This was originally published on Monday, November 23, 2015, in the Pacific Daily News. Click here to subscribe to the PDN.
Divorce is challenging and painful. Many tend to lash out at the other spouse due to the emotions that surround the pain. It is difficult to do, but try to keep your emotions at bay. Being rational could save you money.
Lawyers and court fees are expensive, so if you and your spouse can come to terms in a non-emotional manner you could be saving money that both of you could use after the divorce is final.
One of the hardest assets to give up is the family home. Many happy memories took place there. Maybe you watched your family grow in that house, had family gatherings, holidays and much more.
It’s hard to decide who should get the family home. Many assume that it goes to the person who has custody of the kids. That’s not always the case.
Another point to think about is that you probably purchased that home with two incomes to pay the mortgage, insurance and upkeep. You do not want to hold on to the house and not be able to make the mortgage, which in turn hurts your credit score. As hard as it may be, selling the home can actually be a fresh start. The money that comes from the sale can be split to help get your new lives started.
It may also symbolize a new chapter in your life by getting rid of something that may cause hurtful memories as well.
Having to make all the financial decisions at once can become very overwhelming. Because it is so complex, many people just give in and settle on what is asked. Take time to understand and review each financial decision. Talk to your lawyer and financial adviser to get the best advice. There may be taxes or penalties you will have to pay. Take a comprehensive look at exactly what the decision will do to you in the long run. Be sure that you really do get a fair settlement.
Debt plays a huge part in divorce. Although you may not have used a credit card or secured a loan to purchase a car, the law sees things differently. Assuming that you are not responsible for your spouse’s debt can be dangerous. Debt is something that is a shared liability and it is a shared responsibility to pay it off.
Debt collectors can still come after you if the debt is not being paid. Remember that you will now be down to one income and that debt will be very difficult to pay off. If possible, pay off all your debts before proceeding with the divorce. If you want to expedite clearing your debt, consider consolidating your loans. Money may be scarce for a while, but it will move your plans along quicker.
Depending on the outcome of your divorce, alimony and/or child support is possible. If you are eligible to receive either one or both, there are a few things to keep in mind.
How much you receive may be based on your ex-spouse’s income and capability to pay. To safeguard what you are owed, ask him/her to attain disability and life insurance. In case your ex-spouse is injured and can no longer work or passes away, you will be paid your alimony or child support though these insurances.
Courts can order your spouse to pay, but it is up to them to make the payments. If payments are not made, the balance starts to add up. Because they choose not to obey the court’s order, they can be held liable. Courts can garnish wages or even imprison your ex-spouse.
In other words, don’t count on alimony or child support as your sole or primary source of income. If your ex-spouse cannot make the payments, you will not be getting the money owed to you at that time.
Focus on what is important. If there are children, they should be your first priority. Everyone should be getting a fair share. Get the big picture of how the change is going to affect you and your finances. Before you sign your final decree papers, be sure that you understand what is required from you.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at email@example.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.