Arkansas’ divorce rate is among the top five nationally, according to recent figures from the American Journal of Sociology.
Nobody marries with plans to break up. But, should it happen, decisions have to be made that will have lasting ramifications on finances and livelihood. Much like the death of a close relative, divorce forces important decisions on people when they’re least capable of thinking clearly and objectively.
Here are three common financial mistakes people make when going through a divorce and how to best avoid them:
1. Settling Too Early
Working with financial issues of divorce while dealing with its immediate psychological and emotional impact often leads to poor choices. It takes time to get used to the new realities of divorce, and it’s unwise to let anyone pressure you to make quick decisions about money during divorce.
2. Making a ‘Short View’ Settlement
A settlement that looks fair and equitable based on an even split of marital assets may not be fair after a short time. For example, keeping the house while your ex-spouse keeps stocks, CDs and other assets might look like a good choice. But the cost of home ownership on a single income may force selling the home sooner than desired — or even a foreclosure, should you be unable to maintain payments. If your ex’s assets appreciate during the same time, the settlement’s flaws become obvious. The bottom line is to never sign a divorce settlement without projecting it into the future.
3. Going It Alone
It’s critical to get the guidance of an objective adviser to help with the financial effects this life-changing event will bring. Some of the steps you’ll take may go against your immediate instinct, but working toward your best possible financial outcome is very empowering at this trying time.