Getting divorced can really do a number on your confidence and emotions. Depending on the cause of the divorce, it can be difficult to process the sadness of the experience and regain feelings of happiness and stability. Most of us have comfort food we run to when we’ve had a bad day or bought ourselves something nice to take the sting off getting some bad news. While it’s within the scope of human nature to make mistakes during times of stress, getting a divorce is a long process that is sure to consist of good days and bad.
5 Money Choices that Can Slow Down Your Divorce and Ruin Your Finances
Here’s is some great advice -- you should refrain from any financial behavior that will make your life harder once your marriage is over and you’re ready to start a new life alone.
Here are some examples:
Shopping Sprees: On the list of poor choices a person could make while getting a divorce, this one ranks right up there near the very top. It’s tempting to a new wardrobe or new apartment to go with the new sense of freedom that divorce may offer, but there couldn’t be a worse time to be indulgent. If you are independently wealthy, then this doesn’t apply to your situation, but if you needed your spouse’s income to live a comfortable life, you need to start remembering what It’s like to pay for things without another income. These bills will not be split between two incomes – even if your divorce is not finalized. These new bills will belong to you and only you. You could be creating a financial nightmare for yourself before you’re about to get your new life off the ground.
Liquidating Investments to Fund Your Lifestyle: If you’ve been awarded assets during the property settlement that you want to liquidate to fund your lifestyle, you may want to reconsider and find an alternative source of income. Liquidating that IRA may seem tempting, and you may have the best intentions of putting it back once you’ve settled into your new life. The reality is always more complicated. Once you’ve cashed in these investments, you could be looking at a hefty tax bill, which will negate whatever gains that could come from liquidating the assets in the first place.
Ignoring Your Tax Obligations: Taxes are a financial burden if they are not paid on time, and while the news of an understaffed IRS may leave you untroubled about paying your taxes on time, you’d be making a huge financial mistake. Tax penalties compound over time, and what you thought was a minor problem you’d handle later will quickly become unmanageable. If you’ve used untaxed money anywhere in your budget, be prepared to pay taxes on the funds on your next tax return. If you aren’t sure what tax liabilities you have, hire an accountant to help you work through the details. You will want to pay close attention to line items like early 401k distributions (including qualified domestic relations order disbursements (QDRO),spousal support payments, and any liquidated large assets.
Fighting for Assets You Can’t Afford: Divorce can be a punch in the gut and in the wallet. If you aren’t the higher wage-earning spouse, your life after divorce will be different. While the court may award you spousal support after your divorce, it’s not the same as having an income. You will need to change your expenditures to match your change in resources. Sometimes this means letting go of assets you cannot afford. Many couples fight over the marital home, and it may not be the best choice for you financially. If it’s a larger property than you need in your new life, it may be too costly to manage properly. You could also be stuck with a mortgage you cannot afford on your own.
At Cairns Law Offices, we specialize in no-fault divorces for only $219. If the idea of a low-cost, amicable divorce appeals to you, contact us today to get started! Call us today at (888) 863-9115 to schedule a consultation.