The Financial Reckoning that Comes with Divorce
Not very many of my clients come out of their divorce better off financially than when they went into it. The ones that do were being financially abused by their spouses and were already paying all the bills, so a divorce is relief because it means they are no longer bearing 100% of the financial load for 2 or more people.
So, for the rest of us what is the financial reckoning of divorce? Reckoning is defined as a bill or account, or its settlement. It means that you must accept that you now must pay all your own living expenses, and you have no one to share those expenses with. It may mean you will not get to retire when you wanted to. The financial reckoning also brings about an added level of responsibility. For some spouses this means paying attention to the bills for the very first time in many years. For others it means you don’t have access to your spouse’s income anymore so you can’t make impulse buys and get away with it.
As your divorce lawyer my job is to advise you to prepare for the reckoning. Make a budget. Get rid of the extra expenses. Downsize. Sell what you don’t need. It might mean you need to get a second job when you don’t have your kids. Stop living on every dime you make. Stop contributing to retirement until you can pay down debt. It also means consulting with a financial advisor because not all assets are created equal in divorce. For example, the tax consequences associated with receiving a piece of real estate are different than a Roth IRA.
For further discussion about the financial reckoning that comes with divorce give us a call today.