Easy methods to Financially Survive the Value of Divorce

The high cost of divorce doesn’t have to trap you in a bad marriage.

Forty-two percent of first marriages end in divorce, with the rates increasing for second and third marriages. Almost a million divorces are filed annually in the US alone, with the average marriage lasting about eight years.

You need to know how to prepare for divorce, how the process works, and how much it really costs. Then we’ll reveal two tricks to getting a cheap divorce and how to survive financially.

Who Gets What in a Divorce?

Most states go by common law and separate assets by who’s name is on the title ownership. So if yours is the only name on the deed or registration, the asset is yours in divorce.

The problem here is that even assets owned and investments made before marriage often get so mixed with community property that it’s difficult to prove this sole ownership.

Community property states, which include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin, treat almost all assets and debts as equally owned and split in a divorce. However, some exceptions to the rules; even in community property states, anything inherited by one spouse alone is usually theirs.

It’s important to understand that judges still have a lot of power to divide up assets for some balance though they usually try staying close to the general rule. If everything is in your name, even in a common law state, the judge might try to give your spouse some assets or assign more in alimony.

What Happens to Debt in a Divorce?

Everyone worries about their assets and income in a divorce, but debt can be just as important.

Generally, the court will follow many of those same rules for debt. So any debt you had before the marriage is yours. No offloading that $20,000 in student loans for your worthless art history degree.

How is Alimony Calculated?

Alimony or spousal support can be a big one after a divorce.

Many people don’t know that alimony isn’t mandatory but can be ordered by the judge, especially if they think the spouse will face ‘hardships’ without support.

There’s no set calculation for spousal support, but one calculation I’ve seen a few times goes like this. First, you take 40% of the paying spouse’s net income, so after taxes and deducting child support, we’ll get to next. Then minus 50% of the supported spouse’s income to find alimony payments.

For example, if you make $4,500 a month and pay $700 in child support, your ex makes $2,000 monthly. Then $4,500 minus $700 and times 40% is $1,520 then minus half your ex’s income or about $520 a month in spousal support.

Unless both spouses agree never to change the settlement, alimony can be reviewed with changes in income so it can go higher or lower.

How is Child Support Calculated?

Child support is one of the highest financial costs of divorce, but it depends on where you live. Most states calculate child support on the ‘Income Shares’ model. Nine states use the ‘Percentage of Income’ model, and three use the Melson formula.

The Income Share model starts by adding the combined income and finding each parent’s share. For example, if one parent makes $6,500 while the other makes $4,000 a month, so $10,500 total, with one making 38% and the other making 62% of the total income.

Then the judge will use the state’s child support table to find the estimated cost of raising the number of children and then divide that cost according to the income shares.

In the states using the Percentage of Income model, child support is based on a percentage of the paying spouse’s income regardless of how much the custodial spouse makes. The percentage might be fixed, say 25% of your income, or it might vary depending on how much you make. So it might be 20% on your current income but increase to 25% if you start making less.

The Melson formula for those of you in Hawaii, Montana, and Delaware is based on a set of factors, including standard of living and child needs. This will consider both parents’ incomes so that payment will be similar to the Income Share model.

Legal Expenses for Divorce

Legal expenses drive up the cost of divorce and force people into bankruptcy. Attorneys will start at $1,000 minimum for an uncontested divorce where both spouses agree on splitting up everything and all alimony payments. That’s a minimum, and a survey by NOLO found the total cost of divorce averages $12,900, with a median around $7,500.

Only about sixteen hundred of that $13,000 average was court costs and fees, with the rest going to the lawyers. Yet, in that same survey, the national average rate for divorce lawyers came to $270 an hour.

So the fact that the average cost of divorce is much higher, almost thirteen grand versus the median of $7,500, tells you a lot of divorces cost a whole lot more.

Tips to Financially Survive Divorce

If you want the least expensive divorce you can, you have to go uncontested. Try figuring out some kind of fair split on your assets and debts before getting the lawyers involved.

Don’t try to pressure your spouse or get unfair here because it will increase the chance they’ll change their mind and contest it in court. The average cost of an uncontested divorce is just $4,100, according to NOLO, so a savings of over eight grand right there.

If you can’t agree on a split in the assets and debts, consider getting a mediator before lawyering up. Mediators will cost $100 or so per hour, but helped the respondents to the divorce survey reported paying $500 for all-in cost. The mediator will play the impartial middleman to help you agree on a split in those assets. Then you can go the uncontested route for cheaper attorney fees.

As for financially surviving a divorce, it helps to have a plan before the divorce, how you will pay for everything, and what your finances will be like after. This is where an emergency fund comes in handy, in case costs or support payments are higher than expected.

Even if you aren’t paying a lot in support, your income and expenses will change drastically. This is where you need to sit down and budget out everything. Start from scratch to find how much you’re making and spending and how much you will need to save for retirement.

The high cost of divorce sends thousands into poverty every year and destroys savings. You don’t need to be trapped in a bad marriage, though. Understand how much divorce costs before and after filing, and be ready to get your finances back on track.

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