Part I talked about why people are getting married, having kids later and incentivized into marrying their economic equal. Even when that happens, divorce can still be ugly. There are a few things that you will have to accept about your finances and your emotional state when initiating divorce and it’s better if you are prepared for them from the outset.
Downgrading: Live With It
Moving in, raising kids together, sharing things like cars and vacations is just cost efficient. Divorce makes everyone poorer. No matter who is the breadwinner, everyone is going to have to take a lifestyle downgrade when getting divorced. Even if you marry your economic equal, divorce will raise the costs of everything back to when you were single, except this time you might have kids. As an example, this may mean duplicate clothes or toys at each person’s house. This is in addition to any lawyer or court costs.
You will have to accept, that at least for a period of time, divorce is going to make you poorer, and you have to be ok with that. Forget your social status, forget society’s expectations of you, forget what your friends and family may think of you. This is not the time to get caught up in your own vanity, rather it’s a time to focus and strategize on where you want to take yourself for the next phase of your life.
The hardest part of doing this may be to let the past go. You may have to downgrade homes. You may lose your car and you may end up fighting over items purchased together that have some sentimental value for each of you. When getting divorced, it pays you forward to let the past go.
One of the main reasons people may try to make a grab for all they can initially when they realize divorce may be coming, is that they are trying to maintain their economic standing and safeguard themselves for the future. Once it has become apparent that divorce is imminent though, trying to get what you can on your own likely isn’t going to turn out well for you in the long run. This is the job of the lawyers.
The attorneys are there to be your advocate, no matter who did what. They are looking out for your future relationship with your children and your future economic standing. It’s best to get a lawyer once you have a suspicion that divorce is coming or it’s already confirmed, they can help guide your actions towards what will help you the most down the road and will assist in putting emotions to the side.
Trying to move money and hide money will only make things worse if you ever get in front of a judge, which is why lawyers will always advise you not to make any big decisions financially.
Do Not Try to Hide Money
Being that I am financially sophisticated and my ex-wife was not as strong in her personal finances, when she got a lawyer one of the first things her lawyer demanded was a statement of net worth. This is a document that lays out all your personal assets and liabilities so the court and the lawyers can determine what each party has. This will count everything you can think of under the sun: business interests, investment accounts, cash, homes cars and retirement accounts to name a few.
This document has to be sworn before the court and if either side is caught hiding something it could turn a judges opinion against you should it go to litigation. So just do your best to be honest with this document and don’t make any big money moves while you are separated or think you are going to be divorced.
I recently saw a stand up comedian exclaim, “Marriage is like a bad bet, let me bet half my shit that I’ll never cheat on you. That’s why people aren’t getting married.” We laugh but sometimes this is true and sometimes it isn’t.
Couples go into marriage either one of two ways financially, with one having more than the other or coming in as economic equals. There is obviously a wide range within this spectrum. You could have both entered marriage with little or negative net worth. You also could have each entered with a net worth of $5 million. On the flip side one spouse could be worth a million and the other only $100k.
If there is a situation where one spouse has more, or one spouse has been the primary breadwinner, they tend to feel a bit more ownership over what they have earned. Again, this goes back to the emotional attachment we have to our money, it could be an attachment to what you take home every year or what you have worked diligently to save up, but again, you have to let those attachments go. These emotional attachments will only hinder you in your negotiations in the future and they increase the chance that an adverse move by a spouse will trigger you and lead you to do something rash down the road. I find in speaking with others who have experienced divorce that this is what often leads to the rash decision to start hiding money or spending profusely to spite the other partner.
If you did come in with more or are the primary breadwinner, one way to let go of the emotional attachments to income or savings is to focus on your future. Have faith in yourself and what got you to the point you are at. If you are older and getting divorced, be thankful for the lifestyle you have lived thus far and focus on the fact that if divorcing, you will need only half the money you needed before for divorce. The point is to focus on your ability to cope, survive and thrive rather than fixating on what you are about to lose or have lost. Doing this will keep you from doing anything rash such as the shady movement of money or reckless spending.
On the flip side, if you came in with nothing or much less than your partner, you have a natural tactical advantage from the get go. No one negotiates better than someone who has nothing to lose. Your perspective may be coming from the place of someone who had much less initially and you may not have an attachment to the money that your spouse has. This is a big advantage for you and will likely help you in the long run. Fair or unfair this is just how divorce works. The state looks at a couple as one financial entity once they are married and divorcing usually means that those assets will be split. There are important caveats that are exceptions to this rule which I will cover in the next post in this series but that basic concept is important to keep in mind.
Take Care of Your Mental Health
Another way to make sure your mental state is clear and you are making logical decisions is to seek therapy. This type of spending definitely does not count as new and reckless spending in this situation. Therapy will hopefully have the dual outcome of helping with the emotions you are feeling about the relationship ending and your life changing as well as learning from the mistakes or missteps that led to that point. Divorce doesn’t have to be all trauma and pain, it can be a learning experience either about people, their motivations and intentions or about yourself. It can be all of these as well.
Therapy will not change everything in one shot. It will take time. Feelings of bitterness and resentment will come and go in waves. The key is to understand that these feelings will come in waves that ebb and flow. The bad ones will gradually subside, become less intense and over time you will move towards acceptance. It will be a long arduous process before getting there, but it will happen eventually. The key here which I will stress time and time again, will be to focus on not acting on things related to your divorce when you are in a highly emotional state. This is always easier said than done with such a highly emotionally charged situation, but it is what is best for you in the long run.
In my own situation, I had never really sought therapy until my wife at the time had pushed for it to help resolve our own issues and so she could explain how she felt in a more controlled environment. We went through a number of therapists until I realized that she was the one constantly having an issue with the therapists and that we weren’t benefitting by bouncing around. So I had her commit to one therapist for an extended period of time.
Eventually therapy did not seem to turn out how she envisioned, so she left therapy which eventually led to our separation and divorce, but I had the advantage of being able to continue on my own with a therapist that not only already knew me, but had seen my relationship dynamic in a controlled setting to be able to analyze both sides rather than just what I told the therapist. In retrospect, this was a great turn of events for me personally because it allowed me to continue and even speed up my own self realization and discovery of the blind spot and pitfalls of previous decisions.
I will also add to this that surrounding myself with people that have progressed in terms of their own self awareness was almost just as important in the process as the therapist. People who have been through some episodes that caused them to grow and become more self aware is extremely valuable for your own journey. You won’t be able to surround yourself with people like this if you just seek validation. The people you rely on for advice at this time cannot be “yes” people. They have to be willing to bring you up when you are being hard on yourself but also call you out when you are being unreasonable or erratic. My own friends like this offered me valuable insight into how my spouse was thinking and what the next steps would be. This allowed me to see things many moves ahead and position myself for things that an emotional person would likely not have seen coming.
It’s Not All Bad
In my next post on divorce, I will discuss ways in which it’s not all terrible in terms of money. I will break down examples of the costs of court fees, lawyers and show the different options cost wise for divorce. I will also show the limitations of prenups and how you may be able to protect some of your assets even without a prenup.
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