Watch Out for These 5 Financial Mistakes You Don’t Want to Make When Going Through a Divorce
Depending on the type of divorce you choose to file along with the number of assets that were acquired in your marriage, you could be looking at paying a few hundred dollars in court costs to initiate the process and get your divorce finalized. On top of that, you’ll likely have to split the contents in your bank account and you can’t forget how much you’ll need to set aside for your divorce attorney as it is essential you hire one if you are looking to obtain an outcome in your favor. Between the entire cost of the divorce along with the newly acquired expenses you will soon be acquiring depending on how your debt is divided, now is the time to hold onto your money and make the best financial decisions possible.
With that said, Forbes has shared some financial mistakes you don’t want to make when going through a divorce that will help keep your finances on track as you begin this new endeavor as a single man/woman. Below we share with you five of the seven mistakes you don’t want to make.
- Indulging in retail therapy. Sure it’s nice to treat yourself to a new wardrobe or a nice car since these are decisions you can now make without having to consult with your spouse, however, it is one trap you don’t want to get caught in. While it might feel good at the moment, you may later regret your decision to splurge once you find out how your debt is going to be divided and which bills you are going to be held responsible for. For now, it is best you hold tight of your money rather than spend it to help satisfy the sadness you might be feeling so that if you need it, it’s there.
- Using your investments to cover the cost of current bills. Assuming that you are living separately from your spouse already as you are preparing to file for divorce, you may have realized you are now responsible for more bills than you once were when they were divided evenly between the two of you. Given the higher cost in expenses that you now have taken on, you might be tempted to cash in your investments to satisfy these bills, however, you might want to wait and reconsider. Forbes highlights that when you cash in these assets you may owe a significant amount in taxes and they will no longer be available to help you reach your financial goals.
- Fighting for the house. Most couples who purchase a home during their marriage are subject to having it divided when it comes time for a divorce. However, one party may be adamant about keeping it, yet they have exactly considered the financial implications it will have on them. So, before putting up a fight to retain the home, consider how much it is going to cost in mortgage and maintenance and if your current income flow is enough to satisfy these amounts along with your other monthly expenses. You might find that owning the home as a divorcee isn’t something you are able to afford.
- Forgetting to make a finance plan. Without a financial plan, you may find yourself making irresponsible decisions with your money that could “have lasting effects on your finances.” Rather than just assume you have all your financial obligations under control along with a mental list of what you are earning that will help you attain financial stability, take the time to create a financial plan based on your circumstances so that you don’t run into any surprises, and by that we mean bumps down the road.
- Disregarding how the new tax law affects your finances. After President Trump passed the new tax law, couples whose divorce was finalized after December 31, 2018, are now subject to the terms of the new law. This means that if you are paying alimony or spousal support, you can no longer claim it as a deduction which places you in a higher tax bracket and likely having to pay more in taxes. And if you don’t plan accordingly for this, you could wind up struggling financially to make ends meet.
There are plenty of other do’s and don’ts when it comes to divorce and if you would like to find out what these are, contact Hollywood, FL divorce attorney Jodie Bassichis. Between the knowledge and experience our office has with divorce and other family-related matters, we are sure the information we can provide you with during this time will not only be insightful but also beneficial to you and your family.
To speak with attorney Jodie Bassichis now to learn more about divorce and the other mistakes you will want to avoid, contact us today by calling (954) 963-7300.
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