plonkee money an english-er's thoughts on personal finance

April 22, 2008

trying to divorce, stuck with the house

Filed under: Uncategorized — plonkee @ 12:00 pm

As with most people you get to know, there are some things that you probably don’t know about me. Some of those things are unimportant – you probably didn’t already know that I’m a supporter of Liverpool Football Club, or that I have a major snake phobia (to the extent that writing that word makes me uncomfortable).

Although I may have alluded to it, you probably didn’t know that my parents are divorced. They separated a couple of years ago and divorced earlier this year (I think). By the time that my parents marriage began to fall apart I had already moved out of home, and haven’t been materially affected by their separation and divorce (the same cannot be said of all of my siblings).

One of the problems that my mum and dad had in deciding to separate was the house that they shared. Lazy Man and Money pointed out the other day that with the downturn in the US housing market an increasing number of couples that are divorcing can’t sell the house that they jointly own. This is not too different to the situation my family found themselves in. When they put the familly house up for sale, it took them months to find a buyer, and then it took months for the sale to go through.

Let’s think about what that was really like. A couple who had been married for more than 20 years and have several children – some of whom are at college or school and living with them – decide after much thought, effort and heartache that they would be better off being apart. And, they were right, they are indeed so much better off living apart it’s not true.They then can’t sell their joint house quickly and move on with their lives because the thing won’t shift.

They say there’s nothing like living with someone to find all their faults and flaws. There’s certainly nothing like living with someone when you don’t want to, to really make your life a misery. And did I mention that my younger brothers and sisters were mostly living there with them?

In the end, they managed to sell the house for £300k and they’ve bought their own houses that are less than a mile apart. They are both, on balance, happier now than they were and us kids are ok even the younger ones.

Before I added my comments to Lazy’s piece, most of the other commentators mithering on about people getting divorced too quickly, and that this sort of thing could never happen to them because they worked at their marriages. Whatever.

This particular scenario might never apply to you – for example if I remain living on my own, then it’s not exactly likely to apply to me. But, you never know when you might need to sell your house quickly – you might need to relocate for work, or have an unexpected addition to the family, or move to care for a family member. The probability that something like this will happen is, to a certain extent, out of your control.

However, the more flexibility that you have, the more wiggle room in your position, the better able you will be to deal with unexpected events. This is the sort of thing that sensible personal finance is for – being able to roll with the punches, because no matter how hard you try there will be punches. And they probably won’t be the ones that you expect. Spend less than you earn, accumulate savings, investments and think sensibly about the amount of house you need and can afford. These are the basic things that will stand you in good stead.

The lesson to learn is that by not overstretching to buy a house and by maintaining a sensible financial position you can reduce the impact that a major life event has on your finances, or worse on you and the ones that you care about.

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