The dissolution of a marriage is structurally and emotionally difficult and time-consuming. A divorce may also have a severe financial impact. Though few would say there is an ideal time to call it quits, certain events can make it better or worse from a financial perspective. Learning their impact on finances enables a couple to determine the proper fiscal time for divorce.
In a soft real estate market with an excess of inventory, a divorce can result in burning through home equity. When the market is doing well, homeowners can sell their home quickly and capitalize on its value. A divorce settlement that enables one spouse to stay in the home and provides the other with assets in exchange for the appropriate share of equity is the cheapest solution.
Based on the state of the general economy, divorce has a varying impact. Some divorces require that either or both spouses purchase or rent new homes, new cars, and change jobs. Doing these things might be difficult during a shaky economy because jobs are not plentiful and credit is more difficult to obtain. However, in a booming economy, large expenditures like cars and homes could be more expensive.
When the family includes minor children, divorce becomes more complicated, involving financial support and custody arrangements. Divorced spouses have less combined income because each has separate living expenses. The positive aspect is that children in college may qualify for student grants and loans they previously could not get due to parental income.
A divorce only makes things worse for someone with a poor credit history. The individual may find him or herself qualifying only for bad credit auto financing rather than a traditional car loan. To avoid facing creditors during the short-term, some spouses in this situation request to keep the car and home and wait a few months to begin improving their credit score.
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