While a divorce can greatly affect you emotionally, it can also impact you financially. As you go through the divorce process, remember that the decisions you make now will have long-term effects on your future. As a Certified Divorce Financial Analyst, I’ve seen people make numerous mistakes as they went through a divorce, especially when they didn't have the necessary information or tools beforehand.
For the most part, the common divorce regrets divorcees end up having are avoidable when given the right information on how to navigate this life-changing process.
It’s bad enough that you have to retain an attorney with costs exceeding $30,000 in most cases. However, not hiring the right attorney on the outset is one of the most costly mistakes you’ll make during this process. Many divorcees who make this mistake entrusted the promises offered by an attorney only to find through the process that these promises could not be honored. These divorcees, after seeing what they wanted could not come to fruition, changed attorneys, sometimes more than twice, throughout their divorce process!
Not only was this extremely costly, this delayed and prolonged the emotional process and left these divorcees with less than desirable financial results. There are key questions you can ask an attorney so you know you are choosing the right one the first time (I share some of those below). It’s important to remember your attorney is not your therapist. Save your emotional questions for a qualified counselor and rely on your attorney to protect your legal rights.
How does one lose $150,000? This is more common than you think. Choosing to keep the marital home and using your share of the marital assets, such as cash, to buy-out your spouse can prove detrimental to your financial future. You will get emotional about your home, but you have to set your emotions aside and consider the maintenance costs a home requires before deciding to keep the home.
Post-divorce budgets are frighteningly low when you see the maintenance and repair bills for a home over time. Be sure to weigh all the pros and cons of keeping the family residence and create a realistic budget if you do decide to keep your home.
Who would give up $850,000 dollars in retirement security? People who don’t know the difference between marital and non-marital assets. A woman I worked with was told by her husband that he would never give her any portion of his pension. He said his pension was for his 25 years of work and, therefore, was his money. Knowing the difference between marital and non-marital assets is key to arriving at an equitable divorce settlement – and can affect how you live during retirement.
This is the most costly mistake you can make. “I wish I knew you five years ago or I wish I knew you when I was going through my divorce.” This is what I hear all the time, even from strangers I meet. Not having the right information or clarity when making very important financial decisions turns into making emotional choices that negatively impact you financially, emotionally, and mentally. It’s normal and even necessary to process emotions during a divorce. However, it’s detrimental to use your emotions to make important financial decisions. Your divorce will be unique, so relying on other people’s experience of divorce is also unwise in making decisions during this very important time.
If you’re thinking about divorce, or you are going through a divorce, I don’t want you to make the same mistakes or have the regrets I see so many divorcees carry into their new lives.
Make sure they are the right fit for you. Ask an attorney about your state’s guidelines and any other factors that will be pertinent in your specific situation. Ask what their philosophy is and determine if their way of thinking matches yours. Interview at least two attorneys, and find a third if you are still unsure about the first two. Not sure what questions to ask? Read this blog by my partner and co-founder of Divorce U Solutions, Karen Chellew: 10 Questions for Choosing the Right Divorce Attorney.
Don’t agree to stay in the marital home unless you have the cash flow to do it. Have a detailed lifestyle analysis completed before you agree to keep the family residence so you are clear about the costs of maintaining and keeping the family residence. Even if the value in dollars of giving up some marital cash in order to keep the marital home seems fair, meet with a Certified Divorce Financial Analyst (CDFA) to ensure this is equitable and a financially sound decision long term.
Keeping the home, so your children can stay in it, is a very emotional decision and one that should not be taken lightly; however, if you can’t afford to maintain the home, you or your children will feel that burden and the pressure. Remember, a Home is what you make of it. Wherever you chose to live will be your home, and your children will adapt.
Consult with an objective CDFA to learn the difference between marital and non-marital assets. When you get divorced, your spouse, out of fear, may say things that are untrue. What’s important during the divorce process is to understand the guidelines of divorce laws in your state. One divorcee gave up her right to a $850,000 pension because she didn’t know that pensions were marital assets and, as such, are divided during divorce when pensions are acquired during marriages of long duration.
When working with my clients, it’s my job as a CDFA to take the emotions out of the very important decisions that need to be made in order to move forward with confidence. When I see that my clients are stuck in the emotional moment (which is almost always), I project their financial future for them so they can see the costly mistake of making decisions based on emotions. We look at fair vs. equitable, marital vs. non-marital, lifestyle analysis pre- and post-divorce to ensure we have a solid plan for their future.
Before you finalize your divorce, get a settlement you can live with and receive what is rightfully yours. You can’t go back, so it’s important that you have all the necessary information on the outset for an amicable and equitable divorce settlement.
Divorce is a difficult and confusing time that leads to uncertainty and high levels of stress in many individuals. A CDFA can help you in make informed decisions that will benefit your future. If we ever meet, I hope I don't hear you say, “I wish I knew you when I was going through my divorce.” Instead, I want you to say, “Thank you. You helped me make informed decisions, and now I have the clarity I need to move forward with confidence." Whether you're considering a divorce, in the midst of a divorce or are just starting to recover, know that #UwillbeOK!