Some of you may remember me...an update and a question

[Russell]

Some might remember me from several years ago, I used to be pretty active on here and was on track for an early retirement (I'm 38 now). Out of nowhere my life took an unfortunate turn a few years ago when one morning I woke up to learn that my wife of almost 10 years was leaving me. My world turned upside down as I never expected this nor saw it coming. Lots of heartache later I managed to pull myself together and kept doing what was best for my daughter and I. Everytime I thought things were leveling out a new bomb would be lopped on me to the point I didn't care anymore. Being in CA and at the time my wife being unemployed put me through a financial ringer. Due to everything else changing around my then 4yo daughter I wanted to save the house so my daughter could at least have the same roof over her head and become the symbol of stability and support in her life. However, not only was I now supporting my own household on a single income I was supporting two households. I couldn't dip into the savings I was told all assets were 'frozen' since they were considered community property so I had to somehow manage everything on one income and my credit cards. Thankfully always being financial savvy and not minding living well below my means I managed through it, never being late on the support payments, never asking friends or family for financial support either. In fact, not only did I survive I developed an even better bond with my kid than I had before. Sometimes you have to look at the bad as a blessing in disguise. As a bonus I went from 160lbs to 142lbs in the first 3 weeks not that I needed to lose any weight being 6ft looking back I have no idea how I did it. Of course, I heavily relied on a couple of close friends for moral support as I was still very much in love with my ex and I was a complete mess emotionally- good grief I was pathetic! The financial hit has been devastating too, after $60k in legal bills (her choice to go the lawyer route) I can't deny the fact that I'm now where I was 10 years ago financially. However, such is life and we have to roll with the punches.

Fast forward 4 years of ugly court battles and lawyer bills etc I'm almost done with my divorce and ready for a new chapter in my life which is where my quetions comes in. Per the divorce settlement I owe her x amount and I'm trying to decide how to allocate the liquid and retirement accounts. I could give her more liquid and less retirement or vice-versa. On the one hand in this economy and all the liabilities I have (house, single income, lawyer bills, support payments etc) I want to hold on to the cash as much as possible but on the other hand my 401k will take a hit from the loss of years and compounding perspective. I'm split between saving for the (unknown- I could die in a few years) future vs. saving for an unforseen job situation which in this economy is very possible and would be very damaging to both me and my little daughter. Either way it's a bitter pillow to swallow but I'm leaning towards taking my chances on the 401k and saving cash to be able to support myself and my daughter should I lose my job.

Lessons learned:
- marriage is grand, divorce is 100 grand, 200 if you live in California
- Learn to live below your means
- Life (and wife ) can change suddenly without warning and has the ability to be ruthless - be prepared
- And if you own assets, get a pre-nup before getting married - it's very uncomfortable but someone who's not after your money will understand. If not, don't walk away, run

[bjl584]

What sort of assets do you currently have and how much do you owe your ex? The answer we give would be determined by the numbers.

[Russell]

Thanks guys. Because it's not finalized yet I can't disclose the exact details/amounts but for the sake of this discussion let's say I owe her $100k. Assets I have are cash and retirement accounts. Question is should I pay 50% cash, 50% 401k roll-over or 40/60 or 30/70 etc. I would like to keep at least 8 months of expenses in cash for myself, the rest I can use to pay her and then cover the remainder with the 401k.

[disneysteve]

Thanks guys. Because it's not finalized yet I can't disclose the exact details/amounts but for the sake of this discussion let's say I owe her $100k. Assets I have are cash and retirement accounts. Question is should I pay 50% cash, 50% 401k roll-over or 40/60 or 30/70 etc. I would like to keep at least 8 months of expenses in cash for myself, the rest I can use to pay her and then cover the remainder with the 401k.

Well since we don't know the actual numbers, we can't really answer your question. If you keep 8 months in cash as an emergency fund, what % of the settlement could you pay in cash? Seems to me that would answer your question. Whatever you can't pay in cash would need to come from the 401k.

How does that work exactly? Do you have to take an early withdrawal and pay the taxes and penalties in the process? If so, I'd take as little as you possibly can from the 401k. Keep 3 or 4 months cash and give her the rest. It sounds like you are great at living below your means. You can rebuild your EF much quicker than you can rebuild the 35% hit you'd take on the 401k money. Now if there is some special provision that lets you give her the 401k money without paying the taxes and penalties, I'd go back to my first answer.

[Russell]

DS, long time no talk.

Yes there's a provision to do a rollover so no tax hit to me. However, if she decides to withdraw she will pay the penalty.

[EEinNJ]

Russell, sorry to read of your set-back. Your story is all too common, and having recently gone through it as well, I can sympathize. My state is not a community property state, but that didn't stop my ex & her lawyer from trying.
My guess is however you try and split it, her lawyer will want something else. Try to get them to take more 401k money. You will probably need cash sooner with a child. You'll have plenty of time to make up the retirement money, 'cause the dream of early retirement left along with your wife.

If it's any consolation, you're fortunate to have this happen while you're younger. Having a marriage linger for a longer time before it fails is much more difficult emotionally, financially, and is harder to recover from.

[Grymm]

Aaahhhh...divorce. I have been there myself, having been spared the nightmare many face, having only one single court appearance to finish everything off. My state is very easy when it comes to divorce. Now, I am 3 months away from my son coming of age and the entire thing behind me.

I have a couple of recommendations. First, screw retirement for now. You just worry about you and your child. Second, and I cannot stress this enough...GET OUT OF CALIFORNIA! For the life of me I cannot see one single logical reason to live in that state. Between the earthquakes, fires, ridiculous taxes, even more ridiculous laws, the fact that hollywood and silicon valley has driven prices through the roof and the even bigger fact that the state is broke (liberal policies work...my ass), I just cannot see why anyone would live there. I just filled my car up today. I paid $3.29 per gallon. I bet you won't find that price in CA...

Really, moving would be the best decision you could make, especially if you are in a skilled career field. If your field is a needed field, then move to the south, either Tennessee, Alabama, Georgia, or Louisiana. You will not be sorry.

I hope things get better for you. I'm having a rather rough time myself, albeit under a different set of circumstances. But, it will get better...

[bjl584]

Second, and I cannot stress this enough...GET OUT OF CALIFORNIA! For the life of me I cannot see one single logical reason to live in that state.

Moving may not be an option, especially with joint custody of a young child. My friend went through a divorce a few years ago and had to turn down several offers for jobs that required relocation due to his children.

[Russell]

Moving may not be an option, especially with joint custody of a young child. My friend went through a divorce a few years ago and had to turn down several offers for jobs that required relocation due to his children.

^^^ exactly! I agree with you guys and I wish I'd moved earlier as was my plan (for the same reasons you mentioned) but the ex didn't want to leave CA

Anyway, thanks for the advice, we'll see how it goes. Nothing has been easy, and I never ever had thought that it would go down the way it did with court battles after court battles with my hard earned money walking into the lawyers' bank accounts but after 2 years of this I'm over it...so over it

[elessar78]

I'd say give her liquid. Maybe she isn't as good a saver and planner as you and will burn through it and have nothing for retirement—so in a long, roundabout way you get to poke her with a stick until she's gone from this earth.

[MonkeyMama]

I am so very sorry to read this.

We know several couples going through this right now. You never know what goes on in private and in a marriage, but we have been kind of scratching our heads at *women* lately. I can honestly think of about 6 close friends and family friends, right off the top of my head, where the women just *up and left* recently. None of the men were happy about this. It's just been such a bizarre pattern: "When the going gets tough, leave and don't even give it a try." All of the men our age were at least lucky enough to not have children. Though one who had been married a whopping 5 years or so said it was VERY expensive (in another state).

If it was a few people, whatever, but it is such an epidemic. You are definitely not alone. & hearing all about it lately from the others, I feel for you.

[cypher1]

Sorry to hear about all that. I have a younger sis getting married this Sat, and I recently found out my oldest sis wants to divorce BIL or at least separate. Turns out he wasn't paying mortgage for some time, and they almost lost house, which she had to dip into a large chunk of retirement and investment funds to save it. So mainly due to huge ongoing communication issues, and none of them really want counseling, I can only hope they get their priorities in order for their kids sake. I don't mean to deviate from the original thread. But from observing my sister's situation I've realized both parties are to blame, not just one sided. I wish you all the best, sounds like you're back on track.