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Managing the financial side of divorce

As divorced Lafayette residents know, getting a divorce often means a complete upheaval of your finances. Whether your finances are altered because you've been ordered to pay child support and alimony or because you're lacking the double income you used to have, it's important to take action right away to get them back on track.

In order to build a working budget that makes sense for your new lifestyle, there are a few things you need to take a look at. The first thing is your insurance.

A divorce doesn't always affect a person's health insurance, but if it does, you need to address it quickly. Most companies will allow an employee to sign up for an insurance plan during the year if they've gone through a major life event. Fortunately, divorce qualifies as that. If this isn't an option, COBRA can help an individual get temporary benefits after a divorce.

Next up is debt. To put it simply, get rid of it if you can. Pay off the debt with the highest interest rate first, then work your way down the list. Getting out of debt will bolster your credit score, allowing you to get loans in the future if you need them.

Finally, make a budget and stick with it. Whether you want to use an Excel spreadsheet, an online tool or keep hand-written documents is up to you, but it's important to make sure you are spending within your means. Don't forget to budget for savings. You'll be happy to have an extra stash of money later on.

When you're getting divorced, it may seem like there are endless financial implications. However, if you take the time to set up a budget and understand your finances -- including your debts and expenses -- you'll set yourself up for a prosperous future.

Source: Fox Business, "Starting Your Financial Life Over After Divorce," Andrea Murad, March 22, 2013

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