It’s a little-known fact about me–something even some of my close friends and family members do not know. Up until the start of my legal career, I used to blog anonymously about personal finance. My website eventually received thousands of unique visitors per month and actually generated some money that helped me pay down some of my then significant student loans.
When I eventually ran out of things to write, I was able to sell the blog. As a newly minted lawyer I wanted to focus on my clients. To this day that blog remains on the internet with the buyer of the website continuing to blog about personal finance. The primary impetus for me starting the blog was to hold myself accountable for paying off six-figure law school loans.
About eight years after we graduated (me from law school and my wife with a masters in school psychology) we achieved one of our primary goals: paying off close to $200,000 in student loans.
Personal finance has always been something that has interested me greatly. The methods for debt repayment, savings vehicles, and creating tax-advantaged decisions (coupled with great willpower) is something I find highly fascinating. I enjoy tracking my spending each month, creating spreadsheets, and performing monthly and yearly budget projections. In some ways this has been a great background for me, as a great deal of family law essentially involves family and personal finances. I often jokingly refer to divorce law as “personal finance with someone you now hate.”
Personal Finance and Case Information Statements
The Case Information Statement (“CIS”) that the court requires each divorcing spouse to fill out has a Schedule “C” that is essentially a monthly budget. You’re asked to fill out your monthly expenditure while intact and individually down to the tiniest line items such as “toiletries.” You’re also required to list all of your assets and liabilities to help determine a net worth. Statistics and math come into play in negotiating the division of retirement accounts, stock options, rolling over IRA’s and the like.
Again, many people may find it boring but it’s right up my ally. Even better, I have learned a great deal about personal finance from going through numerous divorces with my clients. There are many takeaways that can assist all of us–even those not currently contemplating a divorce. Here are some of the takeaways I have learned from client’s divorces and that may be able to assist you during your divorce or post-divorce:
Divorce Personal Finance Tips
• Be aware of the Family’s Finances. Although one person may take the lead in personal finances for a family, it’s important that both parties understand the financial picture of the family. This is important for a number of reasons, not the least of which is that financial issues are one of the biggest predictors of divorce. It shocks me how many clients come in to initial consultations with no firm grasp on their own family finances. They’re not sure if their spouse has a pension or some other type of retirement account, they do not know what the family’s monthly budget is, they are even unsure if the car they drive is owned or leased. Sometimes, this is the result of domestic violence and financial abuse, but not always. If you cannot provide a breakdown of your monthly budget, nor accurately list the family’s assets and liabilities, it truly complicates the divorce process and puts you at an immediate disadvantage. It is very difficult to know how to divide assets if you’re uncertain what the assets are. Although discovery will help unearth such issues, it’s something all couples (whether contemplating divorce or happily married) should endeavor to understand. Not to mention, even in an intact household there could be great ramifications if something were to happen to your spouse and then you’d be unaware of assets and liabilities. Simply put, when you go to an initial consultation for a divorce it is helpful to have copies of all records in advance.
• Work Together as a Team. Not to get all Pollyanna again, but it’s simple game theory that working together (whether happily married or not) can lead to better results for all involved. If you have an uphill battle, such as with debt, then you can either bury your head in the sand or you can team up and fight together. Even a divorcing couple should be smart about their current situations Maybe you can both agree to remain in the marital house to cut down on the added expenses of having two separate homes. Maybe you can agree to work together in the divorce to negotiate in good faith and to not waste thousands of dollars in counsel fees fighting over furniture that is barely worth $500.00. The more you want to punish the other person in a divorce the more you’re really punishing yourself as well, because of the added costs. (Not to mention your children.) After your divorce you will likely date again and statistically there are good odds you will remarry. This type of mindset change can help make your post-divorce life more satisfying. You want to learn from the issues that plagued your first relationship and you do not want to make the same mistakes again. That is not the pathway to living Happily EVEN After.
• Don’t be Judgmental. It’s only common that you’re going to have different opinions regarding personal finances. You may have different stomachs for risk, for instance.
• Learn. Although I can’t expect everyone to be a “personal finance dork” like I am, our finances are increasingly important in this modern society. Perhaps you can each take turns learning about new subjects and becoming “experts” on them. Then you can report back to your spouse. For instance, one of you can focus on frugality and budgeting and then the two of you can think of ways to implement the savings.
• Keep Good Notes/Document. Finally (and with tax-season incoming this is more important than ever) it’s helpful to keep good notes and to properly maintain documents pertaining to the household’s finances.
Conclusion
Although personal finance/money issues may not be the cause of divorce in all cases, I have noticed a lack of communication and money stress as being an important symptom leading to divorce for many of my clients. Whether you’re happily married or pursuing divorce, it’s important to keep some of the above ideas in mind to assist in achieving the best outcome for you and your family.
If you’re handling your own finances post-divorce for the first time in a while make sure you read up on the subject and talk with accountants or other experts as necessary to make sure your finances are in good working order. I’ve fought hard with many clients to preserve their assets only to later learn post-divorce they made regrettable decisions.
As soon as your divorce is finalized make sure you get a new will drafted, that you follow up with your divorce terms to obtain your assets, and that you learn about personal finance if it’s not in your wheelhouse to make sure you can properly preserve the divided assets, pay off your share of the marital debt, and have significant cash-flow for yourself and your children.
Partner with Carl Taylor, Esq.
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