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Considering Divorce? Your Budget Will Take a Major Hit

The old saying that “Two can live as cheaply as one” although not 100% true does have some truth to it. Whether you are a couple or a single a 1 bedroom apartment costs the same. The electricity is almost the same, etc. Divorce at any point in life will be expensive and that is not just counting the lawyer’s fees. A household that shared all of the expenses, is now going to be separated, instead of supporting one household you will be supporting two. Plus if there were two incomes covering all your expenses now there will only be one. If you’re in the middle of a divorce or considering the process, take a close look at how your budget will change. In most cases, you’ll have new expenses to deal with for several months or years. Plus, since money problems are a major cause of stress in marriages, often when couples are considering divorce it is because they already have money problems, but getting a divorce over money may only make matters worse.

According to Marripedia divorce initially reduces your assets by about half, and is the primary cause for women applying for welfare. “Almost half of American families experience poverty following a divorce, and 75 percent of all women who apply for welfare benefits do so because of a disrupted marriage or a disrupted relationship in which they live with a male outside of marriage… 

By the time you enter your 50’s your level of wealth has a strong correlation to weather you were divorced or not.

“The assets of married couples in their fifties (who are approaching retirement) are four times greater than those of their divorced peers (See Chart below). Even when the two divorced households’ assets on average are combined 

Running a New Household

As a couple or family, you shared rent, utilities and other monthly bills. In essence, each person only carried half of the household’s expenses. During and after the divorce, you’ll now have one household for each person. The entire rent and utility charges are the responsibility of one person instead of splitting the difference. Your budget will double in size. In most cases, you’ll need to look for a higher paying job or cut out luxury expenses, such as eating out or picking up fancy coffees each morning.

Splitting the Debts

Student loans, credit-card balances and other debts are normally split between the parties. You’ll be responsible for your half. Ideally, you only want your name on the debt after the divorce. If there’s a joint account, one of the parties might default on their responsibility. You’re still required to pay the bill, however. Create a personal budget that accounts for every monthly bill. It may be difficult to swing at first, but it’s possible with some spending control.

Consulting Legal Professionals

When you decide to get a divorce, it’s time to consult a lawyer and this can be expensive. The legal professionals at DiPietro Family Law Group say “At its best, divorce is a difficult transition that involves countless important decisions like child custody and the division of assets. However, at its worst, divorce can be a war.”

You need to understand how complicated divorces can be, especially the legal aspects. A lawyer will explain your rights, and offer a game plan that keeps you financially comfortable. During any divorce, each party is interested in their own rights. Protect yourself with a lawyer by your side.

Considering the Alimony Aspect

Part of the divorce proceedings is making sure that each party has a balanced lifestyle. If one party was bringing in all of the money, the partner should receive alimony after the divorce to maintain that level of daily comfort. Your budget will change if you pay or receive alimony. If you’re the breadwinner of the family, you’ll probably pay something to your partner as a matter of fairness.

Ideally, work with your partner to create a drama-free divorce. Although this concept may seem far-fetched, working out a plan to dissolve your union without bitter fights can save you both money. Remember, the more drama, the more the lawyer makes and the less you have available to split.

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Author Bio: Rachelle Wilber is a freelance writer living in the San Diego, California area. She graduated from San Diego State University with her Bachelor’s Degree in Journalism and Media Studies. She tries to find an interest in all topics and themes, which prompts her writing. When she isn’t on her porch writing in the sun, you can find her shopping, at the beach, or at the gym. Follow her on Twitter and Facebook: @RachelleWilber.

Image Courtesy of BlogPiks.com

About Tim McMahon

Work by editor and author, Tim McMahon, has been featured in Bloomberg, CBS News, Wall Street Journal, Christian Science Monitor, Forbes, Washington Post, Drudge Report, The Atlantic, Business Insider, American Thinker, Lew Rockwell, Huffington Post, Rolling Stone, Oakland Press, Free Republic, Education World, Realty Trac, Reason, Coin News, and Council for Economic Education. Connect with Tim on Google+

Comments

  1. Everyone knows that men routinely get raped in divorce court. A sociologist named Augustine Kposawa found that the post-divorce suicide risk doubles for men, but remains unchanged for women. Men are wising up and avoiding marriage like the plague it is.

    • Frank, that might be a bit cynical but I do agree that divorce is bad for everyone involved (both spouses and kids) but since I’ve been happily married for almost 30 years, I don’t think avoiding marriage is the answer.