Divorce and avoiding the financial pitfalls
Recently on our divorce forum a user asked, “My spouse and I are engaged in a very contentious divorce. I am trying to be rational and not spend my life savings arguing and fighting over our assets and child custodial arrangement. Do you have any suggestions to simply the divorce process and avoid the most common financial pitfalls?”
Divorce is not a charitable process. Even if you and your soon to be ex are on decent terms many spouses focus on what they think they deserve and may even be willing to engage in a prolonged legal battle paying more in legal fees then the objects of contention are even worth. With that in mind, let’s look at a few steps to avoid the most common divorce pitfalls.
Steps to avoid the financial pitfalls of divorce:
- Consider mediation
Litigation is often the costliest expense of divorce. To avoid litigation, consider mediation. Mediation allows you and your spouse to negotiate a variety of divorce issues under the supervision of an impartial third party.
- Avoid becoming a financial victim.
Although you may have enjoyed your spouse taking care of all of the financial decisions when you were married, not understanding your finances entering into a divorce can put you in a vulnerable position. Prior to filing for divorce, it’s critical that you get copies of all of your financial records including information about all of your assets, loans, debts, and investments.
- Establish a financial plan post divorce.
Unfortunately, it’s likely that even after everything is divided and liquidated that you will take a financial hit. This can be especially true if you were not the primary wage earner. You will now have to maintain a new residence with none of the shared expenses.
Talk to a financial planner and consider what steps you will need to take to downsize your lifestyle so you can live on just your income. You will also need to develop a new budget and savings and investments goals.
- Do not let your emotions control your decisions.
Maybe your spouse cheated on you. Maybe you’re really upset. Setting aside your feelings of anger, resentment and pain may be the most difficult thing you have to do during the divorce process. There is a place to discuss and deal with all of your losses, but it’s not at the negotiation table. Letting your emotions control you during negotiations can cloud your judgment and could end up costing thousands of dollars.
- Failing to consider your children’s needs.
Divorce is tragic for children. He may have cheated on you, but he might still be a great father to your children. Children are innocent bystanders in the divorce process. The best parents are those parents who can place their child’s interest above their own and ensure that they work together to develop the best custodial arrangement for their kids.
Using a mediator to construct a fair child custodial plan may be one option. Another option is to put your anger and hurt aside and consider what the children actually need from their father or mother and work together with your spouse to create the best custodial plan.
Divorce is difficult, but if you take the right steps you can improve the process for you and your children and avoid the most common financial pitfalls.