Let’s talk about the most common money mistakes couples make during divorce and how you can avoid them!
Failing to See the “Bigger Picture”
Divorce is not just a severing of your marital union and relationship; it is also a business transaction. Though looking at it this way can seem cold, it can help you avoid the common arguments that couples get into and keep you focused on what is truly important. It is critical to consider the cost-benefit analysis of your divorce – considering the costs versus any proposed settlement or potential trial result. Sure, the possible trial result might be better than a deal on the table, but how much will it cost to get there, and what are your real chances to get that outcome?
Thinking that there is “my money” and “your money.”
People who split their accounts during the marriage, keep their incomes separate and have individual credit cards often think that they will keep “their” money after divorce. In Illinois, they are fooling themselves. Unless the assets are non-marital (as in held before the marriage), all assets are marital property, and generally, all debts are joint liabilities. The law does not recognize your division of assets and debt. All of the assets and debt will be put into the marital “pot” and split upon divorce.
Continuing to Outspend Your Joint Incomes.
In a divorce, it is common to see people not change spending habits or spend more money. Many people outspend their incomes, and spending tends to increase during divorce (attorney fees, more eating out, new clothes, a new place to live). Unfortunately, continuing bad spending habits can make it harder on you down the road. The time to get spending under control is now. Also, the idea that you want to spend more to show that you have a certain lifestyle for alimony/maintenance purposes is outdated. Illinois law calculates alimony using incomes, not spending. Spending money now means less money in your pocket at the time of the divorce.