Ask Chuck: Financial advice for unwanted divorce

Dear Chuck,

My husband is seeking a divorce. I am in shock and not sure how I will survive this financially with two young children. I have not worked since we got married. Do you have a guide or advice to help me?

Unwanted Divorce

Dear Unwanted Divorce,

I am so very sorry, and I’m grateful for the opportunity to be of some help. We do not have a financial guide for your situation, but there certainly are biblical and financial principles that will help. 

Foremost, I do hope and pray for reconciliation. I have seen God restore marriages that have been through devastating betrayal and painful loss of love and trust, as well as those that die from financial stress or lack of spiritual unity. God can do anything, so don’t give up hope. Remind your children that you will be there for them. They will be suffering as well.

Financial guidance

Working through the financial challenges of a divorce requires careful planning, faithfulness, and self-discipline. Emotions can run high, and your strength may waver. Here are some guiding principles to avoid a financial disaster:

• Seek wise counselors: It is critical to surround yourself with wise people whom you trust to give you honest advice. “Where there is no guidance, a people fall, but in an abundance of counselors there is safety” (Proverbs 11:14 ESV). Be sure they have nothing to gain by selling you products or services when seeking their advice. Family, friends, or experienced business leaders from church are possible sources for advice. 
• Consider a spending freeze: Find affordable childcare and help with the children should you need to go back to work. It can take time to build earning power after a divorce. The emotional pain of a broken relationship often causes people to spend money recklessly. Racking up unnecessary debt will only add to the stress of a divorce. Pause all spending until you have a clear plan for replacing the income you will need.
• Prepare for the financial impact: There are lots of tools to keep you organized and prepared for a loss of income or the many costs associated with the divorce. Here are a few:
  • Fidelity has a form to help you organize details.
  • Go to Crown.org and the “Get Help Now” tab to speak with a Crown Budget Coach.
• Common expenses and financial challenges (keep these in mind during and immediately following the divorce):
  • Cost of court and legal fees: an uncontested divorce is often cheaper.
  • Tax consequences: handle properly to avoid surprises. Anticipate the valuation and division of assets.
  • Dividing debt can be difficult. Be cautious.
  • Credit scores may be negatively impacted along with the ability to get credit.
  • To protect credit and any future debt accumulation by a spouse, close joint accounts.

Professional advice

Earning spouses may find their income impacted greatly if alimony is awarded in the settlement. Non-earning spouses face a future of needing to earn enough money to cover bills. The ability to save can be very difficult. I recommend seeking help from a professional financial advisor if you are able. They are often experts in navigating the new financial situation and implications, such as asset valuations or accessing restricted accounts.

Are restricted savings accounts involved?

There is a one-time opportunity to dip into a 401(k) account without a tax penalty for those under 59½. The qualified domestic relations order (QDRO) allows money to be distributed to the account holder’s spouse or dependent without penalty. Unless necessary, avoid dipping into retirement savings for divorce expenses. Social Security spousal benefits can be claimed in certain cases.

Some sources of help and encouragement

• Divorce Care
• The Life of a Single Mom

Going forward

• Track spending and create a new budget with short- and long-term goals.
• Adopt a frugal lifestyle: car, housing, food, clothing, entertainment, etc.
• Avoid impulsive/emotional financial decisions.
• Maximize and seek additional sources of income.
• Reduce expenses: cut the unnecessary ones and negotiate with creditors.
• Seek housing and/or childcare help from trusted family or friends.
• Update W-4 and all insurance coverage and create a new will.
• Pay down debt, starting with those with the highest interest.
• Open new bank accounts and build an emergency fund.
• Establish credit in your name.
• Reevaluate your retirement plan.
• Get a prayer team and trusted “board of advisors” as you begin your new normal.
• Find a healthy community in a church, divorce-care ministry, or small group.

Do you need some education, skills training, or certifications? Crown has an assessment that will enable you to cut through job confusion and help you chart your course. Our Career Direct will encourage you and help you see the way God uniquely wired you so you can find a job you love.

Cast your cares on the Lord

Don’t lose hope. Trade your shame for God’s love and choose to walk in the light. Even in your darkest hours, renew your mind on the attributes of God. Praise Him and look at the many things for which you can give thanks. Take care of your physical, mental, and emotional health as well.  When overwhelmed, seek God’s peace.

"You keep him in perfect peace whose mind is stayed on you, because he trusts in you. Trust in the Lord forever, for the Lord God is an everlasting rock" (Isaiah 26:3–4 ESV). 

If credit card debt is a source of financial pain, Christian Credit Counselors is a trusted resource. They can help consolidate debt and get you on the road to financial freedom.