Divorce can be a tumultuous time for anyone. Often times, people dealing with the stress of divorce find themselves making poor money choices. Unfortunately, all to often, people only realize their mistake after the mistake has been made. Recognizing common money mistakes people make during divorce can be the key to avoiding them during your own divorce.
Money Mistake #1: Hiding Assets
Hiding assets has consequences. When filing for divorce, the parties are expected to be candid and forthcoming about their assets and debts. By concealing assets, one party is withholding important information from the court. This could result in both civil and criminal contempt charges. In other words, you could go to jail. It simply isn’t worth it.
Money Mistake #2: Raiding the Retirement Accounts
Retirement accounts are designed for, you guessed it, retirement. However, some people find it tempting during or immediately after a divorce to withdraw some funds from their retirement accounts. Unfortunately, withdrawals before the age of 59 ½ come with penalties. Additionally, there are tax consequences for withdrawing money from retirement accounts. As such, retirement accounts are an extremely costly source of funds.
Money Mistake #3: Reducing Your Income to Reduce Your Child Support Obligations
Your child support, by and large, is based on the amount of money you make. However, if the court believes you are deliberately underemployed, or if you quit your job, the court may calculate your child support obligation based on the amount of money you are capable of making, rather than the amount you are actually making. Additionally, making choices such as deliberately attempting to reduce your child support obligation does not enhance the judge’s view of you or your parenting abilities.
Money Mistake #4: Going on Shopping Sprees
Some people engage in “retail therapy” to numb the pain of a divorce. Other people use their new single status to justify purchasing brand new furniture for the whole house. Still others purchase a flashy new car or go on a luxury vacation. Living beyond your means can impact your credit score as well as your financial output each month. A better approach is first making certain you can live within your means, and then spend some money on an indulgence.
Money Mistake #5: Not Hiring an Attorney to Represent You in Your Divorce
If you are looking to cut corners, it may seem that representing yourself is a good option. You certainly are legally able to represent yourself during a divorce. However, this may not be the best choice financially. While an attorney costs money up front, a poorly crafted divorce settlement can cause much more in the long run.
Are You Considering Divorce?
If you are considering a divorce, contact the Law Office of Eric C. Cheshire, P.A. at 561-295-3693. Eric Cheshire has over 20 years of experience. He focuses his practice on marital and family law. Together, we can work out a plan to your divorce that suits you and your family.