Financial decisions can be difficult at the best of times. Throw in a divorce and people tend to find money matters even more challenging, and some divorcing Nebraska residents may find themselves making poor financial choices during this stressful time. A financial expert offers a few tips regarding common financial mistakes divorcing individuals should avoid, preventing them from having to sort through a financial mess later.
At a time when expenses are high and unexpected costs seem to be popping up, some people may consider cashing in investments or dipping into their 401(k) to improve their cash flow, reasoning that they can simply return the money later. However, people need to remember the substantial tax bill that will likely result from such actions. In the case of a 401(k), a 10 percent IRS penalty will also apply if the individual is under the age of 59 1/2. Above all, taking money away from these areas means altering a financial plan that was in place for a reason.
In many cases, one of the divorcing parties decides to remain in the marital home, but this can be another costly error in judgment. It’s wise to first consider all options. While keeping the home may be a good choice in some cases, in other situations, the individual who keeps the house may end up saddled with a high mortgage and maintenance costs that he or she cannot afford. No one wants to end up leading a less than ideal lifestyle with the house crumbling around them.
For people going through the divorce process, making wise financial decisions can be yet another challenge in a long list of challenges at this time. However, it is just as important to stay on track now as before the marriage dissolved. In addition to employing a financial adviser, divorcing Nebraska residents can consult with an attorney experienced in family law to guide them through financial decisions, as well as all other aspects of the divorce process.