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5 Common Financial Mistakes People Make After Divorce

Sometimes after a divorce, it's easy to focus on healing emotionally, and let financial issues and money matters take a back seat. Though healing emotionally is certainly an important part of the post-divorce process, it is important to address money matters promptly, since the financial choices you make after a divorce can have lifelong effects, and either help or hurt your chances of moving on both personally and financially. This week we wanted to talk about 5 common financial mistakes that people make after divorce, so hopefully you will not stumble into these money pitfalls.

Failing to create a new financial plan. Now that you are newly single, it's important to create new financial goals and a realistic budget. It can be all too easy to hide your head in the sand, particularly if your ex-spouse was the major breadwinner, or was the decision-maker on important financial issues. If you don't know where to start, enlist the help of a financially savvy family member or friend, or work with a financial planner.

Trying to hang on to the house. It can be tempting to want to keep your family home, especially if you have children and want to keep them feeling comfortable and stable in their environment. However, this is not always the smart choice financially. Some important questions to ask yourself first are: Can you afford the mortgage on your income alone? Can you handle the maintenance issues that may arise or afford to pay for it? Can you afford the property taxes? Making sure these questions are answered first, before deciding to keep the family home will help you make a sensible decision, not based purely on emotions.

Overlooking life insurance. If you and your spouse have children, and one of you is paying child support, it is critical to make sure the person paying the child support has life insurance. It's an easy item to overlook, but if the person paying child support dies, the child support goes away. Ideally, the requirement of life support should be included when negotiating your divorce settlement.

Keeping joint credit accounts. It is best to cancel all joint accounts either during the divorce/separation process, or immediately after your divorce. All too many people make the mistake of sharing credit cards or keeping both names on the mortgage. Unfortunate circumstances occur frequently where one party doesn't pay as agreed, or abuses the couple's joint credit. These situations can lead to financial disasters that take years to clear up.

Using revenge tactics or financial retribution. We see these situations in movies, and sometimes in real life too. One spouse racks up the credit cards to get revenge on their cheating partner, destroy possessions, or perform many other various actions to inflict emotional or financial pain on their ex. However, in the long run, that only causes more financial headaches and lingering bitterness for both parties. Though divorce is a highly charged emotional process, try to stay business-like. It is in the best interest for you, your health and your family's health to dissolve the relationship cleanly.

(Source: 5 money mistakes people make after divorce, MoneyRates.com)

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