Wednesday, April 8, 2009

Dollars & Common Sense

One of the top causes of divorce is money. Yet, divorce is no cure to money problems and adds to them in the short run. Let's face it, divorces cost money. The costs of lawyers, experts, and fees can add up.

That being said the cost of the divorce proceeding is small compared to the added cost of living from divorce. The expression "two can live as cheaply as one" is not entirely true. Unless one of the couple agrees not to eat or drive. But it costs much more to pay for two households. In the short term you have a house and all the same bills and expenses as when the two of you lived together. On top of that you have an additional apartment or home for the other spouse.

Assuming, like most Americans, prior to filing for divorce, the family was just able to pay their bills. Then add in any expenses will cause a short term deficit. Until the court has divided property and debt, your spouse may run up debt. If that debt is not for the family, it may be a dissipation of marital assets and be recoverable. That debt is still a problem. Especially if there is no money to pay for it out of marital assets.

It seems couples are getting divorced earlier in marriage. Thus, there are fewer assets. Also property values are not doing well. Thus, your home will be harder to sell and have less equity. People are less likely to have retirement plans through work. Traditionally marital assets tended to be in terms of retirement or equity in the home. These sources of money seem to be less available over time.

Yet, there is light at the end of the tunnel. Things usually do get better. Remember the poster with the cat hanging onto a branch? "Hang in there baby".