Housing Costs

One of most people’s largest expenses is housing costs. In the process of a separation or divorce, the question as to who is going to live where and who, if anyone, keeps the marital home must be asked. If financially feasible, the spouse who is providing primary care to the children will often keep the marital home in order to minimize change and chaos in the lives of the children. But, what if that is not financially feasible? What if the family home has to be sold and the proceeds divided in order for each spouse to be able to move on independently?

The division of the marital home can be handled in one of four ways:

1. The home is sold, the proceeds are split and each spouse rents or buys another place.

2. One spouse can buy the other out by paying them half the fair market value of the home minus the amount left owing. Basically the same as number one but in this case one of them is keeping the home and paying the other what they would have gotten had they sold it. This option may require refinancing the mortgage in order to come up with the amount of the buyout.

3. One spouse signs the house over to the other and instead of home equity may take other assets like a summer home, recreation vehicle, savings fund etc in lieu of the buyout amount.

4. The home is renovated to include an apartment in which one of the spouses will live so that both spouses are essentially still living in the same home. While this option may make sense financially, emotional reactions to the possibility that one or the other will begin dating after divorce or consider remarriage should be seriously considered beforehand.

A place to live is something we all need but are there ways to reduce housing costs?

• Downsize - One way is to reduce housing costs is to downsize. After a divorce, there is at least one less person living with you, maybe more if your children are with your spouse. You may be able to live comfortably in a much smaller and less expensive living space while still having room for your children when they visit. In a smaller space, you are also bound to save on upkeep and utility bills.

• Refinance - Depending on the current state of the housing market, prevailing interest rates and your personal credit rating, you may be able to reduce your housing costs by refinancing your mortgage. Speak to your bank and a few other mortgage providers to find the absolute lowest interest rate you can get and then see if anyone is willing to beat your lowest offer. A word of caution here – make sure you find out if you will be paying any penalties or fees to refinance because they could quickly eat up any savings you might have achieved by the lower interest rate. If the fees outweigh the savings, it is not worth refinancing.

• Get a roommate - Sharing all your housing costs with a roommate is not just a good idea for college kids. It can be a real help when finances are tight. If you are now a single mother, sharing housing with another single mother may provide opportunities to share other things as well like child care (especially if you are working different hours).

• Take in boarders - This is very easy to do if you live handy to any post secondary institution. Students are often looking for inexpensive places to live and many are more than happy to board in someone else’s home while studying. You may want to be selective about who you allow to live in your home with you. Perhaps the best place to find a boarder is by talking to people you know or by letting the churches in your area know you have a room available. I would also advise only taking in same sex boarders (same goes for roommates).

• Renovate - Renovate your home so it has an apartment in it that you can rent to help you cover your own housing expenses.

• Reduce your taxes - If you decide to work from home, you can claim a portion of your housing expenses on your tax return as a business expense decreasing your taxable income and putting some of your tax money back in your pocket.

Have A Great Story About Managing Housing Costs?

Do you have a great story on how to reduce or manage rising housing costs? Share it!

Return to Financial Survival from Housing Costs

Return to the Home Page

New! Comments