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5 Financial Mistakes to Avoid in a Divorce

Posted on in Divorce/Family Law

b2ap3_thumbnail_Untitled-design.jpgDivorce can be emotionally difficult and if you are not cautious, it can hurt your economic future. If you are going through a divorce, you should make every effort to avoid the following five common financial mistakes that can cost you a lot of money and leave you in a bad financial situation in the future.

1. Becoming House Poor. Often times, the family house gets kept by one spouse after the divorce. Whether you would like to keep the house because of your children or because you are simply attached to it or have invested money into it over the years, you should make sure you can comfortably afford to keep possession of your home. You may find that paying the mortgage and maintaining the house on your own will make you house poor and unable to afford the lifestyle you would like. 

2.  Thinking Short Term. It is common for divorcing couples to focus their attention on short-term problems and benefits rather than thinking long term. By thinking about how every financial decision you make in your divorce will affect you in 5, 10, 15, and 20 years, you can reduce your risk of making a mistake. 

3. Believing All Assets Are Created Equal. When marital assets are getting divided, you should consider their true value. For example, does a $50,000 luxury SUV mean more to you than a $50,000 mutual fund? Again, think long term and ask yourself how much every marital asset will be worth down the road.

4. Failing to Design a Budget. When you are starting over after a divorce, it is impossible to make smart financial decisions without a budget. Therefore, you should work with a financial adviser and figure out your budget for today as well as years from now. By figuring out your current and future budget, you have a number to keep in mind as you negotiate how your marital assets will be divided. 

5. Maintaining Joint Credit. Prior to your divorce, it is a good idea to pull a credit report from Experian, Equifax, and TransUnion and pay off all credit cards that are jointly held with your soon-to-be ex-spouse. If this is not an option, transfer balances to one spouse’s name and close all joint accounts. This way, you will be protected from a spouse that racks up debt or does not pay. 

Contact Our Waukesha County Divorce Lawyers

To ensure you do not make any financial mistakes that could make your life very challenging in the future, it is in your best interest to consult our experienced Delafield divorce lawyers at 262-203-4916. 

Source:

https://www.usatoday.com/story/money/personalfinance/2015/03/07/adviceiq-divorce-finances/24536371/

 

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