Separation or divorce is very hard. I don’t wish it on anyone. The financial challenge that comes with it can very overwhelming.
Here is one scenario. A couple with a young daughter bought a big house in a very nice neighborhood more than a year ago. Now, they have to divorce because the marriage doesn’t work anymore. The husband was making more money. The wife works but her income is not stable. They still have a big mortgage. However, it is not a good time to sell the house given the mortgage rate is so high. The demand for houses declined sharply because many people can’t afford it. She won’t be able to pay for the mortgage all by herself or buy the house outright from him. He doesn’t have enough money to buy the house from her too. What is the solution here?
One idea is to rent the house out for now to cover the mortgage. However, it might require some renovation of the basement. There is no extra money for it either. Perhaps they have to rent out the whole house and move to a smaller partner for her and the young daughter. At least, this can cover the mortgage and wait until the inflation is tamed and interest rates came back down. The housing market is booming again. Then sell the house and divide the asset.
This is only part of the big puzzle of divorce. Some people especially women rely on the spouse to manage the finance. They are almost oblivious to any matter of personal finance. This can be nerve-racking. Hope they find someone who they can trust to guide them through. Financial literacy is probably the lowest in their priority because they have so much to deal with. Tough, indeed. Therefore, learn financial literacy whenever we have time because we don’t want to wait until too late.
Hope 2023 is filled with love, peace and prosperity.
Worthfy Financial Literacy Counselling 