The No. 1 Destroyer of Wealth is Divorce

General Finance

By: Menard | Millionaire Before 50

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.

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.

Republished with the permission of MillionaireBefore50.com.

Last modified: February 2, 2019

7 Responses to :
The No. 1 Destroyer of Wealth is Divorce

  1. Steveark says:

    It can be extremely expensive for one party, but it is as likely as not a financial step up for the other. I’m not discounting the pain involved and the trauma for children but I have several friends that traded in lower income ex’s for wealthy new ones and divorce turned them into multi-millionaires overnight. As long as you are talking about the financial impact of divorce you have to admit that it does allow some people a step into instant wealth.

  2. Karl B. says:

    I’ll take a very contrarian view on divorce. I got divorced 9 years ago now. It was obviously a very difficult time in my life and I probably lost about $150k in net worth at the time. What that made me do though was reassess my finances to cut down on frivolous spending and cut down on luxuries and simplify my life. Lifestyle creep has happened since then but only to a certain degree. So I went from a net worth of around $400k to $2.0M in those 9 years. I’m not sure I would have achieved that if I were still married. (Smart, responsible) People have the capacity to tighten their belt in difficult times.

  3. Wealthy Doc says:

    ugh.
    I have been SO lucky in love and marriage!
    I’m going home to kiss my wife right now!
    Thanks for reminding the happily married how lucky they are!

  4. Success is simple. First you decide specifically on what you want and secondly you decide if you’re willing to pay the price for it. Then you pay the price.

    If we really want to experience that which is important to us we simply must DO the things we know we need to do. Period.

    Want a happier relationship? If you’re not prepared to work at it, or pay the price in other areas of your life for it….. Rosalind (Mrs H) has a saying for you “Well go ahead; want on one hand and shit on the other and see which one fills up quicker”. She has such a great way with her words!

  5. Robert says:

    I’ve really enjoyed Esther Perel’s talks and book on sexuality and infidelity.

    To paraphrase: If people put half the effort of courting in an affair into their actual marriage, they’d never have had the problems and infidelity in the first place.

    It takes constant work. I appreciate the reminder.

  6. Xrayvsn says:

    I went through an absolutely awful divorce (the senior judge presiding said it was the worst one he’s seen). My ex wife was very contentious and actually had mental issues (years later proven with psych report) that added fuel to the fire.

    My legal fees alone were 300k for my lawyers. Had to fork another 100k to help pay for hers. She also turned around and tried a 4 million Civil lawsuit after with a week long hearing in front of jury (awarded $0). That cost me another 125k to defend.

    My blog is sort of getting a reputation as being a conduit for divorcees to share their stories as I got a lot of support after I shared mine and wanted to spread the love

  7. Leah says:

    Yes, divorce is often not talked about on FIRE blogs, and it should be. It’s like there’s a superstition that if you talk about it, it will happen to you. Pretend it doesn’t exist and nothing will go wrong!

    But like Karl above, my divorce 10 years ago is what enabled me to pursue FIRE. My husband would have spent all of our money no matter how much was coming in. Having full control of my money was the only way saving could be a priority, and being on my own also gave me the drive to triple my income over the course of 6 years. My divorce was certainly emotionally painful, but was a fantastic financial decision.

    I appreciate many of the points in this article, but I think the sordid incest-divorce story is a straw man that’s out of place. Menard’s arguing that divorce is common and we should be prepared for it, and then he pulls out this outlandish edge-case/horror story as evidence?

    Infidelity is often the last straw before divorce, but it’s often the symptom rather than the cause. How do you get your spouse to finally let you go without argument? Easy: cheat on them. You’re then the ‘bad guy’, but it’s over!
    Have you put up with a miserable marriage for years but you want an excuse to finally be done with it? Simple: infidelity by your spouse at any point in the last 20 years is the perfect, socially-accepted reason.

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