Getting divorced? Don’t fight to keep the house.This week on The Pete the Planner® Radio Show on 93 WIBC I talked with Jim Reed of Bingham Greenbaum Doll about divorce and it’s financial implications.
It seems like one of the most common arguments in a divorce is who will get the house. Here is what you don’t want to hear: Don’t keep the house. If you win the house, you lose financially. I understand there are reasons you want the house, it’s your dream house, it will make the transition smoother for the kids, etc, but put all those reasons aside because I have the only good argument here. You can’t afford the house. Think about it, the house was purchased by two people with either two incomes or a shared income. Now you are down to one or no income. You can’t keep the house. I know it’s hard to hear, but hearing the hard truth now will be less painful than years of struggling to keep up with house payments you can’t afford.
As Jim Reed mentions on the show, 100% of his clients site money has one of their biggest relationship issues. If that is the case, why fight to keep something that will cause you to have financial problems in your new life? I realize it isn’t this simple because of custody issues. The court often gives the parent that keeps the house custody of the kids. So then you have the kids but you also get the financial time bomb. The system sets you up to fail. Knowing this ahead of time can make all the difference. It will be hard, divorce is always hard, but making the tough decision to let go of the house at the beginning will save you more grief down the road.
Also, if you take my advice and let go of the house don’t run out and buy a condo or another house. Take six months, rent a place while you re-adjust to your new normal. Keeping all your old expenses on a new reduced income can only end one way and it’s bad. Set yourself up for success by moving into your new life without the burden of old financial obligations.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.