This is the seventh in a series of posts on ‘My Responsibilities’.
No-one likes to talk about money and I am going to break through that barrier and talk about it anyway. We talk about happiness yet are reluctant to admit the part money plays in that or its role in our sense of security, one of our basic needs.
To comprehend the financial impact of divorce, there are issues to be understood.
A. Where Does Money Come From?
- Superannuation, retirement funds, investments, savings.
- Earnings through employment, business.
- Government pensions, charity, inheritance
B. What Are Our Needs From Money?
- Essential Needs: Shelter, basic living costs.
- Non- Essential. Lifestyle, discretionary, savings, gifting, debt reduction.
C. How Much Money Is Enough?
Studies show increased stress in people who cannot meet essential needs. Above that, happiness levels rise to a point. Thereafter, increasing levels of income do not produce a greater level of happiness.
D. How Much Money Do I Need?
Approaching sixty, I would be happy if I owned my home, was debt-free, had adequate retirement funds to provide a comfortable lifestyle, with a little savings tucked away. I am not there yet.
E. What Is a Comfortable Lifestyle?
A basic lifestyle provides only for essentials. A modest lifestyle provides some non-essential items such as insurance, communication and owning your own car. A comfortable lifestyles allows some lifestyle choices such as occasional travel, entertainment and hobbies but nothing extravagant.
You need to account for higher costs in clothes and transport if working, additional costs if you have dependents, any house mortgage / debts, and amounts to put away in savings.
What Is The Impact Of Divorce?
I was travelling along earning a living, leading a comfortable lifestyle, and accumulating savings. After divorce it will be gone – the accumulated savings, the comfortable lifestyle, the means of earning a living.
(a) Depleted asset base
Approaching sixty, we had our house and investments for retirement. One important point to understand in divorce is that, even though one may have a sound ‘total asset’ base, as far as providing for living costs into the future, only those assets available for investment can be counted, not those funds tied up in the home. Come divorce, there are two houses to come out of our total asset pool, one for me, one for him.
The remainder of our assets are crumbling away in divorce costs, forced sale of investments in a poor economic climate, and the impact of the divorce on the business value. This depleted asset base will be halved and the resultant asset base for each will be about one fifth our original investment base. This is, looking at part A above, a catastrophic change to financial affairs for someone approaching retirement.
(b) Earnings through employment or business
My new asset base, if I retired today, would struggle to provide me with basic living costs throughout my retirement years. As that is distressing, I initially chose to continue with the business. After my epiphany, and wanting closure on our previous life, the business will now go. There goes the second source of money from part A above, the means of earning a living.
(c) Impact On Lifestyle
As a single person, my living costs are as much as three quarters of that of a couple, yet the financial ramifications of divorce will see me losing both my source of earnings and sound asset base.
I have pondered and researched these impacts. What I have learned is:
1) I am better off than many. After divorce, some end up with just their home, no home and / or mountains of debt.
2) What I previously thought was ‘comfortable’, was in fact a ‘luxury’ lifestyle, (though still not extravagant). What I previously thought were ‘essentials’ (such as owning a car and having insurance), are in fact discretionary.
3) Money does not make you happy. Inner peace makes you happy. However, there is a minimum money requirement for peace and happiness. If you don’t believe me, watch this closing movie scene where Will Smith finds himself out of the soup kitchens into secure employment.
How I plan to provide myself with a level of happiness that, for me, means a ‘comfortable’ lifestyle will be the topic of my next 2 posts.
Image courtesy of [CoolDesign]: FreeDigitalPhotos.net
Spring into Summer 
My thoughts and prayers continue to be with you as you dig yourself out of this mess. i have so much admiration and respect for your ability to A. face head on what is and B. Strategize a way out.
xo
Diana
Thanks. Sometimes it takes quite a while to get to the ‘facing it’ stage – 18 months in my case – and to have a really hard look at the financial fall-out, simply because initially one is so wrapped up in the emotional fall-out. Having a second source of pain is simply too much to bear. However, facing it is the only way of coping with it or (eventually) getting yourself out of it. Thanks for your support.
I wish you continued success my friend. It sure seems you have what it takes to get through.
xo
Diana
I sincerely hope out of all this you’ll be left with enough to be able to enjoy your retirement as much as possible. I’m sure in the end you can still get a lot of enjoyment out of life. But, gee, I can see there’s a tremendous amount of work involved before everything is as it should be and you feel safe and secure again.
I wish you all the best in your retirement and a long and healthy life.
Thanks so much for your well wishes. There are many ways to be happy in life. I am strong and determined and I have a belief in myself that I will get there – despite the continuing set-backs.
Thanks again.
This topic is profoundly important. Thank you for stepping out of the comfort zone long enough to put it out there. You are a very brave, intelligent woman Almost Spring. Sending positivity…keep writing. You make a difference. xx
Thanks for stopping by and your kind comment. I really appreciate it. People who send me positive messages are like angels of light in the dark.
I have checked out your blog. I am busy the next few days and when things quieten down, I will return to it and get back to you. There is a blog I follow written by a woman who came out of a similar situation as yourself. She is 10 years down the track now, re-united with her daughters and life has moved on to a positive place. She writes on her life now but there is the occasional post on her past. If you hunt a bit through her posts you will find them, or you could write to her. Her blog is
ayearofmakingadifference.com
Thank you for sharing…you are wonderful in so many ways, Elizabeth.
I got divorced for the 3rd time at 60. It has made the prospects for retirement tenuous at best. Without Social Security, an eventual retirement would be out of the question. So you have to hike up your pants and be glad for what you have; do what you can. That is often times the price of freedom.
I like how you term the current situation as ‘freedom’.
When I really think about it, that is what it is, although I had not thought of it in those terms before.
Time for a turnaround in thought processes. Thanks.
I have to say that my lifestyle, even seven years later, will never be the same. I lost a home that I held holidays in, had built from the ground up. I took a lot of my retirement out, have only enough to live 2 years on, if I needed it! I have found my simple one bedroom apt. comfortable, packed with all my special and most favorite items. I have found a lot of free, community organized activities. Love the concerts in the park in Delaware behind the fire station, the Columbus Commons and concerts that held there beside the carousel. It is not what you have in possessions but your family and friends, sometime maybe a partner, that make all the difference. I was working as a teacher, taking Master’s classes to get done by 2008, working also as a waitress at Cracker Barrel, my life was so stressful while my ex-husband sat in a chair, claiming he was not depressed but unemployed for 3 years! I got half the debt, did not reach the goal of Master’s so lost my teaching job, they gave me a ‘retirement’ party that was so well attended and wonderful I cannot complain. I do manual labor for the first time in a non-air- conditioned “factory” Advance Auto distribution center. I hope you also will find Peace, I have!
Thanks so much for your long and encouraging reply. I really appreciate it. It is so comforting to read of others who are a bit ahead of me who went through similar things and have found peace and happiness. Your comparison of your ‘now’ with the stressful situation you were previously in made me think. One has to stand back and look at the whole picture sometimes. Thanks for your words of kind wisdom.
Have a great day.
My thoughts are with you. You’re doing a wonderful job of thinking thought the issues, and I feel confident that you’ll be successful in obtaining a comfortable lifestyle. I look forward to future posts about what comfortable means to you.
Thanks for your support. It gives me lot of encouragement when I get feedback from others to keep going.
Oh my, goosebumps and a lump in my throat…I have always loved Will Smith’s acting, and that movie in particular.
Elizabeth, I am sending you a big virtual {{ HUG }}, and I’m wishing for you all the things that will help you put your life back together. Stay strong!
Thanks for your encouragement. It will take time. I will stay strong then step by step, I know I WILL get there.
Thanks 🙂
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I’m in a similar boat. I went from being completely squared away with a comfortable life in my retirement years to today’s reality, which is not knowing if I will ever be able to retire and certainly not being able to own a home again. At 50+ and having had too long a break from my previous career, I’m perilously walking a tight rope with what seems like only baby steps towards figuring out how to survive–in your definition–in any “modest” kind of way. I have to speculate I will always need a car, as living further away from town centers is likely the only place where I’ll be able to afford to make ends meet. Nothing about that standard of living bothers me too much. What worries me is not being able to even manage that much.
I feel for you and I am not there either yet. My posts tend to be what I am positively trying to strive for. I have actually gone backwards the past two years – which is hugely distressing – and my first goal has been to stop the decline. I think that I have achieved that. I am lucky that I should be able to hold onto my house, downgrade to a smaller house, and survive. Where to live would be my next question because, as you say, some areas are less expensive than others. The ‘probably having to work until I am seventy’ is IF I choose the comfortable lifestyle over the survival / modest ones. As time goes on……I am not sure if that is necessary or even what I want. I do remember what you said in a previous comment about finding what makes you happy, even if less financially secure. That is SO correct.
Thanks for your comment. i always appreciate them.
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I really admire you creating this blog for this purpose, Elizabeth. I can see it would help so many people. I love the focus you’ve given yourself in all this.
When I left my marriage some 20 years ago, it was so simple. I immediately started working and all my income was my OWN!!! Before, I had to declare my income to my husband, put it in a joint account, for us to make joint decisions…. but his car, his beloved Holden was always needing something from a sun roof to a rear spoiler, and I just loathed all my earnings were being wasted on his love of his Holden. So when I say simple, it was simple joy that at last my income would be my own!
The way you identify things here, work through them is just great.
I love on your side bar how your goal is to get rid of two boxes of “stuff”. Wonderful 🙂
Ha-ha, I can relate to the money spent on HIS hobbies. It is so liberating once all your money is your own. I never knew it could be so freeing.
Oh yes, the side bars… I must update them again. thanks for the reminder.
Thanks for your encouragement of my writing. I really appreciate it.