A divorce is more than just an emotional and logistical nightmare; it’s also a financial nightmare. From custody, to splitting property, to separating debt, the financial cost of a divorce can wreck your financial life for many years. Prevent further issues by working through these four actions as soon as possible.

1. Protect your bank account and passwords.

Hopefully, you and your ex-spouse (or soon-to-be-ex-spouse) are able to communicate effectively about finances, but chances are you won’t be able to. If you have joint accounts, just know that at any time the other person could clean the account out. Call your bank to understand the rules and regulations of your particular account. Also be aware of automatic payments coming through the account—you definitely don’t want to pay for your ex-spouses services, etc.

It’s also important to remember where you have credit card information saved. Websites like PayPal and Amazon.com store your payment information, and if your ex-spouse has access to those accounts, he or she could potentially spend your money. Lastly, don’t forget about the all-important password. The knowledge of just a few letters and numbers can access all of your financial information, so it’s of paramount importance that you change your passwords and PIN codes immediately to prevent security issues.

2. Do a credit check and understand who pays what debt.

Now that we’ve dealt with your current cash flow, it’s time to deal with the past. It’s likely that at some point during your marriage, the two of you incurred some debt. Whether it was consumer debt or student loans, you need to understand who owes what in terms of your collective debts.

The first place to start is to print out your credit report. Your credit report will show all the lines of credit you have open. Take the time to really go through each line item. Understanding the difference between a co-borrower and an authorized user often confuses people. An authorized user is authorized to use a line of credit but isn’t responsible for paying off the debt. Yep, this type of arrangement can get messy fast, whereas with a co-borrower situation you are both responsible for the debt. Be sure to close the necessary accounts right away to avoid further debt being incurred once the relationship has ended.

3. Create a budget, and stick to it.

Obviously, a divorce is a major lifestyle change. For how many ever years you lived on two incomes, and now you are down to one. The only way to survive the transition and to thrive in your new life is to budget. Budgeting is a lost art, and it’s one that you’ll have to rediscover as soon as possible. No matter what lifestyle you’ve become accustomed to, you need to re-evaluate all your expenses and start fresh. Your past expenditures cannot come with you into your new life.

For the big categories of housing, transportation and food, limit yourself to 25 percent, 15 percent, and 12 percent of your take-home pay respectively. If you are the parent who will have full-time custody of the kids, it will be tempting to keep the house they feel comfortable in. Unfortunately, from a financial perspective this is probably a mistake. Your home was purchased based on two incomes, and to believe you could sustain that level of home expenses is disastrous. Renting is likely going to be your best option for the time being. Let your financial life recalibrate before making a new home purchase.

Ignorance is not bliss. You may kid yourself that you’ll be able to maintain the same lifestyle you had prior to the divorce, but you’ll only be hurting yourself. To take control of your financial life, you must start with a budget.

4. Take control of investments, assets, insurance policies, etc.

In most marriages, one spouse tends to manage the majority of the finances. While this can work well, in the event of a divorce, it leads to all sorts of problems. If you were not the party managing the shared finances, you need to step up and get educated about what you have. This may very likely mean hiring someone to help you manage your investments. You need to find and understand what is in your retirement accounts, college funds and real estate holdings. And don’t forget about insurance policies. It’s likely you will no longer want your ex to receive life insurance benefits, so this will require some paperwork to change. As for other insurance types, health, auto and home, these will all also require some paperwork to have you listed as a policyholder if you aren’t already.

Divorce is an emotionally traumatizing event, and it’s one that often renders people catatonic. Unfortunately, the only real solution is action. Surround yourself with people you trust and take control of your money. Regaining control now will help give you the confidence you need to move forward into your new life.

Peter Dunn, aka Pete the Planner, is an award-winning financial mind who has authored five books, hosts the popular Pete the Planner radio show and travels around the country offering financial education. His signature wit will have you laughing as you learn. For more from Peter, visit www.petetheplanner.com.

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