148: 5 Money Rules That Save You After Divorce

Divorce Ends A Financial Plan

Jessica 0:06

I don't know a single divorce person that doesn't feel like they got screwed in the divorce. In today's episode, we are talking about rebuilding after divorce. What it means for the payer, the receiver, and the spouse who might walk away with nothing. Divorce doesn't just end a marriage, it ends a financial plan. And most people have no idea what to do next. So let's get into it. Hey everybody, welcome back to the Sugar Daddy Podcast, where we help you build a clear financial plan so you can feel confident and in control of your money. To the OGs, thank you for tuning in. And if you're new here, welcome. We are so glad to have you. And we release new episodes every Wednesday. Babe, we are celebrating 10 years of marriage this year, but here we are today recording an episode about divorce. And actually, this came up from an old friend, like an old, old school friend, and I got a text message, and she was like, Can y'all do an episode about rebuilding after divorce? Because I have a story for you. We're not going to get into the story because that is not mine to share. But uh, we have a couple of friends in our circle who are in the processes of filing for and getting a divorce. Um and in most of these cases, the women are the ones who are, you know, a filing and now very concerned about their finances. So that is kind of the backstory. We are having these conversations offline with our friends and helping them nav navigate this. Um, but we figured this was an episode that is worthy to actually record and get the information out there for anybody else who might be thinking about divorce and what that might look like for their finances and or maybe already in the process of filing. So yeah, what do you think, babe?

Brandon 2:05

Yeah. Well, well, we're in our early 40s, so we're at that age where unfortunately, you know, people in your circle are getting divorced, have already been divorced, maybe been divorced a few times.

Jessica 2:17

Yeah. Yeah.

Brandon 2:18

And it's just um, it's the reality. I mean, you know, statistically speaking, 50% of first marriages end in divorce, and then 60% of second marriages end in divorce.

Jessica 2:27

Which I was shocked because you feel I felt like if you're doing it a second time, like didn't you get better, maybe? Like, why is the why is the second divorce rate higher? Or is it because you're like stuck in your ways? Like, I wonder what it is. I wonder what the sign is.

Brandon 2:43

It's a combination of things. I mean, like, I can only base it off of, you know, unfortunately, my mom's been divorced, you know, four times. Um, I think to a certain degree, you do get stuck in your ways as you get older. Um, I think also you carry a little bit more baggage in the sense of things that have happened in previous relationships that maybe you haven't gotten over and you bring it into the next relationship. So I think it's a I think it's a combination of things.

Jessica 3:04

Yeah.

Brandon 3:05

Yeah.

Jessica 3:06

Well, if anybody is listening that's new, hasn't listened to our postnup episodes. Brandon and I went through and got a postnup last year. I guess it was finalized last year. So we have details on that whole process. And really, you know, we're gonna talk about some high-level things that typically happen in divorce, what you can expect, things to look out for. But really, what you want to do is mitigate any of the things that we're going to be talking about today by either getting a prenup before you get married or getting a post-nup if you're already married. And we're thankfully very happily married. I have no plans on getting rid of you anytime soon. Um, but in the event that you said anytime soon, not never. I mean, listen, you know I love you. But in the event that we dissolved our marriage, we've got these things in place because I know, you know, the women that are filing for divorce that, you know, we have in our circles, they are high earners, they are physicians, they are, they got, they got assets. They have been stacking their bag, and now they are extremely worried that half of that is going to be going to their current slash soon-to-be future ex-spouses.

Brandon 4:26

Yeah, because I would say the stereotype is that the man ends up paying alimony or the man ends up spending spending splitting more of what quote unquote he owns. And from our circle, I wouldn't say that's necessarily the case. You know, I I that's, you know, that's happened with people I know, but I also know women who end up having to pay alimony or they're having to split more of their assets because they were the higher earner. So our circle is a little bit different, I would say, than what the stereotypical, you know, situation may be.

Jessica 4:52

Yeah, we have a lot of female breadwinners, a lot of high earners in our circle. Um, and with that, one of the first things I said in our post snup was, I am paying this man nothing. Okay. Let me be very clear. No alimony. I will judge the heck out of you. That that's for a different episode. We're gonna do the sugar daddy after dark, and you're gonna get my real story about how I feel about alimony. Listen, you're not getting a dime, period. That is my stance. So I my heart is already hurting for my friends who might end up paying alimony to these men. And it I just makes me rage inside.

Brandon 5:34

So to make a long story short, the best way to prepare for a possible divorce is a prenup or post-nup. Yes. Long before you even get to that point. And as we've said before in the previous episodes about that, like, you know, a lot of people think that you're planning to fail when you're putting those things in place. And it's like, no, you are putting those in place because the reality is that 50% of marriages in a divorce, and you want to have a plan in place just in case that happens, so that you have a good plan in place while you guys are in a good place, while you're happy, you love each other. And the idea that it's just it's insurance on your love. You know, it's insurance that you hope to never have to use, but if you do, you're gonna be happy that it's there.

Jessica 6:09

And one of

Prenup And Postnup Love Insurance

Jessica 6:10

our episodes, we talked about like I think Brandon is a safe driver, but I still put on my seatbelt when I get in the car with him, right? So this is the your prenup, your post-nup, it's just a seat belt. Your marriage is safe, you're in a good spot, you're you love each other, respect is high, but you're still gonna put on a seatbelt because you're still showing up every day to work, you're still putting money aside in your 401k and your four 403B and in your investment accounts, and you're doing all the things. Now you're preventing the splitting of the things, you know?

Brandon 6:41

So um And it's also also sorry, the point out that, you know, you might not have any assets now when you guys are starting out, but the prenup is also in place for what you're building along the way. Yeah. So, you know, you might get married today and not have much, but you know, the divorce could potentially happen 20 years from now. Yeah. And your life could look very different.

Jessica 6:59

Yes. I mean, our attorney, Aaron Thomas from um the Prenup guy, he said that most of the wealth is built, of course, during our prime earning years. So when people are getting married young and they're like, well, we don't have anything. Why do we need a prenup? We're not millionaires, we're not celebrities. That is the wrong thought to have. So all of this can be prevented. So if you're listening and you're, you know, engaged, get a prenup. If you're newly married or even if you've been married for years like we have, you can still get a post-nup. And hopefully you'll never have to use it because it's it's just love insurance. Just like, you know, we hope to never have to use our homeowner's insurance or car insurance or our phone insurance. We insure all these other things in our lives. Why not our love too? Right.

Brandon 7:44

Also, the thing is the prenup is the same way you should think about financial planning. A lot of people are like, oh, I've had so many people say to me, like, oh, I'll come to you once I have money. Yeah. I'm like, no, like obviously you need to have enough money to pay me because I don't work for free. So but you know, the idea is that I'm helping you grow the money, not necessarily you come to me after you've already had a certain amount of money.

Jessica 8:03

Yeah. So, and the reality is that the average divorce nowadays is gonna cost between 15 and $20,000, right? And that is if everything goes smoothly and it's like very, very normal. We have another friend who just finished a divorce. That thing dragged on. I'm like, we're still in this. How is what what year are we on? And it has been, I mean, astronomically, the cost has been astronomical. So again, putting systems in place like a prenup or a postnup will help prevent you having to spend extra money that didn't need to be spent. Um, and then financial recovery, depending on, you know, kind of who's coming out on the worse end, which historically has been women, can easily take another three to five years because, you know, you might be draining your savings, your credit score might be going down, you might, you know, be starting at 50% of assets because you're now paying alimony or having to share your retirement accounts. All of these things are setbacks that you're going to have to make a plan to recover from. So if you can put a plan in place to prevent it, which you can, that's where we need to start.

Brandon 9:11

Yeah, because normally there's like three categories of whether you would line up in, you know, the aftermath of a divorce. You could be the person who's paying, you could be the person who's receiving, or you could be the worst category where you're the person who's receiving nothing.

Jessica 9:23

Yeah. And I still don't know anybody, even in let's call them amicable divorces, where both parties feel like they got what they deserve, right? Like that just doesn't really happen unless, again, you wrote the rules prior and you're like, yes, this is what we agreed upon.

Brandon 9:40

I would also even say it's an emotional standpoint. Like, you know, mathematically, you may have gotten more than what, you know, was more than fair. But it's an emotional task. Like, you know, your parents separating, your mom, I would say you got a very healthy, you know, in regards to the split. I hope you're listening to the session. It is what it is. I'm just saying mathematically.

Jessica 10:00

Mathematically, even she wasn't happy about it. Yeah, yeah. So, you know, put a system in place, get the prenap, get the post nap, so that hopefully this doesn't have to be.

Brandon 10:10

You know what's funny now that I think about it, I've never actually asked my mom like what happened in her divorces. It's like what how the split was financially. Because like I, from an observation standpoint. Yeah, like as a child, as a child looking at it, I never really noticed that she had to pay a bunch or anything like that. So I don't know if she had things in place beforehand. I've actually never really asked her.

Jessica 10:32

So well, now you we're about to go on a trip. You'll have four weeks to chat with her about all of these things.

What Divorce Costs In Real Life

Jessica 10:40

Um, let's talk about some of the things that you're actually going to have to plan to pay for. So what the divorce actual actually costs. Um, so obviously we're doing legal fees, there could be alimony, joint account closures, credit scores that need to be considered, sold marital assets, right? Like if you own a home, how are you gonna split the home? How are you gonna divide the costs of getting the home ready? Who takes the furniture, right? Like those are all things that we outlined in our postnup. Because I just did not, if we got a divorce, I I'm not gonna fight over a bed frame. Like that's the last thing I'm gonna do with you. You know what I mean? So again, those are the details that you can um you can actually designate in your prenup or your postnup. We have an entire guide, we'll link it. Um, we have episodes on it, we can link those. But what do you want to talk about for when it comes to like the big accounts, like the retirement accounts and things to consider there?

Brandon 11:37

So one of the biggest ones for most people is going to be the possible splitting of a retirement account. And that's what's called a quadro, a qualified domestic relations order. And um, for you know, the people out there, new ones who haven't listened to our previous episodes, I started my financial services career working at Fidelity in the call center for um defined contributions, which is 401k plans. And I remember when, like, you know, I'd get a call in because it would pop up on the screen like, oh, this is in regards to like a quadro. And those were always the worst because you're getting the person calling in who's upset about their account being split. Because basically what it is, it allows you to split the 401k plan or 403B, whatever type of retirement account it is, without having any type of um taxes that need to be paid or penalty.

Jessica 12:21

But when you say split, it's split because of a divorce.

Brandon 12:23

Correct. So let's just say hypothetically you have someone that has $100,000 in a 401k plan, and now maybe the other spouse wasn't working, and now maybe it's split 50-50. So they're taking $50,000 out of your $100,000 and giving it to your spouse.

Jessica 12:37

I wish you would.

Brandon 12:37

Your ex-spouse.

Jessica 12:38

Nope. That's another thing that we put in our post snuff that our retirement counts are ours and there will be no splitting. Listen, I've worked too hard. I'm not giving my money away, y'all. It's just not gonna happen. I love this man, and right now our pot is ours, and I don't think twice about anything. If that was not the case, it's my pot. Okay. So, and he listen, he knows I love this man, and he knows where I stand on this. And I was very clear on this from the very beginning.

Brandon 13:07

Like, oh yeah, she's been like this.

Jessica 13:09

This was not a surprise to him. So, you know, but again, we wanted, we wanted this detailed, we wanted this outlined.

Brandon 13:15

Also, the thing is, too, we're both products of divorce. So it's not even a matter of like, you know, we went into a marriage thinking that that could happen. You know, that's not why you're going into a marriage. No. But the reality is that we we can't predict the future. There could be a plethora of things that we don't control that could happen. And we want to put things, put plan in place for just in case it does happen.

Jessica 13:33

Yeah. Um, what about alimony not being tax deductible anymore? Do you want to, is that something?

Brandon 13:40

Um well, yes. So that's something new as of uh I think end of 2018 going into 2019. Okay. Is that previously when you paid alimony, the person who was paying, it was tax deductible for them.

Jessica 13:55

Oh, as in like it's lowering your income.

Brandon 13:57

Yes. And then, you know, the other person had to pay taxes on it.

Jessica 14:01

Oh, because it's now income for them.

Brandon 14:03

Yes.

Jessica 14:03

Oh, that's changed.

Brandon 14:04

Yes. And that's not beneficial. Oh, no. So it's even worse for the person, it's quote unquote paying. Okay. Because that alimony payment for them is no longer tax deductible.

Jessica 14:13

Oh, ooh, okay. That's a really good call out. Um, sorry.

Brandon 14:16

And like the person who's now receiving it, it's no longer counted as taxable income.

Jessica 14:20

Yeah. Oh, okay.

Brandon 14:22

So it's kind of switched a few things there where I wonder why they did that. Honestly, I don't know.

Jessica 14:27

That's really interesting. Okay.

Credit Scores And Account Separation

Jessica 14:29

Um, the other thing we have to think about, because you know, we live in the United States, credit scores don't really exist in other places, but they do here. And obviously they're very important for various reasons. We have episodes on that as well. Um, but you know, once you get a divorce, you're going to be separating your accounts, you know, your cell phones, your insurances, your credit cards, all of those things. So when you're closing credit cards, your account, your credit score is likely going to drop. It might not be drastic, but if you're if you kind of take a mental check of how many joint cards you have and how many you would be closing at a given time or within a certain window, your credit score is going to drop. So if you've got a strong credit score, it might not be a big deal. You know how to build it back up and how to recover from it. If you're already kind of teeter-tottering and your your score is not looking amazing, you could be taking a hit and it's going to take longer to recover. So those are things to think about as well.

Brandon 15:26

Yeah, because part of your credit score is determined by the amount of credit you have available to you.

Jessica 15:31

Yes.

Brandon 15:32

So when you're closing a card, the available credit that was on the card is no longer there. So it's decreased your overall um amount of credit available to you, which would decrease your score. So that's why I think it's always beneficial to have your own credit cards also. Now you can have joint ones, but also really make sure you have your own because I saw something on social media the other day where I mean, I I hope I hope that it's real and they weren't just making it up. But it was a woman talking about going through a divorce, and she was like, you know, we're going through divorce, and my husband or my soon-to-be ex-husband was telling me, you need to get your own card. And he was taking her off her card. And she's like, She's been a stay-at-home mom for, you know, 15 plus years. She's like, I don't have my own card. I don't have my own account.

Jessica 16:10

I saw that, and it was so devastating. Yeah. Like, and you guys know how I feel about this. If you're new here, this is how I feel. Ladies, women, you need to have your own money. You need to make your own money. You need to save your own money. You need to have assets in your own name.

Brandon 16:27

And the thing is like I well, like with us personally, like, I never wanted a stay-at-home wife, just never want to be a stay-at-home mom. And that works for us. So for those individuals who want to be stay-at-home moms, because that's that's one of the hardest jobs I can't even imagine doing it. You could put things in place to still protect yourself, even if you're not working outside the home and bringing in income.

SPEAKER_01 16:48

Yeah.

Brandon 16:48

You can have, you know, spousal IRAs. You can have, you know, um, make sure that you have access to all the accounts, make sure that you have the login, stuff like that, so you can access the money. So that you still have access to it. I would say I would be cautious if you were going to be a stay-at-home stay-at-home mom or a stay-at-home wife, and your your husband was hesitant to provide that stuff for you. That'd be a huge red flag for me.

Jessica 17:12

That's a whole nother episode, babe.

Brandon 17:13

Yeah. Yeah. But that's talking about in regards to, you know, the possible divorce stuff.

Jessica 17:17

Yeah, absolutely. Well, and then also any kind of sold marital assets that might trigger capital gains tax and other taxation uh events.

Brandon 17:28

Yeah. So for example, like um, if you're selling a home, depending on what the house sells for and you know how much gain you have on it, can make a difference on whether or not you have to pay any taxes or don't. Luckily, with a primary residence for you know, a joint residence, you have up to $500,000.

SPEAKER_01 17:44

Okay.

Brandon 17:44

That would be, you know, you having capital gains that you would have to pay taxes on. Anything above that, then you might possibly have to pay some taxes on. But also the thing is too, like, for example, if if you have joint investment accounts. So for example, the joint investment account, if you're gonna split it, you might have some taxes there depending on how that's done.

Jessica 17:59

Yeah. So those are all things to think about and to be aware of. I think if we're gonna break things down into the paying spouse versus the receiving spouse, obviously the paying spouse is gonna be the one that really feels like they're getting the short end of the stick because you're thinking about equitable distribution of assets. Are you dividing them 50-50 or is there a different way that makes it more equitable or fair, right? If you're thinking about, you know, maybe somebody took inheritance money and put it on the down payment of the house, but now we're splitting the assets or the the equity from the home 50-50. Does that make sense when one person technically put down more money? You know, things like that happen all the time. So those are things you'll you're gonna want to consider. That pesky alimony payment again, that could easily be $1,500 to $3,000 a month, depending on, you know, obviously what your income in addition to possible child support also there. Correct. Yep.

Brandon 18:54

Depending on like what the custody split is, if it's if it's 50-50, or is it one parent has full custody? Yeah. That's gonna make a difference in regards to how that payment goes.

Jessica 19:02

Absolutely. Um, you know, you're probably not gonna want to live in the same place for very long, either during or or post-divorce. And in most states, you have to actually legally be separated and not living together. Um, so now what's one person doing? One person is renting, maybe they're buying something else. That's obviously an expense.

Brandon 19:21

Um before the divorce is finalized.

Jessica 19:23

Exactly. So unless you're moving in with a friend or family member and paying them rent, you're gonna have to, that's gonna be an added, quite significant expense since where we live is usually our highest expense. So that's something to think about. Um, emergency fund. I know a lot of people who they're essentially draining their savings in this process, right? Of like, okay, I've got to find new furniture, I've got to find another place to live, I've got to get my own car, I gotta do my own cell phone. Like all those things cost money. And so you might end up either putting yourself in debt and or draining emergency or savings that you've been, you know, kind of saving up for. Um, and then your discretionary spending is going to increase.

Brandon 20:07

Um Yeah, the biggest thing there is going to change. So basically, when it happens, your entire monthly cash flow, you're gonna reassess that.

Jessica 20:15

Yeah.

Brandon 20:16

Because of what you may be paying out in regards to divorce, maybe some of the things that, you know, assets that you had that were split in half.

Jessica 20:22

Right.

SPEAKER_01 20:22

And so you're gonna have to make changes responsible for.

Brandon 20:25

Exactly. You're gonna have to make changes to exactly how you're spending your money, how you're saving your money, you know? Yeah. So for example, one of the things is with um if you're someone that's getting divorced and you're 50 and over and you had to um uh split a portion of your retirement savings. Now is one of those times where you might want to take advantage of the uh ketchup contributions to a 401k plan, where you can contribute, you know, an additional $7,500 to like say a 401k plan or 403B, or you can also um contribute additional amounts to an IRA.

Jessica 20:54

Okay. So if you're 50 and up, you've got like a little asterisk.

Brandon 20:58

Yeah, you get an additional amount above, you know. So for example, for 2026, it's 24,500 that you can contribute to a 401k plan or 403B. You get an additional 7,500 if you are 50 or older.

Jessica 21:10

Okay.

Brandon 21:10

So that would help, you know, kind of start to make up for the amount that maybe you had split.

Jessica 21:15

Right. Okay. Well, that's good to know. And I think just in general, right, when you're doing things as a pair, you're splitting things in some way, right? But now if you're doing things as as a single individual, you should plan for your discretionary spending to rise on average by 30% post-divorce. Yeah. So you've got to really, really be mindful of your spending.

Brandon 21:37

Yeah, and the thing is too, like I said, it's really sitting down and redoing your financial plan. Like you said, you when you were married, you had a financial plan hopefully in place for how you guys are moving together. But now that you're splits, you have to redo that plan. So that's gonna be like, you know, one kind of the big things is rebuilding an emergency fund if you don't necessarily have one. You know, getting that three to six months worth of expenses in a high yield savings account. Yeah, that's gonna be a huge one as far as a good starting point.

Jessica 22:00

Yeah, absolutely. Things to think about. Um, I think too, for the receiving spouse, if you're thinking about the big things like alimony, it's usually on an average one year of support for every three years of marriage. That means it's not going to last forever.

SPEAKER_01 22:16

No.

Jessica 22:17

So there will be an end date to when your alimony runs out. So that's something you need to plan for.

Brandon 22:22

And the thing is, sometimes it can be paid as a lump sum. So I've seen a scenario where I'm working with someone where they got that as a lump sum. And the nice thing about the lump sum was is that this kind of created their emergency fund automatically for them.

Jessica 22:35

Yeah. Yeah. If you don't have to use it, then that's a great way to turn that into a new pot, which is great. Um, you know, again, starting over with credit. If you do not have your own credit, if loans were never in your name, I mean, you know, once uh Brandon sold his house and then we bought the next house together, which was technically in our in my name and he was on the deed, um, we didn't have a car payment at the time. Like you didn't have varied loans.

Brandon 23:04

Also, the thing was is that I had started working for myself. Yes. And I hadn't been doing it long enough. I hadn't been doing it for two years yet.

Jessica 23:10

Right. And so there was all these different factors. So the new house that we moved into was solely in my name. You were on the deed, but you didn't have varied credit. And in order to increase your credit score, they want to see that you have mixed credit. You know, they like to see personal loans versus mortgagers, mortgages versus credit cards versus, you know, secured loans, et cetera. So car payments, for example.

Brandon 23:34

Um once again, credit in the United States, a credit score is a game.

Jessica 23:37

It's a game. Learn the game, yes. And so those are things, if you don't have that, right? If you've maybe weren't on the mortgage, you don't have a car note, et cetera, you need to think about how are you going to establish credit. So either opening your own credit cards, um, or if your credit score is not high enough to get a good credit card, then you can go and seek out a secured credit card that typically requires somewhere between $200 and $500 as a deposit, but it reports to all three credit bureaus, and it's the fastest way to build individual credit from scratch.

Brandon 24:12

Yeah, we have some previous episodes that do talk about how to build your credit score and details about that as well.

Jessica 24:17

Yes, there's five factors to consider when it comes to your credit score. And then the big one, because again, we live in the United States, is health insurance. Most of us are on one of the partners' health insurance, right? Um, and so thinking about that 60-day window after divorce to enroll in a new plan before Cobra kicks in, uh, which, you know, could easily rob you.

Brandon 24:41

Yeah, because outside, so normally you're only able to make changes to your health insurance during open enrollment. However, there are things called qualifying life events that allow you to make those changes throughout the year when those events happen. And obviously a divorce is one of those events where you're able to make the changes.

Jessica 24:56

Yeah. Yeah.

When One Spouse Walks Away

Jessica 24:58

Um I think if we talk about the spouse that walks away with nothing, which hopefully, I mean, fingers toes, eyes crossed, that that is not your scenario. But if you're thinking about the spouse that has been staying home with the kids, has not been working, has not been making an income, doesn't have their own accounts, doesn't have their own credit, you know, has uh probably a five to 10 year gap on their resume. I mean, oh, rebuilding from that is going to be hard.

Brandon 25:27

Because the thing is too, even in this scenario where you're like thinking about somebody walking away with nothing, they might have something, but it's nothing in comparison to what they should have gotten from the divorce.

Jessica 25:38

Um well, and the value, I mean, being a stay-at-home parent is it's not paid, but it is valuable. And I think the average of like if you combined all of the things, right? Housekeeper, chauffeur, cook, tutor, all the things, if you put those all together as like one lump sum profession, it's like $180,000 a year.

Brandon 25:59

I I'm trying to remember. I I saw this the other day. I can't remember who the celebrity it is, but there's a celebrity going through a divorce, and the wife had signed a prenup that was not good. The thing was, she had an attorney tell her not to sign it.

Jessica 26:15

And she signed it.

Brandon 26:15

And she still chose to sign it anyway.

Jessica 26:17

And she's like watching the colour.

Brandon 26:18

And it's like on video, like saying, like, you know, showing that, like, hey, you we tried to help you.

Jessica 26:23

Yeah.

Brandon 26:23

And so like the prenup's gonna probably be held up because no one forced her to do it, even though it's not a fair prenup.

Jessica 26:30

She was on video signing the prenup to show that she was like in a coherent state, she was not being coerced, she was not being pushed, or, you know, like she was there under her free will.

Brandon 26:41

And I mean, she's still getting like a million or something like that, but it's nothing in comparison to what she should have gotten based upon what they built and her being a stay-at-home parent.

Jessica 26:48

Because I think the estate was what, over 300 million? Something ridiculous. And she's walking away with that. She's walking away with nothing in comparison, you know. Um, so yeah, one in five stay-at-home spouses has no individual credit profile. They have a huge gap in their resume, they have no retirement account in their own name. Um, and so you have to rebuild. And again, if you can get ahead of it, and it's okay to be a stay-at-home parent. It's the most noble thing you can do, honestly, but you can still put protections in place. You can still have your own retirement, you can still have your own savings, you can still have a side hustle. I mean, you can do the things.

Brandon 27:25

And that's my issue with the whole social media conversation of trad wives. Oh, is that if you want to be a trad wife, that's fine. But I've never heard anyone have those conversations and follow it up with, hey, if you're going to do this, put these protections in place.

SPEAKER_01 27:39

Right.

Brandon 27:39

They never, they never talk about that. No. Because you could be, like I said, you could be in a scenario where you've been a stay-at-home wife, stay-at-home mother for you know 15 plus years, raised your kids, everything, and then all of a sudden your husband wants to leave you.

Jessica 27:51

Yeah.

Brandon 27:51

And then you have nothing.

Jessica 27:53

Yeah. Your Gucci bags and Birkins are not going to put a roof over your head.

Brandon 27:59

I'm not going to even say, like, you not even to like that degree. Like, you just, there's so many things that you could put in place just to make sure that if the divorce happens, you're protected.

Jessica 28:07

Yeah. Well, what is it? The the hand that feeds you can starve you?

Brandon 28:11

Exactly.

Jessica 28:11

You know, so you just need to be careful.

Brandon 28:14

And that's why, like, especially having a daughter, um, I'm a huge proponent of like making her own money, having control of her money so that you are not dependent upon somebody else for um from a financial standpoint.

Jessica 28:26

Yeah. Yeah. We want her to always be able to walk away from situations that are not serving her. So if you are in the situation where you really are walking away with just bare bones, close to nothing, then, you know, in the first 30 days post-divorce, you need to open your own individual accounts, apply for a secured credit card if your credit is good, apply for credit in your own name so that you have an option to fund whatever it is that you need to fund, right? Because you're going to be rebuilding and kind of starting from scratch. You might also need to be, and I'm saying this with a grain of salt because of where our government currently is, but if there are government assistance programs, right? If you can file for SNAP benefits for Medicaid, childcare assistance, like whatever you can apply for that will help you in some way apply. This is not the time to be prideful. This is not the time to have feelings about getting a handout. This is not what that is. If there is aid available to you and you qualify, get the help that you deserve.

SPEAKER_01 29:30

Yeah.

Jessica 29:31

Um, and then, you know, community property states like California, Texas, Arizona, uh, where typically they split assets 50-50 in that equitable, equitable distribution. Um, you know, you might get something, which hopefully you're getting something. Have a plan for what to do with that money.

SPEAKER_01 29:52

Yeah.

Jessica 29:52

You know, have a plan, whether it's it's a big number or a small number, do not be reckless, do not, you know, do not live above your means.

Brandon 30:00

And that's where it goes back to the whole planning aspect because now you're having to reassess everything. So for example, you know, if you're going to be renting an apartment, being conscious of what your rent's going to be, utilities that come with that, if you having to get your own um health insurance, you have to assess all those numbers and be very smart about how you move forward, especially initially, if you're not receiving that much.

Jessica 30:21

Yes. Yeah. Um, do you want to talk about social security? Because I know there's that little caveat um that I think is important for people to know for for older people.

Brandon 30:29

Yeah. So if you have been married for at least 10 years and then you end up getting divorced, you might be eligible to claim some of your former spouse's earnings in regards to Social Security benefits. And that's based upon up to like, you know, 50% of their benefits if theirs is more than yours.

Jessica 30:49

So it doesn't reduce your ex-spouse's benefit. So there's no, I mean, you don't even have to involve them. It's just something that you're like owed, essentially.

Brandon 30:59

So if you had worked, you know, just even let's just say you were even working, you but you weren't working as much because you were kind of being more of a stay-at-home parent and your spouse made significantly more, you may be able to get an increase in what your social security benefit would be based upon their earnings and not just solely yours.

Jessica 31:15

Yeah. Yeah. Which I think is, you know, even if it's a hundred or two hundred extra dollars, apply and and take what is totally.

Brandon 31:24

Or no, definitely look into it. If that's the case and you are older, it's getting separated, definitely look into it and see one if you're eligible for it and what that amount would be.

Jessica 31:33

Yeah. Yeah. And then you can also, I mean, there's tons of resources online now, but the Department of Labor has um a career site where you can look into things like job training, resume help, certifications for displaced homemakers. So use the resources that are available to you so that you hopefully are able to set yourself up as as strong as possible, even though um this is not an ideal scenario.

Brandon 32:01

I mean, that's I mean, yeah. No one is looking, like I said, nobody's going into marriage with the idea of getting divorced. Yeah. So it's never going to be the ideal scenario. But the thing is, is that once it occurs, you have to do the best you can to put a plan in place to move forward.

Jessica 32:17

Yeah. So this is this is a lot. And I think this is really just kind of the tip of the iceberg.

Brandon 32:22

Yeah, because there's obviously all different individual situations. Right. And this is just if there's basically no major asset disputes. Obviously, it can become significantly more complicated the more assets you have, possibly the longer you've been married, children, all those additional things add more complexity to it.

Jessica 32:38

Yeah, absolutely.

Five Rules To Rebuild Afterward

Jessica 32:39

But we kind of wanted to give you five rules if you are going through a divorce or if you're, you know, newly post-divorce of how to hopefully get yourself into a better financial situation after the divorce. And the first rule is to wait 90 days before making any major financial decisions. So whether the number is great or not great, you don't need to be buying a beach house, you don't need to be buying a car, you don't need to make any major financial decisions and or purchases.

Brandon 33:09

Yeah, because the biggest thing there is that you want to make a decision based on logic and not emotion.

Jessica 33:14

Yes, rational, rationale, not emotion. Absolutely. And then stability before growth would be number two. So definitely if you need to rebuild your emergency fund, get your emergency fund established before investing.

Brandon 33:31

100%. Um I'm working with a client recently who unfortunately is going through a divorce later on in life and didn't expect it to come, and you know, got a lump sum of money in regards to alimony and was asking me about investing it. And I was like, that's not step one, two, or three. You know, we want to obviously make sure that you have an emergency fund that you're able to get it used to your monthly expenses. So you want to make sure you take care of those basic things first before you jump into the investing aspect.

Jessica 33:55

Yeah. And I mean, if you've been around with us long enough, you know how we feel about investing, but you have to have the emergency fund because the emergencies will come.

Brandon 34:05

I mean, the thing is, if you can't, if you can't get through today, tomorrow, or next week, that's what you need to focus on first because the investing is a much longer plan.

Jessica 34:15

Yes, absolutely. So emergency fund before investing. Number three, calculate your actual monthly, monthly costs of living as one person or living uncoupled, because you might still have your children and your pets, et cetera. But what does that look like? How are your finances changing? Um, and then and and track that. Again, track that discretionary spending. You know, everything is is going to look a little bit different.

Brandon 34:40

So we monarch is a great tool to use for that.

Jessica 34:43

Yeah, we'll link our monarch. You can get 50% off the first year, super easy interface. It looks amazing, and it gives you your full, complete, comprehensive financial picture all on one screen. We really, we, really love it. Um, and then this is a big one. Update your documents. So update your will because I know you don't want your ex getting your things. Update your beneficiaries because I know you don't want your ex getting your things. Um, life insurance, power of attorney, like all of that.

Brandon 35:18

Yeah, checking accounts, investment accounts, everything and anything that you could potentially have named a beneficiary on. Update that immediately. And once again, that's also why it's really good to work with uh an advisor or an insurance agent that is proactive. You know, I had, you know, buddies of mine that have gotten divorced and they were not reaching out to me saying, let's update it. I was like, I know you got divorced, let's update this now.

Jessica 35:42

Yes. And you've had to politely tell somebody uh from an inherited account back in the day that that life insurance, you cannot talk to her about that because she is not the beneficiary.

Brandon 35:54

Yeah, I did not put the policy in place. I was just the person who had to service it after the person had passed away. And it turns out they didn't update the beneficiary.

Jessica 36:02

And it was a pretty, pretty sum of money.

Brandon 36:05

And uh I want to say it was about 600,000.

Jessica 36:08

Yeah, that's I mean, I'd be pissed if I found out that the wrong person got my coins. So you those are the things like you're gonna be, you know, you're gonna be drained, you're gonna be exhausted, you're probably gonna be emotionally distraught. Maybe not. I don't know. But I feel like most people would be in some at some level or at some stage, do the things.

SPEAKER_01 36:31

Yeah.

Jessica 36:31

Take take the 20, 30, 40 minutes and update your documents so that everything is in order. That's really important. So number four, update all of your things. And then number five, get support, build a team, get the CPA, get the C the financial advisor. If you need a credit counselor, if you need somebody to help you get out of debt, you know, you can always come to Brandon. We have tons of amazing people in our network that focus on solely debt reduction and financial counseling. Um, you know, you don't have to go through any of this alone. There are so many wonderful people, including Brandon, um, that can hold your hand through this process so that you can make sound decisions and really have guidance in what your next steps are going to look like.

Brandon 37:15

I think, you know, obviously there's an aspect of having to be able to pay for all these different professionals.

Jessica 37:20

Yeah.

Brandon 37:21

But it could be so beneficial because, like I said, normally going through and coming out on the other end of this, you're you're in an emotional state. And you're not going to be able to maybe think through all these things. One, you don't know them, possibly. And then also you can't think through them going through the emotions that you're going through.

SPEAKER_01 37:39

Yeah.

Brandon 37:40

And it could be very helpful to have someone that is removed from there and it's professional and can help you one, pinpoint all the things that you need to do and also make sure you get them done.

Jessica 37:48

Yes. Yeah. Holding your hand step by step for that accountability piece. I think, you know, divorce is a financial event. It is a, it is a milestone. It's not a pretty one, but it is a milestone and it is going to change your trajectory of what your future is going to look like. So treat it like a recovery stage, right? Like you need support.

Brandon 38:11

The number one thing that can be a detriment to you building wealth is divorce. That's the number one thing.

Jessica 38:18

Yeah, I believe it. I believe it. I mean, we've seen it, we've heard it.

Brandon 38:21

Who you marry makes a big difference in how you're able to, or if you're able to build wealth.

Jessica 38:26

Yeah. We had um our guest Bola was on, and remember she said her dad always said, never marry a liability. I like that one, yes. Yeah. So listen, nobody's getting divorced, nobody's getting married with plans of getting divorced. I think everybody that we know, you know, had best intentions and things happen, you know. So there is light at the end of the tunnel, there is support, people can help hold your hand and guide you, whether you're the payer or the receiver, or if you're walking away with quote unquote nothing. It doesn't have to be the end.

SPEAKER_01 39:02

Correct.

Jessica 39:03

There is still light at the end of the tunnel. So reach out to us if you have any questions. Hopefully, this episode is helpful. I think the biggest takeaway is get ahead of it, have a prenup or a postnup. If you can prevent it from happening, let's prevent it from happening. Um and get the prenup or the postnup. We'll link our attorney's information below. He's absolutely fantastic. We can't recommend him enough. Um, and reach out with any questions that you have and share this episode with a friend. If you have not yet left us a review, please, please, please do that. Um, it helps get our podcast in front of other people and we love reading them. So um thank you for tuning in today, and we'll talk to you next week.