Wingspan Founder Christina Wing was interviewed for a recent Washington Post column by Michelle Singletary, “Here’s one of the biggest financial mistakes people make when getting divorced.” For a lot of couples, the biggest money decision in a divorce comes down to the house. Do you sell it, or does one of you stay?
Christina is the author of Unspeakable: The Taboo Topics We Avoid and How to Talk About Them, a book about the conversations families put off, with money near the top of the list. She sees good reasons to keep the home for the kids. “I’m a big fan of not disrupting children,” she told the Post. If the numbers are close, she’d keep the house. Where she sees trouble is when people, often women, give up alimony or part of their child support to hold on to it.
“Putting the kids first isn’t something you can do if you go into debt in an unaffordable house because then you’re going to end up with nothing.”
Singletary opens with two women who held on to their homes after divorce, one to keep her daughters in the same school and the other because she had nowhere else to go. Both had to refinance, and both spent years on a very tight budget.
Hillary Moonay, co-chair of the family law group at the Pennsylvania firm Obermayer, told the Post that fighting to keep the house is often the costliest mistake people make when dividing assets. Most people think of the house as an asset, but it can also be a liability. On top of the mortgage, utilities, and taxes, there are repairs, landscaping, and surprise maintenance. Buying out a spouse usually means refinancing on one income, and people often give up retirement accounts or cash to make it happen.
Christina and Moonay suggested a few steps to take before deciding:
- Run the numbers. Moonay recommends projecting your income, alimony, and child support over three to five years, then asking whether one income can cover the full mortgage, taxes, insurance, and upkeep. Christina suggests hiring a financial planner or asking your accountant to map out what keeping the house would cost over five or six years.
- Be realistic about your situation. For a parent who stayed home and is now going back to work, Christina didn’t sugarcoat it: “You’re never gonna be afloat. You’re gonna be drowning one year at a time.” One option she offered is putting off the sale for a few years and splitting the costs, approaching the divorce as “a win-win, not a win-lose.”
- Compare assets carefully. $100,000 in home equity isn’t the same as $100,000 in a 401(k). Equity is tied up until you sell or borrow against it, which can leave people “house rich and cash poor.”
- Look hard at the refinance. With rates higher than they were a few years ago, giving up a low-rate mortgage can push your monthly payment up quite a bit.
- Keep emotions out of the math. “Many things in divorce are emotional, not financially driven,” Christina said. For some people, keeping the house feels like saving face or holding on to control.
Singletary’s bottom line is that moving during a divorce is hard, especially with kids. But if keeping the house means giving up your safety net or taking on debt you can’t carry, it’s time to sell.
Getting there means sitting down with your ex and talking openly about money while emotions are running high, which is hard for anyone. In Unspeakable, Christina writes that “when money stays abstract and unspoken, people fill in the gaps with assumptions.” Putting the real numbers in front of both people, with an accountant if you can, gives that conversation something solid to stand on.
Link to the full article below.
——
For more content, check out Wingspan Insights.
