Divorce is hugely stressful with money being a central player orchestrating most of the drama.
Money stress is often a key contributor leading to divorce. And these days, money often dictates how long people stay together, unofficially separated, before they can afford to get divorced. And if you are in the middle of your divorce, you know that most of the long, drawn-out legal arguments revolve around money. Divorce can be devastating, but the reality is that the process of divorce is primarily focused on the division of assets (and of responsibilities, if you have children). All of the emotions you are experiencing related to the breakup of your marriage mean absolutely nothing in a court of law. In fact, you might actually be placing yourself in a worse financial position if you aren’t negotiating with clarity around what’s most important to you.
So, here are some hard-won, lessons-learned through the divorce experiences of myself and my clients. Hopefully, you will be happier AND have more money in your pocket after your divorce.
1. Let Go or Pay the Price
The hard reality is that divorce is an impersonal transaction. The law doesn’t care about who did what to whom. And the law is not focused on what is fair. It is focused on what is equitable based on precedents and guidelines established long before you arrived at the courthouse. Any hurt, anger or entitlement you are feeling about your ex, or the situation you’re in, will not serve you in this process – it will actually cost you money. Remember, every minute your attorney is spending on your behalf is costing you money. And there are limits to what the law will allow, so trying to push beyond those limits will be fruitless, time-consuming and expensive – something you might not want to hear and something your lawyer might not want to tell you. None of your negative emotions will get resolved through your divorce. All the hurt and rage focused on your ex is just a time-consuming, costly distraction away from the bigger picture. This divorce is about YOU, building a new life for yourself. So, focus on the bigger picture. Find out what the law will allow. Don’t waste precious time and money on fighting for something that doesn’t exist. And create a clear vision of what you want for yourself when this all over. Having a clear vision is essential in helping you make better decisions and negotiate a better future for yourself.
2. Accept That You Will Have Less
No one ever wins in a divorce (except maybe your divorce attorney). You are back to a single income (if that). Your assets are sold or divided. Your retirement funds are cut in half. And in some cases, you are paying your ex alimony and/or child support. Regardless, your life will be downsized. Again, many of the guidelines around asset division, alimony and child support have already been established. There is no way to get around them. And if you try, you will be spending your money pointlessly. Believe me, I know. I had a difficult time believing that any of this applied to me. And I definitely spent more time and money than I should have in fighting a losing battle. It’s hard to give up a certain lifestyle … until you realize you could have a better one. In my case, I was told that I had to sell the house. Firstly, I have a difficult time when anyone tells me what I “have” to do. And secondly, while it was a foregone conclusion for the lawyers, I hadn’t been prepared for this at all. I was the one who always paid the mortgage and taxes. Of course, I had forgotten that I would have to pay my ex his half of the equity. The lawyers had all my money, so there was no other option besides selling. Selling the house and moving would be a huge change in my life and a major disruption for my children. Every fiber of my being was against it. And then, winter arrived. There I was, forced to shovel the driveway all by myself – storm after storm. And then, spring arrived. And now, I was faced with mowing a massive lawn. I quickly realized that this house was a huge responsibility I no longer wanted to have – one that consumed most of my money and took time away from my children. I didn’t own this house, it owned me. My fear of the unknown had kept me attached to something that wasn’t serving me. There is freedom in having less. Less stuff equals less responsibility. Less stuff means more time and money to spend on what’s really important. My house was just a house – regardless of where we are, it’s my children and I together that make a home. Less is sometimes a lot more.
3. Be Prepared. Money Brings Out the Worst in People
Everyone I know tries mediation in the hope that they will have a fast, amicable divorce. Unfortunately, mediation can get derailed when it comes to the issue of money and the division of assets. Even couples who thought they were in agreement before walking into mediation get stuck when they each begin to understand the reality of the financial situation. And unfortunately, things become a lot less amicable once money becomes an issue. Divorce is so expensive because there has to be agreement and few people can naturally agree about money. Every inch of your financial life is exposed in a divorce. Completing the requisite financial statement will likely give you the first crystal clear picture of your financial status that you’ve ever had. And be prepared. You will need to revise your financial statement several times until your agreement is finalized (six in my case). At its heart, divorce is all about money and nothing triggers people’s worst fears than money (or lack thereof). Money brings out the worst in people when they start acting from a place of fear. It is every man, or woman, for him/herself. This is the place where mediation breaks down and divorce attorneys get hired to protect what everyone thinks they deserve. Divorce attorneys are expensive though – so at the end of all this, all the money you were trying to protect could end up in their pockets and not yours.
4. Negotiate with Your Law Firm
Working with a divorce attorney is expensive. You want to find the right one that you are comfortable with and who will represent you appropriately. As with almost any other service vendor though, don’t be afraid to negotiate with your divorce attorney to get the best rate – before and after your divorce. The hourly rates of divorce attorneys have notoriously high margins – not just because they provide a valuable service, but also because clients are late in paying them or never pay them at all. So, it becomes a vicious circle. Divorce attorneys increase their margins to mitigate risk and their clients have to pay for the people before them who didn’t. Knowing this is how it works, be creative in offering your attorney a deal that gets you a reduced rate and gets them paid on time. And if you end up owing your law firm money once your agreement is finalized, know that they would rather get paid most of it faster, than all of it slower. I didn’t know this when I was getting divorced … until my divorce attorney contacted me (on a Friday afternoon) with the news that the firm would take $3,000 off my bill if I paid the remainder by Tuesday at noon. Once I realized there was room for negotiation – and that they cared more about when they got paid versus how much – I offered them a deal that got them paid when they wanted but at an almost 50% reduction in my overall bill. I gave them what they wanted most and I saved myself a ton of cash. Remember, divorce attorneys are in your service, not the other way around.
5. Stop the Financial Bleeding
I know that there are some immensely important issues that need to be fought over and won in a divorce – more than 50% of the marital assets isn’t one of them. You are losing money every day that your agreement isn’t finalized. And if you are fighting over more than 50%, you would need a truly compelling case to win. Know what’s most important – otherwise time is money in a divorce. And money is something that you will have a lot less of in the future. Don’t spend it needlessly on issues with little true importance or probability of winning. Know too that money is often a legal strategy in divorce. The party with more money can try to bleed you out financially so that you will be forced to come to terms. I’ve seen this again and again and even experienced it myself. My ex’s divorce attorney filed emergency motion after emergency motion forcing me and my expensive lawyer into court again and again. It can be a reality. It has to be dealt with. You don’t have to play into it though. Fight the battles that truly need to be fought. Let go of the rest so that you can focus your time and energy on re-building your life. This time in your life is finite. It will end. You will be in a far better financial situation afterward if you keep your goals top of mind throughout this process.
6. Don’t Throw Money Away
There are plenty of resources to help you get divorced. However, it is an expensive mistake to think that your lawyer will help you cope with the emotional rollercoaster you are on. Their focus is on the law and, while they might sympathize with your emotional well-being, their only goal is to get you divorced. And any time you spend with your lawyer discussing the emotional ups and downs related to your divorce comes at an extremely high hourly rate. So, the point here is that divorce attorneys are not trained to help you emotionally and they will charge you through the nose for their sympathy. In contrast, a divorce coach will help you gain clarity around what you want, help you make better decisions, help you silence your inner critics and help you feel empowered in this process and your life overall. And a divorce coach charges quite a bit less than your divorce attorney. So, while it seems counterintuitive to add yet another expense to the pile that your divorce has created, hiring a divorce coach is a smart choice that will actually save you money in the long run. It will save you money in attorney fees and it will save you money by helping you make better decisions throughout the divorce process.
7. Money Doesn’t Buy Happiness
The old adage is true. Recent research supports the fact that money has very little to do with happiness at all. There are a number of surveys every year to identify the happiest country in the world (Australia, Switzerland or Norway in 2013 depending upon which survey you want to believe). Interestingly, NONE of the happiest countries in these surveys were actually the richest when it came down to Gross Domestic Product. Even though our society assumes that living well is equated with money, and that people with money are happier, it is all smoke and mirrors. Money really CAN’T make you happier. So, if that is the case, what are you really fighting for in your divorce? What would happen if you focused on what would make you happy instead of fighting over money? How much time, and therefore money, would you save by focusing on happiness? Being a divorce coach, I know it is difficult to see your way out when happiness feels like a far away, distant thing. I also know that it is right there waiting for you. You just need to want it. The Law of Attraction says that the universe sends you what you focus on the most. So, if you focus on your hurt, anger and pain, the universe will bring you more. If you focus on your fear that you won’t have money, then that is what the universe will give you. So, focus on yourself. Focus on happiness, so that the universe makes it easier for you to get there. Paint a mental picture of yourself happy. Be that person. Happiness is more important than money and will be with you for a lot longer after your divorce.