Divorce is painful, difficult, and sometimes it can be very expensive. Household income is reduced, debt is split, investments go up in smoke. You can, however, always find a bright side to your Michigan divorce and your finances are one place where this unexpected discovery may just happen.
Your Money, Your Decisions
When you share a bank account with one person, you must agree about how money is spent and saved. If you fought over money regularly in your marriage, that struggle disappears with divorce. Sure, there are things like spousal support and child support to consider, but only one party is responsible for those.
You have the chance to budget the way you want, splurge where you want, and save as much as you need. You control your money and no one else gets a vote. Talk about freedom.
Prioritize Finances for a Better Life
Was your family living beyond its means? Were you stretched every month because of your mortgage and lifestyle? Were you overcompensating for a bad marriage by splurging on treats for the kids or yourself? Divorce makes people take stock of what they really want and need in life and prioritize accordingly. Unloading the big house and all the expenses that come with it and getting rid of the pricey SUV and replacing it with a lower car payment can save you money.
Divorce might force you to make difficult financial decisions, but it also gives you the opportunity to realize that living smaller may be just right for you after all.
Retirement Right Now
When you reach a qualified domestic relations agreement as part of your Michigan divorce, you can take an early withdrawal of funds from a retirement account without paying a penalty. People under the age of 59.5 typically are charged a 10 percent penalty for accessing retirement funds early, but not divorcing couples. Income tax will still need to be paid if you don’t roll the money into an IRA and instead use it to, say, pay for your divorce or set yourself up with some fresh savings and needed cash flow.
Dealing with retirement money is a tricky part of divorce – how it’s split, whether you should split it, and what should happen to the money. Always consult with a financial planner with the help of your divorce attorney or on your own.
College Financial Aid Boost
Anyone with children has considered how they will pay for college when the time comes. A big financial perk of divorce is how kindly the Free Application for Federal Student Aid (FAFSA) looks at divorced parents. Only the financial information from the custodial parent is required by FAFSA. While child support and alimony are counted as income, one parent is more likely to have a minimized income, which makes you more likely to get more financial aid for your child that wouldn’t have happened by reporting your income as a married couple.
Get the best help and most help for your Michigan divorce. At Femminineo Attorneys in Macomb, we understand the financial challenges you will encounter along the way and do all we can to ease your burden. Contact us today to schedule your no-cost consultation and ask your questions about divorce and money and everything in between.