DIVORCED: Karen Turner
“I’m an excellent housekeeper,” Zsa Zsa Gabor once joked. “Every time I divorce, I keep the house.” While the actress and socialite may have benefited from divorces, for most people, the process is an emotional and financial blow to the gut. Take Karen Turner, 43, a partner at a medical malpractice law firm in Washington, D.C. While Turner has a turbo-charged career and earns a six figure salary, the fact that she’s ultimately on her own to survive is a reality she faces every day.
“When you’re the only income for the household, you have to have some kind of net to catch you if something happens,” says Turner, who has a 12-year-old daughter, Kendall, from her marriage that dissolved in 2000. “You have to know how much is coming in and how much is going out and save something for a rainy day. Because something’s always going to come up,” says Turner.
Turner has adopted an unwavering focus when it comes to managing her finances. She has paid down a $45,000 college debt to about $10,000, which should be eliminated shortly. She shares custody of her daughter with her ex-husband, which means expenses are defrayed between the two of them. And she’s cut back on vacations and tried to live a simple lifestyle, so that Kendall can attend private school and enjoy a growing 529 plan of $14,000 so far.
Experts say it’s important to be on top of your finances throughout the marriage. What you don’t know about your assets and liabilities as a couple will hurt you. “When divorce occurs, men might lose 20% of their income, but women often lose 50% to 75%,” says Logan. “That’s because women are often not in there managing money side-by-side. So they get the short end of the stick.”
If possible, freeze or close joint accounts before the divorce so that you’re not financially liable for expenses that are not yours and to keep your credit in tact, advises Freeman. Sit down and map out not only a division of assets, but outstanding debts; get it in writing, have it notarized, and included in the divorce decree. Have your own credit history already up and running, with your own credit cards and your own accounts, because without a good FICO score you’re not going to be able to do much of anything on your own.
Most importantly, start thinking like a single person. That means downsizing your lifestyle to adjust to new realities. “You might think that you’re entitled to your old standard of living, but in truth neither of you can afford that anymore,” says Wall. “At best, you’ll have half of your old assets. It’s not fair, but then, divorce is never fair.”
– Have a team on your side. A solid mediator or divorce lawyer, along with a financial planner, will set the stage for your life after marriage.
– Think as a single person. It’s hard to shake old habits, but cut back spending and crank up your own retirement savings, because your assets as a couple have been chopped in half..
– Have a cash bridge to a new life. To deal with the steep drop in income, have liquid assets in place so that you don’t have to raid your 401(k) or rely on high-interest credit cards to make it through.
– www.morningstar.com: When you’re in your prime earning years and are in sole charge of your own assets, this site provides the money know-how you’ll need.
– What Women Need to Know About Divorce: Workshops around the country, created by Candace Bahr, to prepare women financially and emotionally for life after marriage (learn more at www.wife.org/secondsaturday.htm).
– www.divorcenet.com: An excellent jumping-off point for financial advice, legal avenues, and state-specific divorce resources.