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financial tips, Money savvy

Top 5 Money Blunders You Can Avoid During Your NJ Divorce

Any divorce will require both parties to make some difficult choices regarding money, but there are some mistakes you can easily avoid with proper planning.

On Behalf of Veitengruber Law | Jul 20,2022

Going through a divorce requires both parties to make some difficult financial choices. However, there are some common mistakes divorcees tend to make that you can prepare for and avoid. Here are our top five financial mistakes and tips for avoiding them.

 

1: Ignoring your expenses
 

Your first step should be to review your budget. How much money are you bringing in? How much money are you spending? Next, you must create a realistic budget for your month-to-month expenses. Keep in mind that your income and costs will change if you lose your spouse's income, change living arrangements, or pay child support or alimony. Your new budget will need to account for these changes.

 

2: Keeping the family home when you can't afford it

Often, the spouse who will have primary custody of the children wants to keep the home to maintain a sense of normalcy and stability for their family. The decision to keep or sell a home can be emotional, which is why sometimes it is difficult to make this decision rationally. But you need to consider your budget and whether or not you can really afford to stay in the home. For many, downsizing or renting can fit their budget better. However, if you keep the house when you cannot afford it, you could end up going through foreclosure.

 

3: Failing to get insurance for spousal support or child support


You will only be able to collect spousal or child support if your former spouse has money to make the payments. If they lose their job or the ability to work all together, you will not have those payments. The best way to secure these payments in the long term is to request that your former spouse obtain disability and life insurance. Putting this contingency in your divorce agreement can provide added security for you and your children.

 

4: Ignoring your liability for unsecured debt


Unsecured debt is typically credit card debt. Most of the time, unsecured debt accumulated in the marriage is a shared liability. Even if you were not responsible for making the purchases, your agreement would divide the debt between both parties. However, credit card companies don't care what your divorce agreement says about who is responsible for the debt. If your spouse is not making payments, the credit card companies can still come after you if your name is on the account. That is why it is the best policy to take care of your debts before the divorce.

 

5: Not considering financial security long-term
 

When negotiating and coming to financial agreements in the divorce proceedings, you need to consider the long-term implications. However, if you only focus on the short-term task of dividing assets and determining support payments, you might not be thinking about how those agreements will impact your finances a decade or two down the road. A financial planner can help you determine how different aspects of the divorce agreement will affect your finances down the road.

 

While you may feel equipped to handle some of these financial issues on your own, others may require the expert advice of an experienced professional. Veitengruber Law is a debt and foreclosure defense legal team. We can help you determine the best path forward when dealing with these financial questions during your divorce.

 

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