Divorce is about money, but a common divorce mistake is actually about the house. And money.
Of course, emotions run high during the process. But for most people, especially women, the financial side of divorce is often more difficult.
- Women must fight harder than men to avoid financial hardship.
- On average women earn 25% less than men over a lifetime.
- Daughters who take care of elderly parents outnumber caregiving sons by more than two to one.
- Women live longer than men.
- 66% of divorces among Baby Boomers are initiated by women.
So women are working harder to make the money and yet live longer and are more likely to end up taking care of elderly parents. That’s why so many divorce attorneys advise women to avoid this major divorce mistake: Trying, at all costs, to keep the house.
In an informal poll of attorneys, this was listed as the worst mistake — by a more than two to one margin over mistake No. 2.
Why It’s a Mistake
For some women, the house is more than just a place to store stuff and sleep. Many feel an emotional attachment to this home. But when facing a divorce, the house is not just a home: it’s both an asset and a liability.
If the house has equity, that can be sold for cash, making it an asset. But if a balance remains on the mortgage, the house may be a liability. That doesn’t include ongoing repair costs and utility bills.
So the first question is: Can you afford to keep the house? Create a personal budgeting worksheet to compare your post-divorce income to post-divorce expenses. What you find may surprise you. Keeping the house may just be a financial error over time.
If you can afford to keep the house, the second question is: Should you keep the house? Moving causes big changes in schools and friends for children and may feel like a huge wrench after the emotional distress of divorce. But as time passes and children age, you are likely to not need “as much house.”
Divorce may not always feel like it, but it’s a chance to begin anew, and sometimes, new surroundings are a helpful part of that healing process.
While each person’s situation is different, the house is a key part of splitting up assets. Be sure you are prepared emotionally and financially for both possibilities.
Arm yourself with the facts about the effects of divorce by joining us for a Second Saturday workshop.