I had this pretty perfect life with perfect plans.
A loving husband. A strong network of friends in Dublin. A community of fellow tech entrepreneurs. A paid off place with all nice renovations done, and adjusted for my tastes. A paid off car, nice job…
It was really good.
But then my relationship broke down, a crisis followed up by a breakup. I’m not going to get into details of what happened exactly, we can say that the relationship has ran its course. We were no longer compatible and decided to cut our loses.
My plans before the breakup
I was on a path to financial independence with lots of assets accumulated already and pretty low cost of living due to:
- being part of the couple
- having a paid off place in Dublin
- having a paid off car
- generally optimized expenses
- not planning to have children
Even though I have been saving and investing for many years, I generally decided that fully retiring in my early 30s is not the right path for me, even if I was financially ready for it.
A better path for me is to focus on optimizing my lifestyle while not getting the work get into the way too much.
And I also discovered that I can do that by switching to a more suitable role, working less, having stronger boundaries, taking sabbaticals, etc.
Another dream of mine was to try to start a business and I was planning to quit my cushy, flexible, well paying job to do just that.
I told my boss that I’m quitting. I told him that it’s serious and that he should come over and meet the team. I was comfortable taking that leap because with a paid off place, low cost of living and lots of cash I would have a pretty long runway and could focus on the business without stressing out about finances.
I wanted to put a formal written resignation just a week after we decided to break up. I planned for this specific date because of a stock vesting date, I was about to cash out additional 30k in company stock and it was worth staying for a bit longer. Turns out not being jobless did save me a lot of trouble.
Logistics of a divorce in Ireland and the financial impact
We got married in Ireland and in Ireland there are no prenups. Or at least they are not enforceable. We are divorcing, but the divorce in Ireland is a very slow process, so we will go with the formal separation which will divide our assets and make us officially separated. After well done separation, the divorce is just a formality.
We had mostly separate finances, some shared assets with 50/50% ownerships, joint accounts for living expenses, but most of our investments were separate.
So what is the impact of divorce on my finances?
- legal costs
- division of assets
- increases of cost of living
Legal costs
I am lucky that we split up on good terms. We are planning to go through a deed of separation (separation agreement) route with minimum amount of legal action possible. I believe that this process has two main parts:
- financial disclosure (affidavit of means)
- separation agreement
Each party has their own solicitor or a team of solicitors and incurs their own fees.
The financial disclosure is challenging because it needs to be very thorough and should be as correct as possible as it needs to be sworn under oath and also it could be challenged in court which could undo the whole legal process.
There are several parts:
- assets
- liabilities
- incomes
- outgoings (your budget really, broken down by lots of categories)
- pensions
And lucky me, I get a lot of income and I have lots of different assets. Even though I had a pretty good handle on them, collecting all the documents was a lot of work.
We did 5 drafts of the affidavit of means with my solicitor team and it took way too long (2 months maybe?).
The legal costs:
- initial consultation 246.00 Euro
- remaining cost depends on how complex the separation/divorce turns out to be:
- simplest path 3k-8k Euro (depending on assets, with my assets it will probably be at the upper range)
- most complex path (long litigation in court) - 50k+ Euro
Additionally, there are some additional costs in valuing / sorting out the assets, valuations alone can be quite pricey and every sale incurs additional costs as well.
Division of assets
The default path would be to sum up all of our assets and divide it in half.
However we did keep our fiances mostly separate, we accumulated money at different rates, invested differently but shared all the expenses 50-50, the equal split of assets would be very bad for me. My husband had a good job too, but was much less driven and financially successful than me. That resulted in my husband having significantly lower personal net worth. In theory he could in theory keep a lot of my wealth.
We agreed to split the asset by our way of contribution, we split the ‘joint’ assets 50-50 and we will leave the individual assets to the individual who acquired it. As this agreement is in theory unfavorable to my ex, I decided to go with several concessions like letting him leave in our joint paid place and keep the car, after we split, he will end up with the apartment and the car and I will end up with the cash.
That is somewhat optimistic on my side, but I think that my ex is a honorable man.
Even in a very unfortunate circumstance if my husband wanted to claim more of my assets I could recover it fairly quickly. I am in a very lucky position with a great paying job I enjoy. My wealth accumulation is still great and I could continue earning money.
Even if we split 50-50, I would still be close to financial independence, it would set me back, but not that much.
Importantly, I am still young, I enjoy working, so don’t need to never work again and be done with money. I can still accumulate and even be successful in business!
The assets that we have already accumulated separately or jointly already give me a great piece of mind.
Increases of cost of living
As I mentioned earlier, my costs were very optimized before the breakup, I could probably get away with 12k for basic living + 6k for traveling/fun experiences.
A life as a single person in Dublin without owning your residence are generally much higher. The major factor is housing. Rent and bills are much more expensive this way. My fixed costs grew from ~1.5k to 3k per month. 1.5k rent, 200-300 bills, food, travel, misc. And there are additional legal costs, counseling cost (due to emotional damage), not sharing the car, etc. Travels also become more expensive as you don’t share the cost of accommodation or car rental anymore.
This is a significant increase in the cost of living! But I think that it’s still okay, because:
- it’s not for forever, I could end up in a relationship again or even have higher costs if I end up having children
- I could always optimize in the future by buying a place or moving to a cheaper country
- I continue accumulating lots of money
What next?
I will continue working on the legal separation and hopefully finish it relatively unscathed. I will be taking it easy at work and focusing on sorting out my life and recovering from this setback. In the meantime, I expect to only get richer due to my job paying me bags of money.
My FIRE number has changed for sure, a single person FIRE is more expensive than for being a half of a Double Income No Kids couple.
In a way, I am grateful for the newly opened opportunities. I could move countries for a better opportunities, will likely end up in a better relationship and likely have kids in the future, all of which is pretty exciting.
It also made me realize that I was aiming too low with my lifestyle. I was so settled before the breakup, I would have probably spent another 10-20 years in the same spot dealing with the same inconveniences. It’s very hard to break a pretty good thing as there is so much inertia.
With my earning potential and a nice career, I could aim higher, have a nicer place and things. When you do things for the first time, it’s normal to not do them very well. There are simply things that you don’t know. Also you change with time. It’s good to get a second chance, because it gives the opportunity to incorporate the lessons learned and end up in a better place next time.