I’ve heard it said more than once that the worst thing you can do for your finances is get a divorce. Dr. Jim Dahle, one of my favorite podcasters/bloggers over at the White Coat Investor, believes “One house, One spouse, One job“ is the best way to get to FIRE – here is a link to his article. This, of course assumes divorce were a choice you could make as easily as you decide your savings rate or your investment allocations! For many of us divorcées this was not a choice at all – or one of the hardest ones we ever made.
Well, I am here to attest that divorce did not result in my (or my ex-husband’s) financial ruin. Quite the opposite has been true. As a couple, my ex-husband and I mis-managed our finances beautifully together! To the point that, even though our combined income was more than four times what I now earn on my own, we never managed to put away money in an IRA or pay down our mortgage. Luckily, my ex-husband‘s employer was more financially responsible than we were and for 10 years of our marriage THEY put my husband’s bonuses in a 401K – half of which I was entitled to when we divorced. And although I was incredibly appreciative for that lump sum, which is the basis for my retirement nest egg and a wonderful boost to my journey to FI, it was the only asset we divided in the divorce. We were we were renting our home at the time of the separation and had no other mutual property. Alimony was not even discussed –I’ve never had a problem getting a job as a NP thank goodness! We kept legal costs to a minimum by using a court-sponsored (read : CHEAP!) mediation service and paid our individual lawyers for limited hours to review our final agreement. Here is a link to a post I wrote with more details about the process, but legal fees in divorce do not need to break the bank if you think creatively.
After my separation I went back to school to obtain my second specialty in psychiatry (as a PMHNP) This has, more than any other professional step I have taken, allowed me to accelerate my path towards FI. The necessity of having to provide for my family and not depend on a partner has led me to look at my FI journey in a different light. It has motivated me to be more strategic about how I am planning and saving for our future. It helps me remain focused on my goals, while still enjoying my present life and experiences. It makes me stronger. So I guess you could say that, in my case, divorce encouraged me towards more FI.
Now for the bad news – the division of the retirement plan did not even begin to make up for the years of lost salary and career advancement caused by my decision to stay home with my kids and work part-time during the years I was married. This was my decision – one I am proud of, recognizing I am privileged to have been able to do so. No sour grapes – well maybe some J! Had I not had children, or had I worked full-time when they were young, I would undoubtedly be in a better position, professionally and financially. Not only would my salary be higher (due presumably to raises and increased responsibility over time), I also have been able to contribute to my employer‘s matching 403b. I might be in a better position to have a side hustle or part-time job, arriving sooner at FI. Might, might, might – shoulda, woulda, coulda. I’m very happy with the decisions I have made and my life style right now. I bring these points up to demonstrate that it’s true that divorce can cause financial struggles. But divorce doesn’t take away your resourcefulness, divorce doesn’t take away your education – and divorce can’t take away the memories that I was able to create by being with my kids as they grew up. Would I have wanted to stay married to my husband forever – yes! – but the fact that our marriage was not successful does not mean that I’m destined to a life of ‘Financial Ruin’!! I can have success in managing my finances.
You might not see this line often in the FIRE community but here it is : Divorce = Financial Freedom!
Any thoughts? Please join the discussion below…