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7 Ways To Protect Your Assets During A Divorce

7 Ways To Protect Your Assets During A Divorce

According to statistics, nearly 40-50% of marriages in the U.S end up in a divorce. Besides being immensely stressful and emotionally draining, a divorce can also wreak havoc on your finances for many years to come. Here are a few tips to help you protect your assets during a divorce.

1. Assess Your Liquid Assets

It’s easy to become emotional during a divorce and attach sentimental value on keeping the house or car. Instead, you’ll want to focus on assessing the value of joint liquid assets such as savings accounts and investment portfolios. Receiving the house during a divorce proceeding may not be as financially advantageous as it may seem initially if you can’t afford the property taxes and upkeep costs. Finding a buyer can also be a hit or miss depending on the current real estate market.

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Make sure to assess the value of your assets correctly. For example, the value of an investment portfolio of stocks and bonds may fluctuate drastically over time. The value of a vehicle will also depreciate with time. You may want to focus more on assets that are less depreciable depending on how risk averse you are.

2. Consider Taxes When Appraising The Value Of Your Assets

Many people going through a divorce appraise their assets incorrectly because they forget to consider the tax implications on investment and retirement accounts. A retirement account is worth less than the stated balance because of the deferred tax payment owed upon withdrawal. If a party chooses early withdrawal, he or she will also be hit with a penalty in addition to taxes.

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3. Protect Your Credit Rating

Both parties will be held responsible for joint account credit card debt accrued during the marriage. It’s a good idea to pay this debt off and close the accounts as soon as possible.

You will also want to obtain a credit report from the three main reporting agencies; Equifax, Trans Union and Experian. This will let you know the status of each account on your credit report including if it is a joint or individual account, the current balance and payment history.

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If you have joint accounts you’ll want to pay them off and close the account. If you’ve added your spouse as an authorized user on any individual credit cards, you may want to contact your creditors and have them removed as a user.

4. Look For Hidden Assets

We like to think of our spouses as honest people but it’s actually quite common for individuals to hide their assets throughout the duration of a marriage. A business owner may add a friend on the payroll in order to hide income. Securities may have been sold without being accounted for.

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According to Los Angeles divorce lawyer Steven Fernandez, “Lying during divorce proceedings is against the law. When someone signs a Financial Affidavit, which is a formal disclosure of finances, he or she is swearing under perjury to disclose any and all information pertaining to income, assets, and expenses.”

5. Revise Your Will & Designated Beneficiary

If you don’t want your ex to receive any funds in case of your demise you’ll need to update your will. Getting divorced doesn’t automatically void your existing will. You may also want to update beneficiary information for any retirement, life insurance, and investment accounts if you don’t want your ex inheriting all of your hard earned assets.

6. Be Careful When Dating

Never move in with someone you’re dating before your divorce is finalized since this may affect spousal and child support payments. A judge may deem you as having more money available if you are splitting living costs with another person. If you do plan to date, keep it discreet. Dating during divorce proceedings may also fan the fire and cause your spouse to become more emotional and less cooperative.

7. Change All Important Passwords

Change the log-in and password for your online banking account. Your spouse may have access to old passwords and may be logging in to see what you’re up to and keep track of your expenditures in order to use it against you in court. Some spouses go as far as installing a key logger in order to monitor their ex’s online activity. Protect yourself by changing your password and installing anti-virus softwares that will be able detect spyware.

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Jacqueline Cao

Entrepreneur

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Published on January 8, 2021

How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

Ever wondered whether your credit card debt is the reason you’re in a bad financial situation? You can’t enjoy any fun activities because a good chunk of your money goes toward debt payment. Heck, you’re even behind on some of your monthly bills.

The effects of clumsy debt management are too many to list here. This guide is going to help you discover how to pay off credit card debt fast and start chasing your financial goals.

Debt problems are the last thing anyone wants to encounter. But things can get out of hand when all the “little debts” you take accumulate in interests.

What if you knew some simple and proven ways to be debt-free quickly? Implementing them would mean better financial health for you. It becomes possible to free up cash for your “wants.” These include taking a trip or buying something you’ve always desired. All that while paying your bills on time!

Let’s not wait any longer. Here are 7 powerful tips for paying off credit card debt fast:

1. Pay More Than the Minimum Credit Card Payments

Many people only pay the monthly minimum on their credit cards. Truly, that’s the right amount for staying on good terms with your credit card company. But you need a different approach if you’re looking to achieve financial independence within a short time.[1]

Most of your payments go toward interest costs when you only pay the minimum amount. A substantial sum of your balance remains standing. As a result, it becomes more expensive to eliminate your debts.

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You don’t want to wait more than 10 years to get rid of debt while it’s possible to do it sooner. All you have to do is double that $100 minimum payment to $200 or go higher.

The good thing is that minimum credit card payments are affordable in most cases. By paying a higher amount, you reduce your interest costs, lessen your borrowing period, and boost your credit score.

2. Start With High-Interest Credit Card Debt

If you have more than one credit card debt, prioritize putting the extra money toward the ones with the highest interests. This debt pay-off strategy, known as the debt avalanche method, is essential for being debt-free quickly.[2]

First, you need to list down all the credit card debts you have in the order of their interest rates. Next, you choose the one with the highest interest and pay a significant amount toward it each month. It can be an amount twice or even thrice larger than the minimum payment.

At the same time, you make monthly minimum payments on the other debts. Their interest charges won’t be as costly as that of the first debt on your list. You only move on to the next high-interest debt after the first one is gone. Remember that your focus is on the interest rates and not the balances.

3. Revisit Your Budget

Budgeting is useful for tracking your financial moves. Once you create a budget, some tweaks along the way can make it work for you better. One situation that requires you to revisit your budget is when you’re struggling with debts. It might hurt a bit to slash some expenses. But you also don’t want to miss out on achieving financial freedom in the long run.

You can reduce some variable expenses to free up more cash for credit card debt payments. They’re the ones that change from time to time. Some examples are groceries, fuel, and clothing.

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Other opportunities for cutting down your spending lie in non-essential expenses. Instead of dining out all the time, you can cook at home more to save money. You can also share some subscriptions with friends and pay a fraction of the cost.

If you’re determined enough, you can eliminate all your unnecessary expenses and focus on paying off your credit card debt first.

4. Avoid Using Your Credit Cards

Do you want to know how to pay off credit card debt with a low income? One simple way is to stop using them. Having your credit cards everywhere you go means that you’ll be more tempted to buy unnecessary stuff. In this case, you spend money that you don’t really own and get deeper into debt.

The quickest fix to stop the debt build-up is spending with cash. You’ll be more aware of everything you can afford at any particular time. If you decide to keep one or two cards to ease the transition, always make wise choices. For instance, only use them when experiencing financial difficulties.

It’s best to categorize your fun activities under “discretionary spending” in your budget. This way, you won’t need more debt to kill your boredom. By halting your credit debt from accumulating, it’s easy to pay down what you already owe and be happy with the progress.

5. Start a Side Hustle to Boost Your Income

You’re probably turning away a lot of money by not monetizing your skills. Everyone has something that they’re good at doing. And you can use that to generate extra income for attacking your credit card debt.

If you look around your neighborhood, you can find several side hustle opportunities. It can be pet sitting, tutoring, or lawn mowing. You can start an online business by offering services such as digital marketing, content creation, and web development. Such skills go in high demand on freelance sites and job boards.

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Finding clients on social media is also a good strategy to utilize your skills and make more money. Facebook groups, Quora Spaces, and subreddits are some places to look for side jobs. You only have to join a niche-specific platform, share your services, and respond to any opportunities.

It’s possible to learn a skill, practice it, and earn from it. Use the free resources online or purchase some e-courses to get started.

6. Sell Your Used Items for Extra Cash

Starting a side hustle isn’t the only way to generate extra money. You can turn unwanted items into cash for paying off credit card debt. Whether it’s an old TV, book, or furniture, there is always someone itching to buy your used stuff.

A garage sale, as much as it’s old-fashioned, is perfect for getting your neighbors and passers-by to buy from you. You keep all the money because there are no business permits or taxes involved. While you may not make much cash, it’s better than leaving your stuff to go defunct in your storage.

Other than that, you can sell your used stuff on online marketplaces. Facebook groups are great places to start if you want quick approvals and hence sales. You only have to ensure that your listing follows Facebook’s commerce policies.

When selling any pre-owned items online, ensure they’re in good shape to avoid problems with your buyers.

7. Know When to Seek Help With Your Debt

Asking for help with your credit card debt can be challenging to do. But letting it drown you is a road you don’t want to take. While you may feel embarrassed at first, it’s the best way to get back on track when you run out of options.

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There are tons of non-profit credit counseling organizations that can offer you free guidance on how to escape the debt trap. An example is The National Foundation for Credit Counseling. They simply review your finances and help you determine the source of your financial problems. After that, they match you with an actionable debt management solution.[3]

In extreme cases, the debt solution can be:

  • Debt relief – where your debt is partially or wholly forgiven
  • Debt consolidation – taking out one loan to repay others
  • Debt settlement – the creditor forgives a significant portion of your debt
  • Bankruptcy – legal process for seeking relief from some or all your debts

It’s necessary to carefully weigh your options before deciding on the way to go. Find out how it might affect your credit score and any other risks.

Wrapping It Up

Debt is a major setback when you’re trying to prosper in life. Paying off credit card debt is essential if you want to reach your financial goals. That means having more free income, a good credit card score, and even a chance to retire early. You become more productive each day because of the peace in your mind.

So, you now have some tips on how to pay off credit fast. Go ahead and get rid of that good life progress killer!

More Tips on How to Pay Off Debt

Featured photo credit: rupixen.com via unsplash.com

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