Cash & Coupling: How To Make A Divorce Suck Less Financially

Last time in Cash & Coupling, we covered how to go into a marriage making financial choices that would benefit you in the event of a future divorce. But what about after disaster strikes and the marriage is over? (I know, we’re thinking real positive around these parts.) Here are five tips designed to help new divorcees keep as much of their finances intact as possible as they bid their husbands adieu.

1. Get professional help from a Certified Financial Planner. A CFP is a valuable teammate who can help you make strategic choices for financial resilience. If you have yet to reach a divorce settlement, a CFP can help you decide what assets are most important to push for in negotiations. Some CFPs even specialize in divorce and earn additional credentials in this area so that they are also CDFAs — Certified Divorce Financial Analysts. Shop around for a CFP whom you like and trust. Look for an adviser who listens to your entire situation, does not push any specific financial products on you (especially before they’ve heard your story), does not offer “one size fits all” plans, is willing to explain things patiently, and who will let you call their references.

2. Get more professional help from an attorney. Divorce is not like pulling off a band-aid — it’s much more akin to an amputation — but the analogy holds: make it quick! The longer a divorce is drawn out, the more expensive it gets; the longer you go without payments owed under the settlement, the more time you spend exposed to your ex’s financial behavior in the marital estate. An attorney can make the process faster and less painful. An attorney will find divorce procedures routine and won’t care about calling your ex to demand documents, even if it’s the last thing you want to do ever. It’s a myth that attorneys are prohibitively expensive; many solo practitioners focus on family law, have reasonable rates and are sometimes open to negotiating fees. Alternatively, a capable paralegal can handle the majority of divorce preparation and filing for less than an attorney. And if your ex hires an attorney, you must, or you may face a significant disadvantage at the negotiating table.

The two strategies above cost money, perhaps thousands of dollars. But it’s critical to find a way to afford professional advice. Divorce is like everything else in that “it takes money to make money.” But in this context, “it takes money to keep your ex from taking advantage of you in a complex legal process while you are emotionally vulnerable, where uninformed choices can impair your long-term financial stability for decades.” In divorce, it takes money to not get screwed.

3. Let the house go. Women often end up buying their partner’s interest in the home. It’s an attractive idea; who wants to add a move to the chaos and anguish of a divorce? But it is worth it to ruthlessly weigh the pros and cons of this decision. Not only might the house unpleasantly remind you of your ex later, and not only will you have less time and manpower to maintain a home, but the housing market is still weak and many mortgages are “underwater” (worth less than is owed on them). Thus, your partner’s interest in the mortgage may be overvalued. In that case, buying him out means sacrificing other more valuable assets in the settlement only to saddle yourself with bad debt. If the house is a losing investment, get out of it.

4. Time it. It may seem weird to think of “timing” a divorce; for some, divorce is as arbitrary as a lightning bolt. But if you are able to affect the timing of a divorce, try to officially file when you have time to work a lot after. Not only will working distract you from the emotional pain, but you have to get earning to bounce back financially. A poorly timed vacation, surgery, job change, period of unemployment or other unpaid stretch can amplify the already jarring experience of going from a dual- to single-income household.

5. Take control of your finances, take control of your life. For many, divorce is the ultimate process of losing control — of whom we loved, of the life we imagined, of the future we thought we had, of our own property. If your partner managed the finances during the marriage, divorce is an opportunity to empower yourself through financial management. You’ve heard it all before: budget, control your monthly expenses, minimize debt, invest, etc. Really learn to do it now. If you devote yourself to nerding out over your finances, you can come out stronger on the other side of divorce.

Photo: iStockphoto

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