How To Tell When a Dollar Is Not Worth a Dollar in a Divorce

You’re getting divorced.

And as you’re sorting through who gets the wedding pictures and who has custody of the goldfish, you’re offered a choice of either a $500,000 house or a $500,000 savings account. One may have more sentimental value, assuming some good memories, but their VALUE is the same, right?

Not so fast.

You paid $250,000 for that house. If you were to sell it, you would pay taxes on the capital gains. It would take time and money (brokerage commissions, sprucing it up, closing fees, etc.) to sell. And who knows what a buyer, not an appraiser, will actually pay for the house?

Your house’s $500,000 “value” is pre-tax, illiquid, and uncertain.

On the other hand, $500,000 in a savings account is money that’s already been taxed, and you can get your hands on instantly, without paying any fees.

Two things “worth” $500,000 do not have equal value.

Thinking “commercially” about money is not just assessing the dollars involved in a financial decision, but the context around that money.

A dollar is not a buck is not a greenback.

There’s a hierarchy to a dollar. You will make better financial decisions when you understand how to rank dollars not just by their face value but by their real value.