The biggest mistake women make when they decide to get divorced (and most divorces are instigated by women) is that they fail to plan for their post-divorce life. This is understandable. The decision to separate from a marriage is highly emotional, and it can be difficult to focus on practical questions, such as how you will cover your mortgage without your husband’s income.
The truth is that your financial life will probably change more than you imagine. According to the Government Accountability Office, women face an average loss of 41% of their household income after a divorce.
We don’t have to tell you that it is a whole lot harder to buy groceries, cover the mortgage, and keep gas in your car with 40% less money coming in each month. We know how traumatic divorce can be, but if it is possible, we encourage you to sit down and start planning for your post-divorce financial life before you pull the divorce trigger. On his blog, money guru Dave Ramsey suggests a unique strategy that is especially useful for women as they seek to make ends meet after a divorce.
Introducing the Four Walls Strategy
When you get divorced, you are going to have to learn how to do more with less. Your first responsibility is to cover your basic necessities, what Ramsey calls “The Four Walls.” These are:
The Four Walls Strategy is simply a means to help you prioritize your spending and budgeting. Before you get divorced, determine the monthly cost of your four walls. How much do you spend on food? What about shelter, clothing, and transportation? This is the minimum amount of income you need each month to breathe easy and keep yourself in a financially stable situation.
Now, focus on how much income you can expect to receive each month. This may include child support and/or alimony, though you may want to consult with a divorce attorney to determine if a court is likely to grant either of these payments to you. (Are you eligible for alimony?)
Can You Cover Your Four Walls?
What happens if the cost of your four walls is higher than your anticipated post-divorce income? Unfortunately, this is the entire point of implementing the Four Walls review before your divorce. If you cannot cover your four walls, then your entire financial life will come crumbling down if you don’t make big changes. Too many women have no idea how much their current standard of living costs, and then they quickly run out of money after their divorce.
The Four Walls review will keep that from happening. If the numbers don’t add up, then you need to make some changes to your post-divorce plans. Remember, the Four Walls represent the bare essentials. You must find a way to cover these costs if you want to achieve any type of stability.
The biggest cost for most Americans is their housing. If your mortgage is simply too much, it may mean you’ll have to downgrade after your divorce. It can be hard to give up a house you love (especially if you have children), but your first duty is to your financial stability. (Should you keep your house after the divorce?)
The Four Walls Strategy is a good place to start when planning your post-divorce life, but it is only a beginning. (Here’s a great article on planning your post-divorce finances.) You will have a lot of decisions to make and a lot of changes in your life. Make sure you are ready for them all.
Keep reading our helpful divorce articles for women, and consider signing up for the next Second Saturday Divorce Workshop near you. Each workshop brings together divorce experts who can help you prepare financially, emotionally, and legally for your divorce.