“Poor planning in splitting the assets in a divorce can create hardship for one party — and often it’s the woman with the emotional attachment to the family home,” says Lorraine Ell, CEO of Better Money Decisions, LLC, an Albuquerque, New Mexico-based fee-only financial planner.
A 56-year-old Phoenix woman who kept her house in a divorce came to Ell’s firm, overwhelmed by upkeep and mortgage costs. “Fortunately, the home had $500,000 in equity, so the answer was obvious — sell the house, get a smaller place and invest the rest,” Ell says. “She just needed help to get there.”
Often, the emotional impact of the financial loss “is far greater than the actual loss of cash,” Ell says. Rebuilding morale with a new reality — and a new financial plan — is crucial.
“You have to know and accept what is happening, and understand there are more important things than money,” Ell says. “Then construct a financial plan to get back to some semblance of normal. That’s easier said than done because often that means working more, downsizing and reducing your lifestyle.”