Recovering Financially From Divorce When Reconciliation Can’t Be Found

Going through a divorce isn’t something I think I’ll ever have to experience. I love my wife and we’ve made a lifetime commitment to each other, to love each other in good times and bad. Neither one of us really believes in divorce being a real solution to marital problems.

The hard fact is, however, it is becoming more and more common, and unfortunately even those self-identified as Christians are divorcing at rates similar to the rest of the population. The good news is, if you re-run the data, people who actually regularly attend church, their divorce rate dropped 27% compared to those who don’t. So those who are actively involved in church and actions related to religious observance, are more likely to find a way to make things work.

Even so, the reality is that divorce still happens, and for many who have been involved in physically or emotionally abusive relationships, divorce is something that might need to be discussed – and even planned for.

Today I thought I would look at the topic of divorce, and what someone can do to recover financially when the worst happens.

Here’s a look at the topic with the panel of the Money Mastermind Show, along with Valerie Rind, author of Gold Diggers and Deadbeat Dads.

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Divorce Statistics

Divorce is not a solution, but an exchange of problems. – Harvard sociologist Armand Nicholi III

Before we jump in too far, let’s look at some stats surrounding divorce.

• 20 percent of first marriages end in divorce within five years;
• 48 percent of marriages dissolve by the 20-year mark, according to 2006-2010 data from the government’s National Survey of Family Growth
• 65% of second marriages in the U.S. end in divorce, by some estimates (source)
• 60 percent of people who identify as Christians but who rarely attend church, have been divorced.
• Of those who attend church regularly, 38 percent have been divorced. (source)

No matter how you look at it, divorce is pretty prevalent in our society. But why not try to be one of the good stats and work on improving your marriage?

Seek Healing For Your Marriage If At All Possible

While the stats might look grim for marriage, in most cases that don’t involve physical or emotional abuse, you’re probably better off seeking help for your marriage.

Bear with each other and forgive one another if any of you has a grievance against someone. Forgive as the Lord forgave you.  Colossians 3:13

• Seek counseling: Look to a trusted pastor at your church, a mentor or a good counselor to help you heal your marriage.  Seek counseling with your spouse.
• Seek God’s guidance & pray:  The Bible tells us that unless God is involved, we’re doomed to failure. “Unless the Lord builds the house, its builders labor in vain.” (Psalms 127:1). Seek God’s will for your life and marriage, and pray about what you should do. Pray with your spouse.
• Communicate. Listen to your spouse, and meet them at their point of need:  Become the best you that you can, be patient and try to listen to their needs in the relationship, the true reasons why the relationship has been damaged.
• Do your best to engage in the habits of a healthy marriage: Do your best to love your partner sacrificially, and meet their needs in a healthy way.
• Be willing to accept co-responsibility for your marriage: Be willing to accept that you may have had a part in the breakdown of your marriage, and be willing to work towards fixing it.

Divorce Is Not Conducive To Wealth Building

If you’re headed down the road to divorce, it’s important to note that divorce isn’t good for your finances, in fact there’s an inverse correlation between divorce and net worth.

In his book, Stop Acting Rich, Thomas J. Stanley surveyed 944 millionaires nationwide and found that 91% were married to the same spouse on average for 36 years. Of those fully 2/3 had never been divorced.

In the same survey, 90% of the millionaires indicated that their parents were never divorced or separated any time prior to their 18th birthday.

The lesson?  If you want to build a large net worth, don’t get divorced. It can be disastrous for your finances.

Financial Hurdles That Come With Divorce

There are quite a few financial hurdles that you’ll have to navigate if you do end up getting a divorce. Among them:

• Costs of the divorce: Lawyer fees, court filing costs, mediation.
• Costs of setting up a separate household.
• Having to start over financially.
• Cost of time and effort to change all of your insurance, retirement, trust and will beneficiaries, as well as transfering titles to cars, homes, etc.
• Having to figure out the family finances, if a spouse had done that previously.

These issues are only the start.

Costs That Come With The Divorce Process

The divorce process is expensive.  Depending on if the divorce is amicable, or contentious, it can be hundreds of dollars up to thousands of dollars.  In my home state of Minnesota, divorces can tend to be pretty expensive, in the many multiple thousands of dollars.

Bruce Cameron of Cameron Law PLLC in Rochester, Minn. says the generally accepted figure is anywhere from $15,000 to $20,000.

So what are some of the costs that you can incur during a divorce proceeding?

• Lawyers fees (which can vary by state).
• Court costs (also varies by state).
• Costs for parent education classes.
• Fees for early neutral evaluations.
• Costs for mediation.
• Costs to refinance a home.
• Record deed fees.

Of course once the divorce proceeding is complete, there are other costs you’ll often incur.

• Costs of setting up a new household. What was once one household is now two. You may need all new furniture, a place to live, a car and more.  It can add up very quickly.
• Child support.
• Spousal support.
• Cost to pay off debt that is in both of your names.
• Costs for therapy.
• Costs for help from a financial professional if needed.

As you can see, the costs are starting to pile up.

Steps To Recover Financially From A Divorce

Thankfully you can recover from a divorce, even if it is hard.  Here are a few things you should endeavor to do.

• Don’t make rush judgements.  Time time to to process, grieve the loss of the relationship, and refocus.
• Don’t be afraid to get the help of a professional when it comes to your finances and emotional health. You may need help to relieve the stress of figuring it all out on your own during this time.
• Take stock of where you are financially. Take an inventory of all your assets and liabilities and your full net worth.
• Protect your credit.  Make sure to close all joint accounts, settle joint debts, check your credit report and report errors. Make sure you aren’t being taken advantage of.
• Rethink and revise your retirement plans.  Change beneficiaries on retirement accounts.
• Review your insurance coverages, buy new insurance and ensure that all of your beneficiaries are updated.
• Update wills and trusts.
• Update your budget to account for your new financial reality.
• Increase income and decrease expenses.

What it comes down to is that divorce is a huge life change, and you’ll need to make changes in so many different areas.

Have your own tips for recovering financially from a divorce?  Share with us in the comments!

Related Content

• 24 Habits Of A Healthy Marriage: Part 1
• 24 Habits Of A Healthy Marriage: Part 2
• Ten Ways To Improve Financial Intimacy In Marriage