How to Save Money During Divorce

If you are considering getting a divorce, this Wall Street Journal article http://www.wsj.com/articles/money-and-divorce-six-major-mistakes-to-avoid-1431693937 will help you plan and avoid making common costly mistakes.

Mistake #1: Overlooking assets.

Know your family’s assets and liabilities prior to the divorce. Maintain your access to tax returns, bank, retirement, and investment accounts. Make an inventory of property including real estate, collectibles, and other valuables. Keep track of shared debts, such as loans and credit cards. You will still be responsible for them after you are divorced.

Mistake #2: Keeping the house.

A household that took two people to run can be far too expensive for one person to handle. Taxes, utilities, maintenance, and other costs can quickly drain savings. It is often better to sell the house and split the proceeds during settlement.

Mistake #3: Underestimating expenses

Know your post-divorce expenses beyond housing costs, including clothes, food, school, utilities, as well as discretionary expenses such as sports and travel. Overestimate rather than underestimate.

#4: Seeking revenge

Remember that every dollar you spend getting a divorce, is one less you will have to split. Experts suggest approaching a divorce as a favorable business deal rather than seeking revenge. Amicability can save a lot of money.

Mistake #5: Forgetting about Taxes

Consider how the settlement will affect the taxes of both parties. Divide assets in a way that does not stick one party with a higher tax bill. Different accounts may have differing tax consequences.

Mistake #6: Thinking that the Divorce is the Final Step

After divorce there are important financial matters that need to be dealt with, such as updating the will, your health-care proxy, and power of attorney. Don’t forget to transfer titles of real estate, cars, investment accounts, etc.

By following this advice, you can limit costly financial mistakes of divorce.