Divorce is no longer a terrifying beast we prefer not to talk about in everyday conversation. Considering that between 40% and 50% of all marriages end in divorce, we’ve gotten more comfortable with the topic. The real horror here stems from the financial stress divorce places on couples nationwide.
In the United States, the cost of a divorce ranges from $15,000 to about $42,500.
Whether it’s someone’s first marriage or their fifth, it’s easy to make the same financial mistakes over and over again, especially in divorce. So to help you avoid those mistakes, we’ve taken the time to list a few of them below. Keep reading to learn what kind of financial missteps you need to avoid during and after your divorce.
Buying things can make us feel all sorts of good. Things like a new car to represent a new you, an expensive gym membership, and other luxuries might make you feel better on the inside, but they could also be killing your financial security. Without support from your former spouse and with your new legal bills to pay, you may find yourself in a world of financial hurt if you’re not careful.
Using Investments to Pay Bills
Cashing in on investments to pay current bills is never a good idea, especially if you’re in the midst of a divorce. Not only will you lose that investment, you’ll likely need to pay taxes on it later. Bankruptcies from unpaid medical bills affected almost 2 million people in 2013 alone. Don’t let that situation sneak up on you, whether it’s a medical bill you need to pay or not. Your financial goals may change after a divorce, and losing an important investment or declaring bankruptcy can seriously damage any progress you may have made towards those goals otherwise.
Planning Another Wedding
Weddings are undeniably expensive affairs. And considering that there are just about 2.4 million performed every year in the U.S., it’s fair to say that wedding planning is a huge (and expensive!) industry. Planning a wedding either during or immediately after your divorce might seem romantic, but it’s the opposite of that for your finances. Wait until your legal fees are taken care of and any outstanding debt is resolved.
Relying on Credit Cards
While your credit score is good to pay attention to, credit cards are not. Relying too heavily on credit cards can end up tanking both your credit score and your financial stability in the long run. Like retail therapy, spending money with credit cards feels good. That’s why it’s so dangerous, especially at a time when your emotions may be running high.
Neglecting the Possibility of Spousal Support
In many cases, spousal support can give you the cushion you need to get back on your feet after a divorce. This is especially important to consider if you’re not the primary breadwinner in your household. However, experts like Avani Ramnani advise thinking about your needs first.
Ramnani suggests determining what your future looks like before you request any portion of assets. For example, if you plan on staying home to parent, Ramnani advises to “fight to get a larger share of the assets instead of more alimony. This gives you a more dependable cushion, and thus more control of your finances.”
Nobody said divorce was easy, especially when it comes to finances. Remember: over 50% of all American marriages end in divorce. You’re not alone! If you want to make sure your finances are secure for the future (no matter your marital status), make sure you’re avoiding these mistakes.