When a person in Maryland is going through a divorce, it can sometimes be hard to think straight. However, it is important not to let emotions cloud your judgment in a divorce, or you could make one of the following financial mistakes.
Mistake 1: Forgetting the hidden expenses of homeownership
It may be tempting to try to keep the family home in a divorce. After all, the marital home may be a couple’s most valuable asset, and if the couple has children, the parent awarded custody may want to continue raising their child in the home they are familiar with.
However, homeownership is costly. If you want to keep the family home, you need to make sure you can afford the mortgage, upkeep, homeowner’s insurance and property taxes on a single income. It is all too easy to wind up “house poor” if you do not keep these expenses in mind when going through a divorce.
Mistake 2: Unforeseen tax issues
The Internal Revenue Service plays a role in a divorce that many people do not anticipate. For example, if you choose to sell the family home, depending on how much is made from the sale, you could be responsible for paying capital gains taxes. Or if you have stocks or other investments that appreciate, you may be responsible for paying taxes on the gains that go above the cost basis.
Mistake 3: Failing to budget on a single income
Budgeting for your life post-divorce is essential. You may be moving from a dual-income household to a single income. Or, if you stayed out of the workforce while married, you are now facing the prospect of having to find a job that pays enough to support you. Whether you will be paying or receiving spousal support and child support is also important to keep in mind. Ultimately, you should plan for the possibility that you will have a lower household income post-divorce than you had while married.
Seek assistance when going through a divorce
Ultimately, divorce legal issues such as property division, child support and spousal support can impact your finances post-divorce. For this reason, it is important to seek the assistance necessary to understand your rights and options in a divorce. Family law attorneys may be a useful resource in such endeavors.