The No. 1 Destroyer of Wealth is Divorce

No. 1 Destroyer of Wealth is Divorce

Death, Disability, Disasters, and Divorce…

Out of the most feared and dreaded D’s in life, there’s probably no subject more shunned upon by money bloggers than the topic of divorce. It’s not a particularly difficult topic to write about, and yet many avoid the subject altogether. This is surprising because divorce is no longer a taboo considering its prevalence in modern society.

Last New Year’s Eve, it was Pete Adeney, aka Mr. Money Mustache, and his wife. Pete is famous in the personal finance community for retiring at the age of 30 and living a frugal life. According to this New Yorker article, his blog is earning $400,000 per year.  That’s obviously a large amount of money to live on for someone who skimps on shaving cream and bikes his way around town.

More recently, it was Jeff Bezos, and his wife, MacKenzie. Bezos announced in a tweet they will amicably untie the knot after being together for 25 years. Jeff Bezos, of course, is the richest man in the world having founded Amazon. Bezos may have less hair than Mr. Money Mustache, but he’s worth a staggering $130 billion.

But don’t let statements of amicable separation fool you. Having gone through the process of divorce myself, I can tell you that it’s never easy, especially when children are involved. Fact is, it can be really ugly– a river of tears will be shed, tensions will run high, and a custody battle can ensue.

And your wealth could be instantly split in half depending on where you live.

Related: Why Married Couples Who Combine Finances Get Richer

Community vs Equitable Distribution States

The Bezoses live in the State of Washington, which is among the few Community Property States (along with Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Wisconsin). This means that marital property, i.e., acquired during the marriage, is assumed to be owned by both parties and therefore should be divided equally upon divorce.

Jeff Bezos may have been calling the shots at Amazon, which led to its rise as the most valuable company in the world, but he could not have done it without the support of his wife. Without a prenup, MacKenzie will be likely awarded half of the Bezoses’ assets. If this happens, the impending divorce would technically make Bill Gates the richest man again.

On the other hand, the Adeneys live in Colorado, which is among the other 41 Equitable Distribution States. Often, that means the higher earning spouse receives a bigger piece of the pie upon divorce. Pete Adeney could, therefore, get more considering that he wrote most if not everything in his lucrative blog.

Even then, the divorce could leave Adeney liable for providing alimony or child support. But the bigger issue could be the potential damage to his brand. The founder of the Mustachian cult risks losing followers having written posts centered on “happiness” while he was married. His advice as a divorcee may no longer appeal to certain F.I.R.E. practitioners.

My ex-wife and I lived in an Equitable Distribution State when we divorced, 19 years ago. But we didn’t have much anyway. We were already married for eight years but had only two working years in America under our belt. Still, it was very difficult for everyone involved, including my son who at times had to travel across two different households in two different states.

My divorce was uncontested so the custody was granted to my ex-wife as the custody of young children is likely granted to the mother. I was ordered to pay child support that lasted a decade– until my son turned 18 years old, which I did and would have done so anyway, as any responsible father would, regardless of the judgment.

In fact, my current wife and I shouldered most if not all his expenses throughout high school and college after he moved in with us. It’s something that you can do only when you’re intentional with your money.

Divorce is still illegal in the Philippines

The only complexity is that my ex and I were married in the Philippines, which for some abysmally stupid reason remains to be the only country (other than the Vatican) that prohibits divorce. I had to pay a lawyer to have our marriage annulled, i.e., proven never technically existed– which took two years.

Annulment is legal, but the process is costly and could take many years in most cases. It was not a necessary legal procedure for me to take in order to remarry in the states, but I did it anyway to protect any future assets that I may inherit from my well-to-do Filipino parents. Not to mention being able to remarry in the Philippines.

But what really strikes me is how some people in the country would think of that as a source of pride. All in the name of Catholicism? How primitive can that thinking be?? Yes, marriage is a sacred institution that should not be taken lightly. But we all live in a much bigger world– where couples do separate and divorce– it takes two to tango!

Sure, the children need to be protected as they are often the most affected by divorce– they are left miserable and confused. But heaven knows your kids will be better off seeing the two of you part ways than constantly see you fighting. What’s really important is that both parents continue to work together for the good of the child in spite of the separation.

Infidelity is the most common reason

Contrary to popular belief, disagreement about money is not the most common reason for divorce. Occasional disagreements is actually a good thing because it means you’re talking to each other about money. Hell often breaks loose when one spouse discovers the other’s infidelity, which is not always about sex and adultery.

A close friend of mine confided that she’s now divorced from her then-husband, who was a wealthy businessman. So tumultuous was their relationship that it involved both financial and sexual infidelity. Not only was he secretly channeling money to his sister; he was also having an incestuous relationship with her!

“I divorced him last year even if he begged me not to. I caught him and his sister in a very compromising position when I went with him to their parent’s house where she lives too. They were in the kitchen kissing and one of her hands was inside his pants,” my friend wrote in a text message. She added in Tagalog, “Akala nila tulog ako sa kuwarto.” They thought I was asleep in the room.

She added further, “Actually, I filed for divorce two years before that but he won’t cooperate and he was bribing me so much to stay with him but I can’t stomach what I saw. No wonder why all throughout our marriage the sister hated me.”

“He ended up paying me $350K and I got everything in our home and all the three cars plus spousal support of $5,500 a month. The only thing he got was the Toyota Camry but he paid me for half of its value and his clothes,” she disclosed.

Final thoughts

Divorce is devastating and can be extremely costly. It should be avoided as much as possible. Being faithful, forgiving, having shared goals, and being on the same page with your spouse about money are all extremely important to preserve your relationship.

But if your marriage inevitably goes down to the toilet, it’s important that you remain in talking terms with your spouse. Aim for mediation instead of hiring expensive divorce attorneys to minimize the cost. You should continue to work together for the best interest of the children.

It’s also important not to lose hope. Immediately clean up the mess and move on with your life as I did. Only then can you put yourself in a position to love again.

Wow I didn’t know divorce is illegal in the Philippines, that’s crazy! Thanks for sharing your experiences with divorce, it’s definitely not covered enough in the personal finance community. 😀

You’re welcome. I don’t intend to become an “expert” in the subject though. Once is all too many…lol. Thanks for stopping by 🙂

A very thoughtful and informative post on a difficult topic. Great advice! Divorce can be devastating financially and leads many to declare bankruptcy.

The flip side is that if the person you’re divorcing is financially irresponsible, and you’re not, in the long run you could be financially better off. I know that is true for me. Yes, I lost half of my 401K, but it was after I’d only been contributed to it about 10 years. Yes, I paid high child support, but that is behind me now. And when I remarried it was to someone who shares my financial goals and is a good saver. I am semi-retired in my late 50s, though I plan on continuing to work and earn money in some form for a number of years, and my wife plans to retire fully in two years, in her early 60s. Meanwhile, my former wife, who married someone with a financial style similar to hers (a spender), is still working full-time, as is her husband, with no talk of when they will be able to retire.


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