourself. It is always best to do nothing until you are confident in what is best for you.—SO

MARC ROYCE

Suze Orman is an Emmy Award–winning TV host, New York Times bestselling author and host of the Women & Money podcast. Orman will answer selected questions in this column. She regrets that unpublished questions cannot be answered individually.

Email your financial questions to connection@costco.com. Please include "Financial Connection" in the subject line.