Divorce: The Most Common Financial Issues

One of the most frequent questions I am asked is about the financial hurdles that often crop up during the divorce process. From figuring out what to do with the marital home to navigating new budgets and support arrangements, these are the financial challenges that need to be resolved during most divorces.

The Marital Home


One of the most significant questions that consistently arises is how to handle the marital home, particularly given the current landscape of rising interest rates. In most marriages the family home is the largest asset that a couple owns.  For many couples their home has a mortgage with a low interest rate, the decision on what to do with the property becomes pivotal. Some opt to sell the home, while others consider a buyout scenario, where one party retains the home by purchasing the other’s share. However, this usually necessitates a refinancing process, which can be financially daunting amidst high interest rates.

To navigate the challenge posed by high interest rates, a meticulous approach is essential. The impact of the new higher interest rate on the mortgage is significant.  Running these numbers helps determine the extent of the increase in the monthly payment. If equity is drawn from the home for a buyout, the mortgage escalation becomes even more pronounced. This ties into another critical facet of divorce – budgets and support.

Crafting New Budgets and Support Agreements

The transition to post-divorce life requires a reassessment of individual budgets and support systems. Key components include child support for families with young children and determining spousal support based on individual earnings and new budgets. To approach these questions effectively, a holistic strategy is crucial.

To tackle budget and support issues, the initial step is not purely financial; it’s about understanding the goals of each spouse collectively and individually. These aspirations serve as the foundation for creating suitable solutions. For instance, if a couple’s goal is to keep their children in the same school district, this goal informs decisions about housing arrangements and budgets. If the goal is to ensure both parties own a home post-divorce, this informs decisions about support to ensure each party can qualify for a mortgage.

Flexible Approaches to Spousal Support

Unlike rigid child support calculations, spousal support offers more flexibility. In California, a rule of thumb suggests that support may last half the duration of the marriage for marriage of less than 10 years.  However, for longer marriages determining spousal support involves an analysis of earning potential, historical income, and marital lifestyle.

In a divorce, the financial questions can be overwhelming. The most effective strategies are a balance of financial expertise and empathy. Understanding the options for handling the marital home, constructing realistic budgets, and determining appropriate support becomes a compass guiding you and your spouse toward a stable future. The journey is undoubtedly intricate, but with the right guidance from a divorce financial professional, like Kristine Rushing, you and your spouse can emerge from the process with your financial foundations intact and your sights set on new beginnings.

Contact Financial Harmony, LLC

For more information regarding financial planning while going through a divorce, contact Kristine Rushing at (833) 340-2305 to schedule a free consultation. Financial Harmony is located at 7700 Irvine Center Drive, Irvine, CA 92618.