Divorce an Enabler for FIRE?

[Sue J]

We're coming up on our 35th anniversary in Sept. We started with almost nothing at age 21. DH does not like to think about money, while it is a constant theme to me. In theory, we probably should have been one of those couples that wouldn't work but we actually make a great team.

We've always kept everything jointly except for my Roth IRA and pocket cash. DH always spends his pocket cash and I usually have a chunk of mine left at the end of the month so that goes into a "stash" container. It's no secret, he knows I have it and where it's kept. He doesn't care to count it.

In our earning years DH would have spent everything that came in if he didn't have a family to support. He loves electronics and gadgets and used to frequent thrift stores to find "vintage" things to play with. He had a good eye for that stuff and often would sell things at a profit. When it came to supporting us (I was a full time mom) he was completely wonderful but still needed to have money for "stuff".

As he approached retirement he came to realize that his time was more valuable than stuff so he has become a frugal retiree. He sees it as a new hobby and he's told me he really enjoys the downsizing/simplifying/economizing. Fine with me!

I've never been a recreational shopper. I own 5 pairs of shoes and that includes slippers and waterproof winter shoes. I'll go clothes shopping once a year just to replace things that are worn out. Three shirts or sweaters, two pairs of shorts and jeans and I'm good for the year. Just not into fashion and accessorizing. I could never spend thousands every month on clothing or decorating or eating out or mindless shopping.

DH has gone through some major changes since retiring in June, 2010. He still has no interest in money topics but a few weeks ago he asked about the monthly expenses compared to his monthly pension deposit. He knew that his pension covers the expenses but for him to ask for specifics was a welcome inquiry! I printed it out for him to have on hand. He may not look at it for months, but that's ok. It meant a lot that he asked.

 

[FinanceDude]

Here's a slightly different angle. I have a 45 year old friend who is a partner in a consulting business. His third share ownership is worth a lot. Before he built the business he was quite keen to get married, now he says he'll never get hitched or even get into a common law situation. He has a great girlfriend of 3 years who is really nice and works as a clinical nutritionist, so he has the bigger bank balance, but as they are "just dating" as he says money isn't a big factor. However he's just waiting for the marriage conversation. I feel sorry for him, but understand his thinking.

Why would you feel sorry for him? If he is happy, that is all that matters. I think some folks on here are too critical of others just because they are not as LBYM or financially astute as we like...........

 

[BellBarbara]

I married at 25 to what I can best describe as a goof. Nice guy, but I knew I would be the main bread winner forever. We had one child, and then I knew I would be the one doing all the work and earning the money....At that point our house was way up, so I decided to split then. I never regretted it. He was such a financial disaster!

Now I am married to a man who has just the right balance of saving and spending. I never have to think about finances with him. What a change!

 

[Achiever51]

This divorce thread is interesting, but also a little depressing. As someone young and married (almost 5 years now)... Is there anyone on here not divorced?

DH and I will celebrate our 35th wedding anniversary in December. Despite starting out with very little, I cannot recall a single disagreement involving finances. DH realized very early on my interest & aptitude for money matters exceeded his, shall we say, more cavalier approach to family budgeting and finances, and he suggested I take control. We have periodic discussions about our finances, and he's more involved now, but he freely admits that his best financial move was handing me the reins. Coming from a family where my mother handled all the finances, it was a comfortable situation.

 

[Danmar]

Amethyst: Your list seems about right to me. Would do all that plus some and still we manage to LBYM. Obviously, if this is LOYM it is not smart.

 

[Zoocat]

My ex and I were very incompatible financially. I, after putting myself through college and grad school as a single mother, was (am) very financially responsible, and frugal if necessary. I was/am a saver. He was not a saver when I met him. He liked to spend on luxury items and resisted even contributing to an emergency savings account. But he did invest most of his inheritance into mutual funds, mostly in his name only.

During the 23 year marriage I managed the household finances and found ways to save, paying down the mortgage, etc without his participation. I also worked, managed the house, the yard, raised our children, etc etc.

So, after divorce, and a very nice division of marital assets, I found myself in pretty good financial shape.(And my ex is still very wealthy.) Still, I have been working and saving for 7 years, doubling the amount of my divorce settlement. So, yeah, I'd say getting divorced really improved my ability to FIRE, otherwise I'd still be married to a workaholic who liked to spend ostentatiously.

 

[kaudrey]

I was divorced about 11 years ago. My ex was a spendthrift, and I made about 2x what he did. We combined everything, and when we got divorced, I gave him more than he deserved, because I just wanted to get it done (and I knew he'd drag it out if he could). I gave him 1/2 the growth in the 401(K) during the marriage, 1/2 the equity in the house, and 2 years of "support payments", since he was "used to a higher lifestyle than he could afford" on his own. Sigh.

But, it's all water under the bridge now. For the last 10 years, I have been able to save lots. I wouldn't have been able to do that if I had stayed married to my ex. My current boyfriend (going on 6 years) and I keep our finances separate, but we have the same goal of retiring early, and are working toward it together.

 

[GaryInCO]

We're in the midst of a divorce. One of DW's complaints was that I didn't earn as much as I "should" have. We both are self-employed and she's frankly a harder worker than I am. (She doesn't spend time in forums like this one. ) But she said a number of times that she didn't want to work like a dog now, for the chance of a better retirement later, she wanted to have a life now. Like duh, wasn't that what I was doing? Spending time with our little kids instead of locking myself in my office? But I digress.

At first she said I didn't get any of our rental properties because I'd been such a financial load, "only" earning nearly 6 figures a year. I didn't bend over for that and she eventually relented. We're splitting assets 50/50 and sharing custody of our two teenagers 50/50.

My hard decision is who gets the house. Either of us could. At first she assumed she would, but I was unhappy about losing my home (in addition to my marriage), partly because that's our kids' home too. They tend to favor her, and it would be more attractive for them to "come home" to stay with me instead of "we have to go to Dad's crappy little house."

When she heard that I wanted to stay, she said OK fine -- almost too easily, I thought. Now I'm wondering if I did the right thing. It's a high-end house, 4000 sq ft on a lakefront lot. In this market that's worth about $600k. Which means I'd have to come up with $300k to buy her out, plus there's a bunch of long-overdue and expensive maintenance, probably $30-40k at least. If it turns out that the real estate market goes up here, it would be a good move financially.

It's a lovely place to live, with lots of happy and bittersweet memories. If I keep the house, I'll have to take a mortgage to pay her off. I will almost certainly get a housemate to help cover expenses. I sure don't need this huge house all to myself 50% of the time.

Or I could tell her, nah you go ahead and keep the house. Then she'd have to pay me, and I could go get a smaller/cheaper place. (But it would have to be big enough to house 2 teenagers half-time.) That would probably be the smarter move FIRE-wise, but...

Not a decision I ever expected to have to make.

 

[haha]

I almost could not bear to stay in my house or even to enter the door after my marriage broke up. From my POV, our life there with the children had been almost perfect. It still makes me sad to think of what we all lost.

Ha

 

[KingB]

Or I could tell her, nah you go ahead and keep the house. Then she'd have to pay me, and I could go get a smaller/cheaper place. (But it would have to be big enough to house 2 teenagers half-time.) That would probably be the smarter move FIRE-wise, but...

IMO, you should let her keep the house. Financially, it is better for you. Plus, your teenagers will still be living in the same house.

 

[W2R]

It's a lovely place to live, with lots of happy and bittersweet memories. If I keep the house, I'll have to take a mortgage to pay her off. I will almost certainly get a housemate to help cover expenses. I sure don't need this huge house all to myself 50% of the time.

Or I could tell her, nah you go ahead and keep the house. Then she'd have to pay me, and I could go get a smaller/cheaper place. (But it would have to be big enough to house 2 teenagers half-time.) That would probably be the smarter move FIRE-wise, but...

Not a decision I ever expected to have to make.

Many couples find when they break up, that NEITHER is able to singlehandedly afford to pay for the lifestyle they once led. There is a good chance you may not be able to afford the upkeep on this house plus the new mortgage payments.

So, IMO the house question comes down to a question of who "gets to" sell the house and give half the proceeds to the other. Don't forget that to sell a home in this market may take some money to dress it up and fix it up, and you would probably have to pay for all of that. It may take a while to sell in this market.

You don't need a 4000 square foot house on a lake to keep your teenagers part time. The older they get, the less time they spend at home. Plus, in just a very few years they will be grown and gone.

Like Ha points out, you may feel a need to leave due to the memories.

I would suggest giving her the house and letting her sell it. Then rent (not buy) a house for yourself until you have had some time to recover and have a better idea of what you want and need, and where.

 

[growing_older]

There are advantages and disadvantages whichever way you go with the house.

I bought my ex out and kept the house. It was expensive and cost me a lot in time before I could reach FI. It kept my kids (younger than yours) in the same schools, with their same friends and with the same "home" as much as possible in an otherwise huge upheaval for them. I'm glad I was the stable parent in the home and it was well worth the financial cost to provide that for them.

Everything in this place has a memory associated with my ex, and that can be hugely painful at times. But everything in this place also has my kids' memories and they don't see the pain the same way.

 

[Dreamer]

We will be married 39 years in Oct. We also started with the 0 + 0 plan and have always had everything joint. I can't say that we are 100% compatible when it comes to money and have had quite a few arguments regarding money over the years. I am the saver and he is the spender. I have relaxed over the years, once house paid for and children reared and retirement accounts were higher. I would definitely keep finances separate, if I were to become a widow and were ever on the dating scene again. That is very hard for me to even imagine.

 

[Nords]

I'm thinkin' Freebird nailed it. He said she goes nuts spending $ on clothes for her and the kids - probably about $1K a month. I'm assuming the rest goes to their other bills - the big house, car, etc.

I try to imagine myself emulating that spending example, but it seems like a combination of a lot of running around and a huge effort to supervise a bunch of people.

Oh, wait, that's what I used to do for a living... but this time I'd be spending my money instead of getting paid?!?

 

[GregLee]

Going on 43. Happily married. Started with 0. We have always combined our resources. Income and expenses are tracked on Quicken (before, by Money) so we both know what the other is spending.

Congratulations on your upcoming 43rd. In a couple of months, it will be my 43rd anniversary, also. My first marriage, her second. Our working incomes were approximately equal, now our retirement pension incomes are, and also our spending habits. Our finances are commingled. A difference is that we have never tracked our expenses, and have little idea what the other is spending. Since we're both tight with money, that's never been a problem.

 

[KingB]

Congratulations on your upcoming 43rd. In a couple of months, it will be my 43rd anniversary, also. My first marriage, her second. Our working incomes were approximately equal, now our retirement pension incomes are, and also our spending habits. Our finances are commingled. A difference is that we have never tracked our expenses, and have little idea what the other is spending. Since we're both tight with money, that's never been a problem.

Congratulations on your upcoming 43rd too. I have to make a minor correction. It will be our 44th (2011-1967). I hope DW doesn't see this or I might not see the next anniversary.

 

[sheehs1]

My hard decision is who gets the house. Either of us could. At first she assumed she would, but I was unhappy about losing my home (in addition to my marriage), partly because that's our kids' home too. They tend to favor her, and it would be more attractive for them to "come home" to stay with me instead of "we have to go to Dad's crappy little house."

I'd like to throw another idea out as well. I had friends that did this and it worked really well for their children. They kept the home while their children finished high school, college and were out on there on. Their children lived there full time. In other words, it was the parents that went back and forth and not the teenagers. Each parent rented a cheaper..affordable place and moved back home to be with the children on a rotating basis. I thought this a wonderful idea...to disrupt their children's lives as little as possible.

It also could allow...for both of you to continue supporting the home splitting all cost + maintenance...until you have some time to really think about what you may want. Just a thought. Don't know what this will do to the legal aspects of property distribution with a divorce but I imagine you could each own half as tenants in common, keep it to pull this off and agree to sell it at some point in the future.

Otherwise what W2R said.

 

[growing_older]

I'd like to throw another idea out as well. I had friends that did this and it worked really well for their children. They kept the home ... Their children lived there full time. ... the parents went back and forth

Tried this and it can be a good solution for kids, but it is difficult for parents unless both are very reasonable. Depending on why you are getting divorced, this may not be possible. It didn't work for me.

 

[nun]

Why would you feel sorry for him? If he is happy, that is all that matters. I think some folks on here are too critical of others just because they are not as LBYM or financially astute as we like...........

I'm sorry for him because money is his priority.

 

[sheehs1]

Tried this and it can be a good solution for kids, but it is difficult for parents unless both are very reasonable. Depending on why you are getting divorced, this may not be possible. It didn't work for me.

I agree...the circumstances and relationship between the parents either make or break this approach. Also think it could be very hard on the parents...keeping them hooked into their old lives while trying to get a new one. ...that sort of thing. Still...if ...certain conditions exist..it is a great way to do it "for the kids"....or at least in the case of my friends it was.

 

[GaryInCO]

Thanks for all the thoughts and ideas!

sheehs1, we actually did that for a few months. She moved out last July so she already had an apartment. She decided she wanted to get back into our boys' lives, but not mine, so she proposed the swap. I had some friends offer me their basement bedroom half-time for ridiculously cheap. The boys stayed in the house, and DW and I swapped every 2 weeks. It worked, but I sure didn't like moving back and forth.

But probably the kids won't either.

We'll be keeping the boys in the same school no matter what. We'll share custody 50/50 so whoever moves out has to live somewhere in the same school district, or drive the boys to/from school every day. The boys will split time between our current house (their lifelong home where they were born and raised) and the other parent's house.

Ha, I definitely hear the "still feel sad about it." Maybe it's not smart for me to stay here -- might be hard to drop the sadness of what was lost if I'm living where we lived for our entire married life. I think I'll get over it once she's gone, but...

The biggest question for me is financial. Do I really want to tie up 3/4 of my net worth in my house? (Or take out a mortage, which works out the same.) A house that is absurdly big for me, especially when the boys aren't here? If I was more confident that real estate would continue to appreciate, I'd feel more comfortable with the house as an investment. But the way the economy looks these days I'm not so sure it's a good idea.

Letting her buy me out, then buying/renting something small, would free up a lot of money. If I could do anything useful with that money, that would be the best answer. But I don't have a great record in the stock market... otherwise I'd be FIREd already!!!

 

[FUEGO]

I try to imagine myself emulating that spending example, but it seems like a combination of a lot of running around and a huge effort to supervise a bunch of people.

Oh, wait, that's what I used to do for a living... but this time I'd be spending my money instead of getting paid?!?

The people that ask you "whaddya do all day" are the ones who have no problem occupying every waking moment with tasks that involve spending money. They are scared of themselves and find hours of unoccupied unstructured free time frightening. Running errands all day keep them busy.

 

[growing_older]

Just be careful you don't get sucked into the nightmare scenario. You move out to let her have the house, then the court orders you to pay to preserve the kids' current situation - living in family home with mom. You end up with all the same cost as if you kept the house, but she keeps the house and kids end up mostly with her in their old house at your expense.

 

[obgyn65]

Sorry to read this Silver. I am pleased things got sorted out. Take care.

Lucky me....since all of our tax returns had been joint, and he had not even paid the FICA for his own or employee's pay, the IRS came after me as well. I was required to re-file married but separate for the previous seven years, and pay all of my taxes owed plus penalties. (We had gotten refunds for most of those years) This process took about 3 years to get through.

 

[zonar]

I have been married more than once and I hate to say it everytime I got divorced my finances took a beating. I'm mostly clear of all prior responsibilities. I have 4 years of child support left and I have been paying for 11 years even during time of unemployment. I have 25% equity tied up in former marital house that I fully own, but am desperately trying to sell to pull out the equity. If I do succeed I will be finally clear and reasonably on the way to where retirement is even possible.

My dream is to never get married again. The risk for me has been far to great not to say it can't work for other people. I have the freedom and sleep well at night. That piece of paper carries so much headache and risk, it's just not worth it. It is a false sense of security.

Never mix business with pleasure!