The first thought that ran through my head when I received an invitation to one of the five (!) weddings my husband and I are attending this summer was, "Wonderful!" But as I browsed through the couples' registry, my thoughts turned to... divorce. Call me a cynic (or maybe just jaded after yet another celeb divorce -- sayonara TomKat), but wedding gifts bring back memories of my ex-husband and I divvying up kitchen appliances and sheet sets in addition to our other assets.
Most people who go through a divorce view marriage through a different lens. While I still believe in love, I also acknowledge that divorce is a reality. The dissolution of a marriage is fraught with so many emotions, complicated decisions and painful adjustments that it's easy to make financial mistakes along the way that can have damaging consequences down the road.
If you are in the beginning stages of a divorce, there are preparations you can make to protect your future interests. If you're already in the midst of one -- or on the other side -- finances should still be top-of-mind.
Here are some of the most common financial mistakes people can make during and after a divorce -- and how to help prevent them.
Giving it all away: Emotions can cloud judgment, and I know women and men who look back and wonder why they agreed to certain concessions during their divorce. Many people become so tired of conflict that, by the time they split up the assets, they may hand over more than is equitable. While you don't want to incur excessive legal fees (see #3), you do need to fight for your own financial wellness. Consider working with a financial advisor in addition to your attorney to help ensure you're requesting the right assets for the right reasons.
Assuming debts are paid: After the divorce is final, make no assumptions when it comes to your debt obligations, including mortgages and credit card debt. Did you sign the house over to your ex-spouse? If so, make sure your name is removed from the mortgage as well as the title. I have an acquaintance that didn't even own her marital home anymore and was liable for payments when her ex-husband fell in arrears. Be sure to resolve jointly held debt and close all co-signed accounts.
Racking up legal fees: One thing my ex-husband and I agreed on was that we didn't want all of our savings to end up in the hands of our divorce attorneys, and we made an effort to be efficient in our decision making even though it was difficult at times. Acrimonious or not, lack of preparation, lingering arguments and back-and-forth negotiating can generate steep legal bills. No matter how bitter your divorce, try to come to a similar agreement with your spouse.
Succumbing to budget denial: If you're accustomed to living on two incomes or relied on your spouse's salary during your marriage, life as a single person can be a big adjustment. Changes to your lifestyle are often difficult to face, but hard to avoid. It's essential that you develop and commit to a budget, especially if you're new to managing household finances or are drawn to retail therapy. I've seen friends rack up credit card debt by overspending and ignoring savings goals in the wake of a divorce. I even have a very expensive leather coat hanging in my closet which serves as a reminder of an episode of my own excessive post-divorce spending.
Overspending on kids: Closely related to budget delusion is overspending on your kids. Even if you and your spouse have been careful with purchases for your children, it's easy to get off track during a divorce when you -- and your children -- may be dealing with some guilt and uncertainty. In some circumstances, divorce can even bring out competitive behavior between parents who may be vying for their children's affections in the midst of custody battles. Before you pull your wallet out to buy your child a new video game or bicycle, remember that indulging your child -- or yourself -- in the purchase will not undo the divorce and may actually be detrimental to your overall financial situation
Regardless of how you may react emotionally, remember that keeping a level head about finances during the split can lead to more financial security for you and your family in the future.
Don't waste time on the things that aren't working. Check this PDF out, you won't regret it. http://dateyourexagain.com/?p=227
When we have an emotional reaction our emotions swamp our logical thinking and it is at these times that we buy the “leather coats” or perhaps even worse. The degree to which we can control ourselves during an emotional reaction is a myth, especially for those people who have a high level of emotional conditioning from childhood, otherwise known as emotional baggage.
To make more effective decisions we need to release the energy that fuels the emotional reactions in the first place. Going through my own divorce I was lucky to receive this gift. I learned how to FEEL.
When we learn how to feel into our emotional pain, it will go away quickly, leaving us in a better place to make well grounded decisions. The great thing about the Emotional Hot Button Removal techniques is that when we practice the emotional energy goes away permanently.
So if you have to go through divorce you can divorce your partner and your emotional baggage at the same time. At least we can get some value from divorce, rather than just splitting our assets!
Hugs, Jacque
www.yourdivinedivorce.com
Boyd Lemon-Author of "Digging Deep: A Writer Uncovers His Marriages," the author’s journey to understand his role in the destruction of his three marriages; "Eat, Walk, Write: An American Senior's Year of Adventure in Paris and Tuscany;" and “Unexpected Love and Other Stories. Information, reviews and excerpts: http://www.BoydLemon-Writer.com.
Travel blog: http://boomertravelblog.com.
Retirement blog: http://FulfillingRetirementAdvice.com
Don't try to get more. Try to split it, 50/50, or whatever feels fair. And you'll both get more.
Fight, and you'll both get way less. But your lawyers will be rich.
1. Over-optimistic projections. A couple has 150,000 in assets, each lawyer predicts her client will receive 90,000, legal fees of 45,000 -55,000 are generated, and each gets less than 25,000. The lawyer who provides a fair, accurate, though somewhat dim prediction is regarded as weak and ineffectual and not hired.
2. The Fable of the Lawyer who Scared Other Lawyers Each lawyer creates business and work in a tough economy for the other lawyer. No one scares anyone.
3. Friend's Trashtalk Who helps keep the divorce litigation going. Jane, You are nice, but overly trusting, you are going to need a lot of money for your expenses and too many women don't push hard enough. Make sure your interests are protected. Bob, my friend Jack is working 3 jobs, and pays all his money in support. One month, he said he couldn't pay, his wife said, take a 4th job and wqrk instead of sleeping. Each person in a divorce will need to make substantial sacrifice and thinking otherwise will deplete your limited funds.
4. Calls, calls, and more calls. Jane's friend Molly suggests she get weekly status reports, file motions for various things, and is surprised when the bill is now 50,000. Lawyers bill for every call, every motion, every single thing they do, regardless of whether it is effective or achieves anything.
Only have lawyers do critical work and get written estimates.
A great list of wasting precious family assets on law fees...
Let's add CHANGE THE LOCKS to the list of things to do when preparing for a divorce.
Also, CHANGE BENEFICIARIES. In some states, this can't be done after you file for divorce until the divorce is settled to determine who owns retirement accounts, life insurance policies, etc.
(What you described usually happens when a person who lives alone dies and relatives, friends and neighbors help themselves to items they swear the deceased intended them to have.)
It didn't end there however. I paid the lawyer, the kid's braces and gave her another 5k when she started whining again. I did dodge a major bullet though. She had been too busy with my replacement to participate in ANY of the issues but did take my offer to a lawyer who said and I quote, "I can ruin him financially for life if you want", Thankfully, (her parents are multi millionaires) she declined.
I don't know how the housing issue works in other states but in Washington while I quit claimed the house (also my dime) and gave it to her in the final settlement, no one will recognize that. And you better believe Wells Fargo would never agree to let me off the hook.
Pay attention, people... most of us will be there. Those that will not, just have a higher threshold for pain.
H
If people would only think with their correct head.
H
My birth father simply gave up his parental rights when he remarried and had more children. He didn't want to pay more than $60 a month for 3 children in 1973 (yes, that's for all three children, not per child). It wasn't right then and it isn't right now.