In between lawyers and adjustments to daily life, divorce can be a costly process. However, it doesn’t have to be as expensive as people often make it out to be. Here are some common financial mistakes to avoid when separating with your spouse.
- Don’t fall into the retail therapy trap. It can be tempting to impulse shop, but you may find yourself regretting that big purchase down the line.
- Don’t forget the recent tax changes. Now that the Trump tax plan is in effect, the person paying alimony no longer receives a tax break.
- Watch your 401k distributions. Your 401k is not the catch-all solution to short-term money problems. If you make an early withdrawal, not only will you have to pay income tax on the withdrawal, but you’ll be assessed a 10% penalty.
- Take housing into consideration. Deciding on who gets the house is important. It could potentially come with a high mortgage and might also be costly to maintain.
- Don’t quit your job. Once again, impulses can run high and although it may be tempting to quit your job to avoid alimony, it’s a bad idea in the long run.
- Have a plan. When separating, make sure both you and your spouse have a concrete financial plan in place.
Going through a divorce is stressful, but by following these steps, you can easily reduce the financial burden. If you are seeking a divorce, Shah & Kishore can help. We are committed to helping our clients achieve a smooth and amicable separation.
To learn more about how we can help you with your particular situation, please email or call us today at (301) 715-3838 to set up your FREE consultation.