Divorce has a way of completely upsetting one’s expectations for the future. One day things are moving along just fine, and the next you are making decisions that will impact the rest of your life. One of the big decisions is whether or not to keep the family home. It may really be two questions: “Should
I keep the house?” and “Can
I keep the house?”. Let’s consider both in turn.
Whether you “should” keep the home is more of an emotional question. What does the home represent to you? Often it is an emotional safe haven full of good memories that you have spent years getting just right. It could also be an emotional roadblock to moving forward with your life.
“Can I keep the house?” is more of a financial question. Will your income post-divorce allow you to maintain the house? Will taking the house in the divorce mean forgoing other marital assets such as retirement accounts, that may be more valuable in the long run? Perhaps keeping the house will require keeping your ex-spouse as co-owner, do you want that?
Due to its functionality, your house is an asset different from a stock or retirement account. So, in many cases, the decision is a compromise focused on the question: “How long should I stay in the house?”.
If you are unsure of the best way to handle the house, there are 3 exercises that you should go through to determine your best decision or when you should expect to sell.
- Develop a post-divorce budget to see if you can afford to keep the home. Perhaps with child support it may make sense to stay. When the kids go, the house may need to go as well.
- Run a retirement projection to see how keeping the home will impact your retirement and other financial goals.
- Finally, list the benefits and tradeoffs of keeping the home. The benefits may be proximity to work and school. A tradeoff may be that you are now in charge of the upkeep.
There is no doubt that a house is treated different from a retirement account. Even so, it needs to be viewed with an honest and objective lens to determine how it will influence the unfurling of your new future as you blossom into the new you.
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