Last year, my husband asked for a divorce. Four months later, it was a done deal and we were both in good financial positions.
While I understand that not everyone is as fortunate as I am in terms of relations with an ex, and with the money situation, the reality is that divorce doesn’t have to devastate you financially. Here are 3 things I learned that can help you avoid a huge financial catastrophe when you divorce.
1. Avoid the Lawyers Whenever Possible
One of the biggest reasons that we ended up in a better financial place is due to the fact that we were able to avoid lawyers for the most part. Rather than fighting over everything, we sat down and talked about the situation. Our “kitchen table” approach led to us dividing up everything satisfactorily, as well as to working out an arrangement for our son that took his needs into consideration — and put them first.
Legal costs, on average, run around $15,000 to $20,000 when you go all-out. This is because you are paying for the time the lawyers spend hammering everything out. If you want to save money, you can use mediators, which cost closer to $2,000 to $4,000. And you can really save if you did what my ex and I did. We decided everything on our own, and then presented our preferences to my uncle, the lawyer, who handled everything from there. Our divorce cost us less than $300 because we only involved a lawyer at the end (and we probably got a discount because he’s a relative).
If you have a relationship that allows you to work things out amicably on your own, you will have a financial advantage.
2. Be Honest and Respectful
Mutual respect is a big deal if you want to avoid a financial mess when you divorce. Unfortunately, there are situations where this isn’t possible. If you are in a position where you need to leave because of abuse or some other untenable circumstance, you might need to take advantage of community resources designed to help you.
However, if the divorce isn’t precipitated by a desperate situation, it’s important to be honest and respectful if you don’t want to end up paying a great deal of money. My ex and I decided that our goal was to make things as easy as possible for us to start new lives, and as easy as possible for our son. That decision to look at the big picture, and work out a way for both of us to start in as good a position as possible, was based on mutual respect and honesty.
We sat down and figured out what each of us would need to get a new start. He decided to move into a cheaper apartment closer to his work, and I decided to move across the country to live near my family so my son and I could get help and support as needed. Even though I was hurt that he asked for a divorce, and he was sad to see us (especially my son) move across the country, we both set that aside in the interest of what would make things work for us both in new lives.
The reality is that my ex has never helped much with our son, nor attended his activities, so moving close to my parents, who go to everything and are there for him (and me), makes sense. We have a schedule worked out that allows my ex as much contact with our son as he wants, and that has worked well.
But the key has been honesty about our needs and hopes, and enough respect for each other to try and ensure that things work out for the both of us, as well as doing what we can jointly to help our son. Coparenting, rather than trying to get our son on a “side,” has been a big help, too, since it means we are reasonable about costs and we share those costs.
3. Get Rid of Joint Finances ASAP
While my ex and I were fortunate to trust each other, we did what we could to separate our finances as quickly as possible to make that division quick. It can help to sell the house, rather than try to work out a complicated agreement for one of you to buy the other out. Just sell, and split any profits (or share the losses). Refinance the debt you can. Because I am self-employed, our lender wouldn’t let me refinance the car loan under my name only, so we haven’t been able to do that. However, I am paying the loan because I use the car, and the lender did change to put name first on the loan.
It’s easier to divide everything up if you can do so equitably, and if you can establish your own finances quickly.
Note: Every situation is different, so here are a few things to consider as you split your finances: opening a checking account, getting your own auto insurance policy, updating beneficiaries on your retirement plans and life insurance policy, and canceling joint credit accounts (when possible).
We were able to do so with a minimum of fuss, and it saved us fighting over money, running the risk of having the other make a mistake and ruin credit, and any number of other issues. Plus, dividing everything up quickly, and closing joint accounts, allowed us to present our completed divorce arrangement to the lawyer in full form without wrangling and complications.
Divorce is rarely easy, and I know that I managed pretty well. Not everyone will be so fortunate, but if you can keep your head about you, and work something out, you can both avoid the kind of financial ruin that only enriches the lawyers.