Financial freedom and divorce are two concepts not normally held together. In many situations, divorce and financial freedom tend to be two goals that compete with one another. You will find people who delay or avoid divorce to not suffer financial harm. In other situations, people will bite the bullet and get divorced knowing that it will cost them dearly from a financial perspective.
Where you fall in this assessment is completely up to you. There are certainly circumstances that make a divorce more expensive. Beyond the actual expenses of the case itself, you find that a divorce may hinder your financial life. All the planning that has gone into your finances may be thrown out the window when you consider that a divorce reverses many financial gains.
However, this is not a given. Just because you have filed for divorce does not mean that you must necessarily accept a poor financial outcome. Rather, many people who go through a divorce find a bright financial future on the other side of the case. This is what we will be discussing in today’s blog post from the Law Office of Bryan Fagan. Namely, what benefits you may be able to take away from a Texas divorce case.
What is financial freedom?
Financial freedom is a term that became quite popular around two decades ago. The idea of being independently wealthy had been something which existed for centuries. Self-sufficiency and wealth are certainly positive qualities in the estimation of many Americans. We tend to look at self-sufficiency as a key determiner of wealth and success. As a result, an independently wealthy person does not need to answer to anyone. That independence and the options that came with it come across as quite attractive to many Americans.
Financial freedom is as much a state of mind as it is a reality. Saying that you are financially free means you can make your own choices when it comes to your life. For example, even if you enjoy the work that you do there is a certain amount of consideration you must make as it pertains to your work. Being able to show up each day and perform the tasks of your work requires you to fall in line with another person’s schedule. Financial freedom, however, allows you to forge your path and make your own decisions.
At the same time, financial freedom is a mental state. Having the ability to determine where you are going in what you are doing, and a given day is incredibly freeing. Financial freedom allows you the opportunity to make those sorts of choices for yourself. Sure, the finances as a part of your life are a major benefit to financial freedom however, being able to attend to matters involved in your own life without concern for work is freedom in and of itself.
Does financial freedom mean not working?
One of the major focuses of people when it comes to financial freedom is the inability to focus their time and energy on different interests. Have you ever thought long and hard about what you would do with more free time? I’m willing to bet that you have. All of us allow our minds to wander from time to time. To where is up to you. There are always realities that hold you back from fully embracing those visions of complete freedom. Your family is a worthwhile anchor (in a good way). What else is there keeping you from your independence?
Work and the need to generate an income for your family keep many of us at work. Even if you do not have a family this reality is inescapable. Finding a path towards financial freedom is a worthwhile goal. Does that eventually mean not working? Well, if you embrace the FIRE moment then, yes, it does. FIRE stands for: Financial Independence Retire Early. In other words, to be financially independent is to make moves toward no longer having to work.
To someone who is working a 9-5 cubicle job that may sound great. The idea of retiring early could be just what you need to invigorate your life. In a divorce, the dream of financial freedom may take a back seat to more pressing matters. The realities of a retainer fee, court costs, and an attorney who bills by the hour all come into focus. With that said, prioritizing your goals in a divorce is crucial. What do you want more? Having financial freedom is a trendy goal for Americans today. However, making sure your divorce runs smoothly is a reasonable and immediate goal.
Assessing your current finances
Being able to determine where you are financially is a major part of this question. Some would argue that if you are performing an analysis of your finances for the first time in your divorce then you are not ready for financial freedom. There is some truth to this. Typically, people who can achieve financial freedom usually have their minds wrapped around the numbers in their finances. Understanding all your investments, your rates of return, the mortgage on your home, and other numbers all allow a person to achieve financial stability.
It may be reasonable to argue that a person with this type of desire for financial freedom would do everything possible to avoid a divorce in the first place. Consider that the prospect of a divorce is something that would surely set you back in terms of having a goal for financial freedom. Most people do not have the margin in their budget to pay for a divorce while achieving financial freedom. Therefore, if financial freedom is your number one goal, then your second goal may be to keep your spouse happy and engaged in the marriage. This way our divorce would be unlikely and the costs of a divorce even unlikely.
If a divorce is necessary in your life then understanding where your finances are may be step number one. This does not have to be anything complicated. However, it does need to be done. Looking at your overall financial picture means assessing your assets and liabilities. What are your sources of income? How much debt do you owe? What percentage of that debt is subject to division in the divorce? Once you understand the big numbers in your life the smaller numbers fall into focus. From there, you are more able to determine whether financial freedom is in your near future.
Child support as a budget item
Assessing child support from the perspective of a parent who wants what is best for their children is the right way to approach the subject. Being able to support your children financially is a major component of financial freedom. It would be short-sighted to be simultaneously angry about child support and in favor of financial freedom. In a divorce, these two realities stare each other in the face. What is your child support obligation?
The primary conservator of your children does not pay child support. Therefore, if you are assessing your immediate financial picture then becoming the primary conservator is a reasonable goal to have. Not only are you able to be with your children more but you do not have the obligation to pay child support in that scenario. On top of that, you can receive child support from your co-parent. This will assist you in paying any household bills or other expenditures that your family has.
On the other hand, the non-custodial or non-primary conservator does have a responsibility to pay child support. Being your child’s non-custodial parent carries with it certain responsibilities. Namely, the responsibility to pay child support. This child support is assessed based on your net monthly resources. From there, a percentage of your resources is paid in child support. The more children you have the more you pay as a percentage of your resources. Of course, your specific circumstances are a factor and the needs of your child come first.
Considering spousal support
One of the short- and long-term financial impacts of a divorce may be the payment of spousal support. In a marriage, you and your spouse may have different aptitudes, backgrounds, and abilities when it comes to providing for yourselves. This is not a new concept. Married people tend to take on different roles within the marriage. One of those roles may be to provide financially for the family. You may have taken the role of caring for the children in the house. Where does this leave you in a divorce?
Feeling uneasy about your finances during a divorce is an unsettling position. This is the type of scenario that leaves many people awake at night. It is also the sort of situation where you may have delayed a divorce because you did not think you could afford to be single. However, spousal support exists and may be of assistance to you. Spousal support takes on multiple forms. Let’s first talk about temporary spousal support in a Texas divorce.
Temporary spousal support payments occur during your divorce case. You and your spouse can agree upon a certain amount of money to be paid from your spouse to you. This is done after detailed negotiations. Or a court may order temporary spousal support in a temporary orders hearing. This requires you to submit an accurate budget showing your income, expenses, and other responsibilities. In that case, a judge would likely order only as much spousal support as is needed to keep your head above water financially.
Spousal maintenance and contractual alimony
Spousal maintenance is court-ordered spousal support after the divorce. The needs of your spouse are assessed in terms of finances. Does he or she have an inability to provide for themselves financially? Are they aged, infirm, or otherwise incapable of working? In that case, spouse maintenance will be ordered for you to pay. In most cases, judges are hesitant to order spousal maintenance. The reason is that judges would prefer for spouses to be able to care for themselves financially.
There are limits in terms of duration and amount to spousal maintenance awards. To begin with, you and your spouse need to have been married for at least ten years for spousal maintenance to be awarded. The only exception to this rule is if domestic violence has been a part of your marriage within the past two years. Additionally, your spouse must Evidence that he or she is incapable of working at this time. Or, that he or she is attempting to apply for work or complete their degree.
Spousal maintenance may only be ordered by a judge. You and your spouse may not negotiate for spousal maintenance. As a result, this is a subject where having an experienced family law attorney is of great assistance. Entering into a trial means having a tremendous amount at stake in the case. All the work that you have performed and preparing your case comes down to the evidence submitted in a courtroom. The attorneys with the Law Office of Bryan Fagan are equipped to help you face the challenges of a divorce trial.
Contractual alimony as an alternative to spousal maintenance
The other type of spousal support in Texas is contractual alimony. Contractual alimony is a type of spousal support that is negotiated between you and your spouse. The two of you are free to negotiate regarding contractual alimony throughout your divorce. There is no set amount of alimony which needs to be ordered. It is completely up to the two of you. Additionally, the requirements for spousal maintenance are not relevant when it comes to contractual alimony. This means that you should not expect contractual alimony to be negotiated the same if you have been married for less than 10 years.
Another important element of contractual alimony with enforcing contractual alimony orders. Suppose that you and your spouse negotiate for contractual alimony in your divorce. The specific agreement is that you pay your spouse $1000 a month in contractual alimony for the next 20 years. For your first year after the divorce, you have no problem making these payments. However, that begins to change in year two following the divorce.
Eventually, you stop making the payments of contractual alimony. Your ex-spouse begins to grow frustrated and contacts you about the missed payments. You explained that you lost your job and are now earning less money. This, in and of itself is not a defense to not paying contractual alimony. Your spouse is unable to enforce the terms of your final decree of divorce for contractual alimony. Rather, elements of contract law would need to be used to do so. For this reason, before agreeing to contractual alimony please consult with an experienced family law attorney.
Final thoughts on financial freedom and divorce
The beauty of financial freedom is that you do not need to conform your opinions to those of another person. Rather, you are fully able to assess what your own financial goals are and base your life around those goals. Of course, taking into consideration your family, children and other endeavors is necessary. It is all a balancing act. However, financial freedom allows you to have a balance in your life rather than focusing your attention primarily on work.
If you are assessing your readiness for financial freedom for the first time in your divorce, then you are probably not financially free. That may be a good goal for you in the future, but it is not your current situation. Additionally, if you previously achieved financial freedom but your divorce has put an end to that then you may not have been financially free in the 1st place.
Finally, financial freedom is in the eye of the beholder. By this, I mean that what you consider to be financial freedom may not be what I consider to be financial freedom. Having a family that loves you, an education and the ability to find work when you need it is one definition of financial freedom. How you define financial freedoms is up to you. However, bear in mind that the more you focus on your finances the more prepared you will be for a range of subjects inside of your divorce.
Considering a divorce? Contact the Law Office of Bryan Fagan today
Developing a strategy for financial freedom does not need to end just because you are divorcing. Many some people use a divorce as a jumping-off point for becoming financially free. Every dark cloud has a silver lining, as they say. It could be that financial freedom is your silver lining to the dark cloud of your divorce.
The attorneys with the Law Office of Bryan Fagan offer free of charge consultations six days a week in person, over the phone, and via video. These consultations are a great way for you to learn more about the world of Texas family law. Before signing a document or negotiating on a subject you do not know well, contact our office. We look forward to the opportunity of serving you during an important part of your life.
Evan Hochschild was raised in Houston, TX and graduated from Cypress Creek High School. He went on to graduate from Southwestern University in Georgetown, TX with an undergraduate degree in Political Science. While in college, Evan was a four-year letterman on the Cross Country team.
Following in the footsteps of his grandfather and uncle before him, Evan attended law school after he completed in his undergraduate studies. He graduated from St. Mary’s University School of Law and has practiced in a variety of areas in the law- including family law.
Mr. Hochschild is guided by principles which place the interests of clients first. Additionally, Evan seeks to provide information and support for his clients with the heart of a teacher.
Evan and his wife have four small children together. He enjoys afternoons out and about with his family, teaching Sunday school at his church and exercising. A veteran attorney of fourteen years, Mr. Hochschild excels in communicating complex ideas in family law simply and directly.
