Tennessee couples face many costs when divorcing. This can include emotional energy and time in addition to the financial costs of filing. Along with those expenses, some make financial mistakes during the process that can cost them in the long run. Forbes lists a few common mistakes to avoid during divorce.
When life falls apart in the home, many turn to retail therapy to stem the emotions. New houses, new cars and lavish vacations do not address the real issues of divorce and can leave people with debt and expenses they cannot pay on their own.
The Clearpoint Blog also discourages divorcing couples from cashing in retirement assets to pay everyday bills. Taking this money may increase a tax bill and add in withdrawal penalties. Those who end up with a large tax bill after withdrawing money from retirement end up in the same spot without the cushion of a retirement account.
Couples should also focus on unsecured debt. This can be personal loan, auto loans or credit cards and both spouses can be expected to pay them off. The first step in dealing with this is to determine who is responsible for paying them off, and the other spouse should have their name removed from the loan. If the name stays on the unsecured debt and a former spouse stops paying, the other spouse is still responsible for the debt.
Once the divorce is final, it is also important that each spouse has a financial plan. Many times, irrational behavior can lead to excessive spending or poor decision making during the divorce, and those choices can affect a life forever. A financial plan can set up a secure financial future.