The upheaval of divorce can make it a challenge to focus on your finances, but you should know that the financial decisions you make now could continue to impact you for a very long time. Read on for more information on turning these divorce-related financial mistakes into positive moves that will help create a more financially-secure future for you and your children.
Failing to look at the big picture. Don't allow the stress and emotional aspects of divorce to keep you from taking a hard, realistic look at your financial picture. A budget that covers the next year is essential, but will only provide you with a month to month snapshot of your bills and income. Take it a step further and complete a net worth statement. This only sounds intimidating; it is actually pretty simple and the information gleaned will be invaluable. This listing of your savings, investments, assets and debts will show you exactly where you stand and give you insight into important financial goals. If you have a negative net worth, for example, you may need to focus on how your divorce agreement could help even up that equation to a more positive number.
Take it for granted that you need possession of the family home. If you fail to accurately evaluate the extent of financial obligations that home ownership entails, you may end up being house-rich but otherwise broke. The mortgage, property taxes and homeowners' insurance is only part of the burden; houses require upkeep and maintenance and it's not inexpensive. Depending on your budget, renting could make more sense right now.
Pursue a set amount of assets without regard to potential. When it's time to divide up the marital estate, or your property, be sure to look beyond the obvious face value of the assets. For example, a vacation home is not just worth the value of the property, it could be an income generating tool if you rent it out to vacationers. Be sure and take a look at the possible tax implications of owning certain types of property.
Going into divorce with joint credit card debt. Trying to pay off as much joint debt as possible is well worth the money and effort spent. Whether the divorce decree divides the debt between you and your spouse or one party is assigned the debt, you may still be on the hook for the balance if the other party fails to pay the obligation.
Talk with your divorce attorney, like Margit M. Hicks, PA Attorney at Law, about these financial issues in greater detail. Careful financial planning when creating your divorce agreement is seldom more vital than at this time.
Share10 May 2016
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