smart spending

5 ways divorce can cost you

Unequal division of assets
Unequal division of assets © Andrey_Popov/Shutterstock.com

A couch is a couch -- until it's part of divorce. Before committing to certain possessions, take the time to understand each item's true value to get a fair deal.

"People need to realize there are different values to things that appear to have the same value," says Mark Baer, a family law attorney in California.

For instance, $100,000 in retirement savings isn't equal to $100,000 in equity in a house, says Baer, and the value of both will fluctuate. The full value of the retirement account can't be accessed until a certain age. If you or your spouse dips into it early, you will pay penalties and taxes, reducing the initial $100,000. By contrast, $100,000 in home equity is easier to tap without penalties.

On the other hand, whoever gets the house should perform any due diligence that any third-party homebuyer would do. That means getting an inspection to uncover any deferred maintenance or repairs that may lower the home's value, says Baer.

"Are you paying top dollar for the house?" he says. "Are you making an emotional decision? In many cases, people are."

Be similarly careful about splitting smaller possessions. For example, instead of giving the china to your spouse while you pay full retail price to replace it, Baer recommends each of you take half and pay an equal amount to replace the other half.

advertisement

Show Bankrate's community sharing policy
          Connect with us
REFINANCE HOME EQUITY AUTO CDs CREDIT CARDS
Product Rate Change Last week
30 year fixed refi 4.08%  0.04 4.12%
15 year fixed refi 3.18%  0.03 3.21%
10 year fixed refi 3.21%  0.04 3.25%
 
View Rates in your area Next
Product Rate Change Last week
30K FICO-based HELOC 4.30%  0.03 4.27%
50K FICO-based HELOC 3.96%  0.01 3.97%
100K FICO-based HELOC 3.81%  0.01 3.82%
 
View Rates in your area Next
Product Rate Change Last week
60 month used car loan 2.75%  0.10 2.85%
48 month used car loan 2.99%  0.07 3.06%
60 month new car loan 3.20%  0.05 3.25%
 
View Rates in your area Next
Product Rate Change Last week
1 Year CD 0.99%  0.01 0.98%
2 Year CD 1.22%  0.02 1.20%
5 Year CD 1.87%  0.04 1.83%
 
View Rates in your area Next
Product Rate Change Last week
Balance Transfer Cards 15.76%  0.01 15.77%
Cash Back Cards 16.44%  0.04 16.48%
Low Interest Cards 11.04% --0.00 11.04%
 
Next
advertisement
FRUGAL NEWSLETTER

Discover new ways to cut costs and save more every day. Reduce your spending, not life’s pleasures. Delivered weekly.

advertisement
Partner Center
advertisement

Connect with us