When you’re going through a divorce, it’s really hard not to keep all the financial issues at the front of your mind.
Unfortunately, people can get very focused on the day-to-day expenses they’re facing and overlook some serious issues that can leave them facing an uncertain financial future. Here are some of the biggest mistakes that divorcing people make:
Not having a financial plan at all
Even if you’ve never done it before, this is the right time to put a budget down on paper – and stick to it. The worst thing you can do right now is losing track of your spending. The temptation to quickly replace comfort items that you have to give up to your spouse or engage in a little retail therapy can be very strong during this emotional time.
Ignoring the tax consequences of your decisions
Thinking of cashing in some investments to get through the divorce? That could be disastrous when it comes to tax time. Do you need to divide up the 401ks? Without understanding the tax implications, you could end up with less than you expect – or a big tax bill. If spousal support is an issue, you need to understand how the taxes will affect what you can afford to pay (or expect to receive).
Fighting for the house when you can’t afford it
Sure, the house may be the biggest asset you own – but it is also a huge expense that you’ll have to handle all on your own after the divorce. Before you even contemplate trying to fight for the house in the divorce, make sure that you can afford the taxes, insurance and upkeep without your spouse’s income. It may be much wiser to sell and split the proceeds.
Legal guidance can help you steer clear of common divorce pitfalls, including the ones that can leave you feeling like your pockets have been pinched beyond all recognition.