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Going from two incomes to one presents a bankroll of burdens. From taxes to credit card debt, divorce creates complex financial issues that prove difficult for many women to tackle alone. “Women are so traumatized by the divorce, and all the emotional, social, and legal issues, that they are not thinking clearly of the financial issues,” says Natalie Nelson, a certified divorce financial analyst (CDFA) in Boulder, Colo. After you call your lawyer, make an appointment with a CDFA to insure your financial present and future.

To assist with the process, we asked Nelson for advice on how to keep a cool head during these financially turbulent times. Despite the economy, divorce rates are on the rise in America.  With more than 25 years of financial experience, Nelson is also a trained mediator in divorce litigation cases. Her goal: helping women become more financially savvy. Here’s her advice on how you can do it.

Untied:How soon after a divorce should women meet with a financial advisor?
Nelson: Get in as early as possible. There’s nothing more heartbreaking than agreements that have already been made which overlook important concepts. I call those meetings “Getting Your Ducks in a Row.” And it’s critical to get that help before women are in the emotional heat of the divorce. When someone gets emotional, the left part of his or her brain shuts down, which is the critical thinking part. So when they’re in the midst of their divorce, it’s not the time for them to be absorbing financial concepts.

Untied: What are some critical financial mistakes that women make while dealing with the divorce?
Nelson: Statistics show in the few years after divorce, women are worse off than men. We have an opportunity during divorce to make some educated decisions that will maybe soften the blow, so women don’t go broke within five years after the settlement. We want to transition them into a lifestyle that is a few steps down, but can be sustainable over time.

Women need to learn about the importance of receiving a pie during the settlement that’s made of various pieces instead of just wanting the house, which so many women want because they’re family oriented and want to stay right where the family is, even though the house may be too big or expensive. Women are refinancing whether or not they can even qualify, foregoing retirement for the rest of their lives.

Untied: Where do divorced women need to start in order to gain control over their finances and future?
Nelson: Women need to make a budget that is realistic and current with their lifestyle to see where they are right now and what is needed going forward.

Get the assets together. Get the retirement. Get a clear snapshot of where they are right now and don’t take the easy path, which is maintaining the house in exchange for retirement. So often I hear women say, “Well, if I don’t save up for retirement or if things get tough down the road, I’ll just sell my house and live off the proceeds.” If they do the math, they’ll realize that keeping the house will get them in deep trouble.

The other thing is getting retrained and retooled as early on in the divorce process or after the divorce as possible so they can get into the workforce and start their earning. And definitely look at monthly needs and the duration of child support.

Finally, most women are under their husband’s health insurance, so they’ll need to get a health insurance quote for themselves.

Untied: How has the recession affected the number and nature of divorces?
Nelson: Our numbers are way up in our filing. People aren’t waiting until things rebound.

But I think people are getting a divorce without consulting attorneys, which I think is a script for disaster because they aren’t aware of the tough market out there to get refinanced. They aren’t aware that credit card companies aren’t giving credit and instead may even be shutting down credit lines. We just don’t have the same free flow of money.

Some parties also have to live together before the house sells. I’ve written my first post-divorce, living-in-the-same-house agreement because the parties need to wait together for the housing market to rebound before they can sell because they can’t have two places on their current income.

We’re doing a lot more “what ifs” right now. What if the house doesn’t sell? What if there is a short sale? What if one party has to move out? What if someone can’t refinance and the house has to go up for sale? And all these “what ifs” that we didn’t think of.

Untied: If a couple is forced to live under one roof, what advice do you have for them?
Nelson: We set up a household bank account and how much proportionally each has to put in.

We can also write provisions if one of the parties needs to move out. We can’t hold the parties to it if things become unbearable and one of parties needs to move out. [They need to know] what they’re still responsible for if they need to move out, as far as expenses go. They can’t just announce they are moving out because then we would have a financial collapse within the home. We get very specific on what expenses need to be shared.

Also, personal property is divided even though they’re living in the same house, so if one moves out they already know what is theirs.

Plan Ahead
Seven Steps to Finding a Certified Divorce Financial Analyst
  • Check out CDFA for a state-by-state list of CDFAs in your area.
  • Ask your CDFA prospects questions such as “How many divorce cases have you handled?” and “How much of your practice is divorce-related?” This research will help you find the most qualified CDFA.
  • Ask if your CDFA has experience working with female clients.
  • Use a CDFA who has underlying credentials - such as a tax accountant or a certified financial planner - because they know tax laws.
  • Consider collaborative divorce attorneys that aim for a settlement that meets the interest of both parties. Here, negotiations aren’t based on bottom-line percentages, and the divorce process is more amicable.
  • You don’t want a CDFA that is selling a product. This is a conflict of interest in his/her handling of your assets.
  • Don’t base your decision purely on a CDFA’s hourly rates. Finding a quality CDFA and spending a little extra on him/her can save you in the end.
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