retirement

Financial Reasons Not to Divorce

Before you decide to pull the plug on your marriage, you should consider some of the numerous financial cons that can come with splitting up.

Statistically, approximately 50% of all first marriages end in divorce. The odds of second marriages succeeding are lower, and the odds of third marriages making it are lower still. In other words, there is an inverse relationship between the number of marriages a person has and their odds of success.

As a Certified Divorce Financial Analyst, I work with divorcing clients from all walks of life. Many times I encourage them to try counseling before they throw in the towel. It’s not that I don’t want the business, but rather I know that after dividing all of the assets, it can be difficult to maintain one’s prior lifestyle. Unless there is a great deal of money, things can easily become uncomfortably tight.

Here are some areas that each divorcing spouse should think very carefully about:

Keeping the house.

Maintaining 100% of the house on perhaps 50% of the income is challenging under the best of circumstances. The food bill and electric bill may go down, but most likely they will not be cut in half. There may not be enough money to pay all the bills. That may mean getting in over one’s head with a loan with the possibility of losing the house to bankruptcy.

Selling the house.

A couple getting a divorce may want a quick sale in order to put an often-nasty chapter of their lives behind them. That can mean the process ends in a fire sale, which can weaken one’s ability to negotiate the best price. If the buyer knows this, they can submit a low-ball offer, taking advantage of the situation.

Sometimes the timing of selling in a bad market can be awful for the sellers. Whether an unfavorable housing market is seasonal or a product of longer-term fluctuations, selling at the wrong time can cost a lot of money on what might be the couple’s largest asset.

Of course, moving costs can add to the already bad situation.

Additional living costs.

With two households, there are duplicate expenses. For example, there will be two electric bills, two cable bills and so on. Travel might be an added expense, depending on work commutes, parent responsibilities and more.

Professional fees.

Attorney fees are not inexpensive, especially if the divorcing couple battles about every little thing. Additionally, they probably need financial planners , real estate agents, CPAs and other ancillary professionals, all of whom come with a fee. A therapist might be needed to help with emotional anguish associated with divorce.

Self-representation.

There are some that try to save money and represent themselves. They can make serious long-term errors because they don’t know the law, compounded with making emotional decisions.

I am not advocating that someone stays in an abusive marriage to save money. If someone finds themselves in a physically or emotionally abusive situation, leave and let the financial chips fall where they may. Fortunately, in my almost 20 years of practice I have encountered very few clients who have needed to leave due to abuse.

Divorce shouldn’t be a knee-jerk reaction. It should be well thought out and viewed as a long-term solution to a broken-beyond-repair relationship.

About the Author

Barbara Shapiro, CFP®, CDFA®, CeFT

President, HMS Financial Group

Barbara Shapiro is the President of HMS Financial Group located in Dedham, Mass. She is a CFP®, Certified Divorce Financial Analyst and a Financial Transitionist®. She is also co-author of "He Said: She Said: A Practical Guide to Finance and Money During Divorce." Her firm specializes in comprehensive financial planning with a subspecialty in divorce that assists clients' transition from marriage to independence with peace of mind and confidence. Learn more at HMS-Financial.com.

Securities and Advisory Services offered through Cadaret, Grant & Co., Inc., a Registered Investment Adviser and Member FINRA/SIPC. HMS Financial Group and Cadaret, Grant & Co., Inc. are separate entities.

Most Popular

Dying Careers You May Want to Steer Clear Of
careers

Dying Careers You May Want to Steer Clear Of

It’s tough to change, but your job could depend on it. Be flexible in your career goals – and talk with your kids about their own aspirations, because…
September 13, 2021
5 Top Dividend Aristocrats to Beef Up Your Portfolio
dividend stocks

5 Top Dividend Aristocrats to Beef Up Your Portfolio

The 65-member Dividend Aristocrats are among the market's best sources of reliable, predictable income. But these five stand out as truly elite.
September 14, 2021
7 Best Commodity Stocks to Play the Coming Boom
commodities

7 Best Commodity Stocks to Play the Coming Boom

These seven commodity stocks are poised to take advantage of a unique confluence of events. Just mind the volatility.
September 8, 2021

Recommended

12 Things You Must Know About Claiming and Maximizing Your Social Security Benefits
Basics

12 Things You Must Know About Claiming and Maximizing Your Social Security Benefits

Claiming Social Security benefits at the right time means more money in your pocket. Here's a guide to everything from knowing your full retirement ag…
September 27, 2021
11 Best Things to Keep in a Safe Deposit Box
savings

11 Best Things to Keep in a Safe Deposit Box

These valuables and documents, along with some items you hold dear, should be stored securely at your bank.
September 25, 2021
Your Doctor is Retiring. Here's How to Find a New Physician
health insurance

Your Doctor is Retiring. Here's How to Find a New Physician

More doctors are considering quitting due to burnout from the pandemic. If you must find a new physician, get recommendations from friends and review …
September 24, 2021
9 Things You’ll Regret Keeping in a Safe Deposit Box
savings

9 Things You’ll Regret Keeping in a Safe Deposit Box

Locking up certain important documents and valuables in a bank vault could turn into a headache for you or your heirs.
September 24, 2021