Thursday, March 13, 2014

Getting A Divorce? 10 Financial Tips

If you ever have any questions about your legal rights or finances
 be sure to consult your attorney and they can help you or point you to the help you need. 

So you're getting a divorce. 

Or at least contemplating one. 

It's imperative to be smart about how you pursue your divorce money-wise and with some foresight, some planning… you will be in a better position financially than what you would have been.

Having been through one, I can say however expensive you think it is… trust me, your number is too low. Aim higher. Attorney's fees are comparative to merciless little blood sucking vampires and seeing your monthly statements from your attorney's office is not for the faint of heart.

There are different "types" of attorneys. Often how much they are willing to work with you will depend on what they are like. If they have a "down home" feel, if they are laid back… they may be more willing to work with you on payment plans, etc if you begin getting low on money to put toward your case. If you choose a slicked out attorney that is all sophistication and glitz… beware, they are more likely to be "by the book"… now, granted… this may NOT be the case for everyone, as there are ALWAYS exceptions but this has been my personal experience.

As a woman, divorce is much harder on you if you haven't worked. If you've been a stay at home mom, even for a good share of your marriage (a part time job during your marriage to pay for a few "extras" doesn't support you in the long run) be warned… it's going to be a tough road. If you have little to no education on top of that… it's going to be even more difficult.

This is admittedly my personal opinion of an "ideal" divorce... and yes, I know for this scenario to work you likely have to be in a marriage that is still amicable...  a divorce process where you can still somewhat communicate constructively and the husband can look at what is best for the mother of his children in the long run… If you're blessed enough to have this be your scenario (which I know they exist, I've known some) I would recommend you stay married for awhile. The husband needs to tell his wife: "This isn't working. I want a divorce. But I care about you as the mother of my children. I want you to go get a full time job… or get some additional education… something before I file. Let's give this a few months to let everybody adjust first to you working. Because you need to be able to support yourself in the long term." I know… you're thinking…. but that's what child support is for! That's what spousal support is for!

Well, here's the truth: 

It used to be in the old days that if you were in a ten plus year marriage as a woman you had a good chance of not only child support but also spousal support… at least for awhile. Not so much anymore. I was in a marriage over ten years and have little education and he cheated… no spousal. I'm not saying I was "owed" this or that. I am however stating the facts and it's important you know this. If you're a woman and you are in the same situation I was in or even similar I must tell you that you are in a very precarious position as a stay at home mom/wife. I would tell you from the day you get married you need to create a nest egg. I would say every time you go to Target, Wal-Mart, etc and you pay for the essentials your family needs ask for twenty dollars back in cash. Or whatever amount you can reasonably fit into your budget. I know there will be some women (and men) who read this and will be flabbergasted, appalled, angry, etc I'm telling you to put money back. (Keep it in cash and put it away and DON'T spend it.) Maybe you're thinking "that's really underhanded"… and yes, perhaps it is…. and yet it's SMART. One day you may need that money and if you don't have it you will be kicking yourself. If at any given time your husband comes to you and says: "I want a divorce. I'm done" you need to be ready at ANY given moment to have money on hand to pay for your portion of it.

Because guess what? Husband's don't always pay for the divorce anymore. They don't always have to foot the bill. Yes, even if you've been a stay at home mom in a long term marriage. It's shocking, I know. That was my case. You may be fully expected to pony up for your attorney's fees and if you don't have any money saved you're in a real pickle. What people don't tell you is any lump sum "settlement" you get the remaining attorney's fees, debt, etc will be taken off the top. That whittles it down quick.

10 Money Tips Regarding Divorce: 

1. The day you file for divorce, go to the bank first. Take out exactly half of what you have in the savings account. You can either take your half now or let him take it all. Get a receipt. Keep it in a safe place. Start a Manila envelope or binder with all your divorce documentation.

2. See how much cash you have saved. Hopefully you've been putting cash back. 

3. See what you can sell. Can you get him to agree to sell the pool table? Do you own any art? Now is the time to begin selling it. Luxuries are not a necessity. Do anything you can to pare down your belongings and make some money. 

4. You can sell your wedding ring (make sure you go to a reputable dealer) and wedding dress (it won't bring much). Those are always an option for bringing in some additional cash.

5. Attorney's fees are costly. The AVERAGE divorce costs $15-20 thousand in the United States. The more it becomes contested, especially over child custody the more expensive it will become. You will wish later you had all that money back. Don't let your emotions run your divorce. Think rationally about your finances. 

6. It's not just attorneys fee's. There are court costs... think about fifteen hundred, two grand... there are mediation fees... another five hundred at minimum, maybe upwards to two thousand or more. There are court-mandated parenting classes and those can run the gamut from eighty dollars to over a hundred. There will be the cost of an Ad Litem if you have children which can run anywhere from twenty five hundred upwards depending on the length/ugliness of your case. Then there may be psychological evaluations. Another couple grand. Realize that everytime you call your attorney, you email, anything, there is a charge. And many of these charges are out of your control. Even if you're keeping YOUR communication to a minimum your spouse's attorney WILL be reaching out to yours... often as a strategy to up fees, make you cry "Uncle!" and to wear you down.

7. You could go bankrupt getting a divorce. It happens. It's essential you make wise decisions. You need to be schooled in taxes and how they affect your settlement. If you're getting a lump sum settlement from your husband will you be taxed? Will your child support be taxed? What about spousal support? At tax season will you file married or separate? If you have two kids, always choose the youngest as the tax deduction. 

8. The faster you can get your divorce done.... the better you both are at coming to an agreement, the better it will be for you both. The longer it goes on the more costly it is and more taxing on you emotionally and even physically. 

9. If you have to re-finance your house, if you have to get a loan from a bank or buddy to pay your spouse their "share/settlement"... there will be costs associated with that. Renting requires deposits, a new home requires new accounts for electric and water, etc. Have you factored all these expenses in to start your new life? It's likely you will be living at a lower level you were previously. You may have to rough it a few years before getting back on your feet. Just be aware.

10. If your car is paid for it likely makes financial sense to keep it... at least for awhile. Don't forget to change your cell phone plan if you share one with your spouse. You may have iTunes accounts, Ebay accounts, Amazon accounts, etc you share as a married couple and you may have to get your own. Get your own credit card if you don't already have one and get any debt you have paid off. If you must go into divorce you want to go into it debt free. 

If you're contemplating marriage for the first time be sure you ask your future spouse all the tough questions. Do you know their credit score? What is it? Do they pay their bills on time? Do they have any loans? Do they invest? Do they have stocks or bonds? What about CDs? Are they a saver or a spender? Have they started saving for retirement? Do they have credit card debt? Do you need a pre-nup?

Kevin O'Leary (off the ABC show Shark Tank) gives great financial advice and it would be worth picking up his book: Cold Hard Truth: Family, Kids & Money to read and take notes from. As a woman it's important to think about investing for your future regardless of whether you marry or not. Some of his best tips are: 

1. Invest only in stocks that pay dividends. 

2. Only invest 5% in any one stock. 

3. Only invest 50% in bonds and 50% in stocks.

If you're contemplating a second marriage you may understandably be much more cautious the next time around. If you marry a guy and you both want to purchase a new house together (fresh start) you may still have your own house to consider. One option may be to keep it as a rental property. (Hey, if it goes downhill you still have a house) But be aware that any income from that rental could be considered community property depending on your state. Be informed, read up on your legal rights so you can make wise decisions. You may want a pre-nup going into your second marriage. It's important to review your will as well. Cover all bases and you will be well on your way to being prepared financially for the future. 

© ~ 2014 

Recommended Books:

Kevin O'Leary series 


To My Readers:

 Thank You for reading

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