{"id":1126710,"date":"2019-07-15T14:17:40","date_gmt":"2019-07-15T19:17:40","guid":{"rendered":"https:\/\/dailyreckoning.com\/?p=107700"},"modified":"2019-07-15T14:17:40","modified_gmt":"2019-07-15T19:17:40","slug":"7-financial-mistakes-to-avoid-after-a-divorce","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1126710","title":{"rendered":"7 Financial Mistakes to Avoid After a Divorce"},"content":{"rendered":"

This post 7 Financial Mistakes to Avoid After a Divorce<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

Raise your hand if you\u2019ve heard that half of all marriages will end in divorce? <\/span><\/p>\n

Even if that statistic was once true, it\u2019s not anymore. Divorce is on the decline and has been since the 1980s in America. <\/span><\/p>\n

Experts now put your chances of uncoupling at about 39% in the U.S. <\/span><\/p>\n

The drop in divorce rate seems to be, in large part, due to Millennials making their vows stick. A 2016 study found that young people were 18% less likely to get divorced. <\/span><\/p>\n

And similar data is echoed across the pond, young Brits are 27% more likely to make it through their first decade together \u2014 the prime divorcing years \u2014 versus those who got hitched in the \u201980s.<\/span><\/p>\n

But divorce still happens and it can be one of the most emotionally and financially devastating events you have to go through. If you or someone you know is currently going through a tough divorce, here are seven mistakes to avoid that will impact your finances. <\/span><\/p>\n

1) Retail Therapy<\/b><\/span><\/h2>\n

It\u2019s tempting to start throwing money at the new problems you have. But buying a new car or a new house, or taking an expensive vacation won\u2019t help your situation much, in most cases it\u2019s going to make it worse. <\/span><\/p>\n

Avoid the cliche of retail therapy and try to avoid making any big decisions that will affect your finances. The retail therapy high is short-lived, and what you\u2019ll find is you\u2019re left with bills and payments you can no longer afford when it\u2019s all said and done. <\/span><\/p>\n

2) Cashing in Investments<\/b><\/span><\/h2>\n

Legal bills are no joke, and you might be tempted to cover some of your fees by cashing in your investments. I\u2019d advise against that. When you are selling highly appreciated assets, you typically owe substantial taxes. Additionally, since those assets will no longer be invested, you\u2019re likely pulling yourself off track to meet your larger financial goals. <\/span><\/p>\n

This can get worse if you\u2019re retired. Ensure that you\u2019ll have enough income to live off if you do decide to pull money out. The last thing you want is to have to go back to work years after being in retirement. <\/span><\/p>\n

3) Forgetting the New Divorce Tax<\/b><\/span><\/h2>\n

Back in the day before Trump\u2019s new tax plan went into effect for 2018, a spouse paying alimony would get a tax deduction for paying spousal support. The receiving spouse would be the one having to pay taxes on that income. <\/span><\/p>\n

Under Trump\u2019s new tax plan, the person paying alimony no longer gets that tax break. That is for divorces finalized after December 31st, 2018. And the spouse paying alimony is typically in a higher tax bracket anyway than the recipient. This means less money to go around and not great for divorcing couples altogether. <\/span><\/p>\n

4) Pulling Money out of Your 401(k) <\/b><\/span><\/h2>\n

As I said, money can be tight during a divorce. Between attorney bills and that aforementioned new car payment, your 401(k) might look like a pile of cash that could solve all your short-term money problems. <\/span><\/p>\n

But if you don\u2019t have taxes withheld, you can face another huge tax bill, and the IRS will slap a 10% penalty on you if you\u2019re under the age of 59 \u00bd. <\/span><\/p>\n

If your divorce settlement includes a qualified domestic relations order, which basically means you get some portion of your former spouse\u2019s retirement accounts, you can put this into an IRA account under your own name, and continue to defer taxes. <\/span><\/p>\n

What you should avoid doing is taking all the cash now, this could bump you into a much higher tax bracket and you\u2019ll lose a large chunk of those funds. <\/span><\/p>\n

5) Fighting Over Who Gets the House<\/b><\/span><\/h2>\n

If you anticipate any tension over who will get the house, consider this first: while your house might be gorgeous and worth a lot of money, it can also come with high costs to maintain and a mortgage to pay. <\/span><\/p>\n

It\u2019s not uncommon for recently divorced couples to leave one person with a house that\u2019s worth less than what they owe (negative equity). Consider all your options before you decide who gets the house. <\/span><\/p>\n

For instance, if you\u2019ve lived there for a number of years, it might be beneficial to one party to keep it. But if either of you alone can\u2019t afford the up-keep or mortgage payments, then it doesn\u2019t really matter who gets the estate. <\/span><\/p>\n

6) Quitting Your Job to Avoid Paying Alimony<\/b><\/span><\/h2>\n

I\u2019ve heard of angry couples where the main breadwinner in the relationship literally quits their day job so they don\u2019t have to pay alimony. I\u2019ll tell you right now, it\u2019s not a smart financial move.<\/span><\/p>\n

This will end up costing you more time in court, more attorney fees and you\u2019re delaying the inevitable, which is you\u2019ll eventually go back to work and have to pay alimony. If you don\u2019t end up working again, you risk losing steady income that likely will outweigh the alimony check. <\/span><\/p>\n

7) Not Having a Plan<\/b><\/span><\/h2>\n

When all is said and done, you might feel like you\u2019re finally free to do whatever you want with your money. And this is of course true. However, one of the biggest mistakes you can make is not having a financial plan after the divorce. <\/span><\/p>\n

It\u2019s tempting to start spending money on things that might bring you joy, especially if you\u2019ve been in an unhappy marriage for awhile now. But the financial mistakes you make right after a divorce can haunt you for the rest of your life. <\/span><\/p>\n

So take a pause and sit down with someone to get help to plan out your next steps. With everything settled, you should feel like you have total control over your financial life and hopefully can start fresh.<\/span><\/p>\n

To a richer life,<\/p>\n

\"Nilus<\/p>\n

\u2014 Nilus Mattive
\nEditor, The Rich Life Roadmap<\/i><\/p>\n

The post 7 Financial Mistakes to Avoid After a Divorce<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

This post 7 Financial Mistakes to Avoid After a Divorce<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

Seven big mistakes that could ruin your financial security after a divorce.<\/p>\n

The post 7 Financial Mistakes to Avoid After a Divorce<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"author":55,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[366,626,3010,494,2473,2627,475,923],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1126710"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/55"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1126710"}],"version-history":[{"count":1,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1126710\/revisions"}],"predecessor-version":[{"id":1126711,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1126710\/revisions\/1126711"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1126710"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1126710"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1126710"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}