After a split, you expect some emotional fallout. But a financial one, too? Rough stuff.
Unfortunately, failed relationships are costly, with the average legal fees for a contested divorce running up to $30,000. Considering that nearly half of Americans can’t even cover a $400 emergency—let alone the security deposit on a new apartment—few people are fully prepared for the monetary implications of ending their relationship, says divorce lawyer Christina Pesoli, author of Break Free from the Divortex. And there’s not a clear and concise financial road map of what to do, adds Arthur Hoffman, CEO and founder of ICA Financial Services in Glendale, AZ.
Here, real women share the surprising costs, and our experts explain how you can minimize those expenses if your relationship ever does come to an end (hey, it’s smart to be prepared!).
IF YOU WERE LIVING TOGETHER…
When Iris, 34, broke up with her live-in boyfriend of 3 years, he moved out of their three-bedroom place, leaving her to pony up the $1,800 monthly rent solo because she couldn’t find a new roommate or a smaller apartment. (Fun fact: Even if both your names are on the lease, most contracts say the full monthly rent must be paid—regardless of whether one of you peaces out.) “I’d put away $10,000 in savings, but it lasted me only a few months,” recalls Iris, who had recently quit her executive assistant job to pursue her dream of being a photographer and illustrator. She admits she “made a few emotionally driven” spending decisions at the time, too (shopping sprees!). “I learned some hard lessons, like you should always have a nest egg—more than you think you need.”
When splitting from your partner-slash-roommate, there are obvious immediate expenses: getting a new place, hiring movers, buying furniture, or absorbing your ex’s half of your previously shared bills. You may also have to close any joint bank or credit card accounts and update your health care policy if you added your ex to yours—but since most health care policies have yearly open enrollment, “you could be responsible for bills your ex runs up until the next enrollment period,” explains Hoffman.
All of those headaches are enough to fuel your brokenhearted anger—and could be the reason why 15% of women choose to stay with their partner when their relationship is clearly not working, as a recent survey by legal resource site Avvo found. But relying on your family and friends can be your ticket out—so don’t be embarrassed or retreat from them because of your situation. “They can help you start your new life,” says Annabel Acton, founder and CEO of Never Liked It Anyway, a site where users are able to sell items from past relationships. Your brother can help you find new apartment leads; your aunt, a loan to cover a security deposit; or your BFF can give you her spare flat-screen TV. In Iris’s case, she also relied on her town’s temporary visitors, converting a portion of her apartment into a rentable space on Airbnb that ended up covering three-quarters of the full rent payment each month.
Preventive steps to take now
The sad reality is, 27% of cohabiting couples (there are over 7 million of them, per the US Census Bureau) break up within 3 years of moving in together, according to a report by the Centers for Disease Control and Prevention. So from day one of cohabiting—even if you and your guy are in love gaga land—you should be maintaining your financial independence (there’s no need to commingle your accounts right away, which many couples make the mistake of rushing into, says Pesoli).
Plus, you should be talking honestly about your financial situations, which will make it easier to establish expectations. Unfortunately, Valerie, a 25-year-old retail sales associate and fashion blogger, did not do this. She moved in with a guy who made more money than she did, and rather than telling him so, she spent a year and a half splitting the bill for a lavish lifestyle of traveling and swanky dining. When their love fizzled, “I was left with very little and had to move in with my mom,” she says. Ouch.
If you’re going to sign a lease or buy a house—or even pricey furniture—together, it’s worth considering a cohabitation agreement, which specifies what happens to your joint assets should you part ways (don’t need a lawyer for this; just need something in writing). Without one, “you may have to go to court and start a partition action on the house if you can’t agree on who’s buying the other person out,” says Lois Liberman, chair of the matrimonial practice group at NYC’s Blank Rome law firm. It also protects you should your partner skip town and stick you with all of the bills. “Some people do whatever they can to frustrate the other party,” says Samuel J. Stoia, a family and matrimonial attorney in Livingston, NJ. Don’t believe him? Just take a gander at what one woman had to pay to leave her ex, below.
IF YOU’RE GETTING DIVORCED…
Sally, 43, didn’t realize when she left her husband of 9 years that she would be stuck paying for everything, including his credit card debt (which she was liable for because her name was on the account, too) and his default on their joint mortgage (their house eventually went into foreclosure). After the divorce was finally over, she was out $200,000 and was hit with a damaged credit score that took her a decade to fix. “My advice to others? Be financially independent and never put anyone ahead of your own well-being.”
If Sally and her ex-husband had had an amicable separation, used a mediator to resolve money matters, and filed their own divorce papers, her total costs may have clocked in at under $1,000. It’s when a couple can’t work through their issues that the costs really skyrocket. “If various experts need to get involved to handle child custody, [division of] property, or even substance-abuse claims, you could be spending more than $100,000,” says Stoia, who estimates about 5% of his cases hit the six-figure range.
And who do you think is signing that check? Well, you and your ex could use your joint marital funds to pay for it. Or the partner with the higher income usually must pay a larger percentage of the bill—regardless of who initiated the divorce. So if you’re the breadwinner—which more and more women are these days, lawyers confirm—you may be ponying up for the legal fees. “A growing percentage of women are now paying alimony and child support because they’re earning more than their exes, or these guys were the homemakers in the relationship,” says Stoia.
Once the divorce is over, “many people have unrealistic expectations regarding necessary changes to their lifestyle. My experience with women who’ve been the primary earners is that they are surprised they will have to split their 401(k) savings equally and may even have to pay alimony,” says Karen Milliken, a vice president and portfolio manager at wealth management firm R.M. Davis in Portland, ME. Yep, it’s likely you just doubled your expenses while also slashing your income by as much as 50%.
It may be smart to hire a divorcee fairy godmother, aka a financial professional, for a reality check on how much single life is going to cost you. He or she can help you create a budget for your new circumstances and future plans (i.e., retirement and savings); close shared accounts and open solo ones; update insurance and retirement policies; and, if applicable, transfer ownership of real estate and other property, execute a new will, change a beneficiary, and designate child guardians.
Preventive steps to take now
A prenup: It’s not just for celebrities. It dictates exactly what will happen and who gets what in the event of a divorce, eliminating (or significantly minimizing) the cost of litigation, says Liberman. Although only 2% of Americans have a prenup, a 2015 survey found that 81% of people wouldn’t call their love into question if their significant other proposed one, so it’s not the romance killer it’s been rumored to be. In fact, it could actually be considered a gift, as Katie, a 31-year-old event coordinator, realized after her marriage of 5 years crumbled. Had they had a prenup, she estimates she would have saved about $14,000 in legal and real estate fees. Just let that sink in.
But say you and your man have already walked down the aisle. In that case, make sure you’re involved in all of the financial decisions and have at least one credit card under your name only. “It shows creditors you’re capable of taking care of your own debts and liabilities,” explains Hoffman, which will make it easier to set up new accounts should you find yourself on your own.
If you have kids, treat their finances separately. “The average middle income family will spend $240,000 per child to raise the child to age 18—that’s a big budget to manage,” says Michelle Crosby, a former family law attorney and founder of divorce mediation company Wevorce. She advises opening a separate bank account for each kid, so you can readily understand average monthly expenses, both fixed and variable. Plus, it will be easier to keep the account intact in a separation—with or without a prenup.
CASE STUDY: A breakup bill
Kelly*, 24, a master’s student who was living with her boyfriend for 3 years, shares the hefty costs she incurred in the month following her very messy split.
CASE STUDY: A divorce bill
Andrea, 34, a federal government employee who was married for 2.5 years and has a 3-year-old daughter (from a previous relationship), shares the financial drama 2 months into single life.
This article was originally published by our partners at WomensHealthMag.com.