I attended a workshop this week that reminded me that we all buy based on our emotions. We buy non-essential items and find excuses that make them essential. Have you ever gone into a store for one item and come out instead with a cart full of items? Those were items that five minutes ago you didn’t need and now all of a sudden you do.
Working with divorcing clients I regularly see the long-term consequences of emotional decision making. Petty arguments over who gets the can opener, or some small item, can blow up an existing set of agreed upon decisions. This causes delays in the process, increases expenses by eating up professionals’ time or provokes the other party into complete animosity.
Of course, it’s not just small things that are complicated by emotional decision-making. In some cases, there are very important decisions that couples just can’t seem to get past. An angry spouse may put up unreasonable roadblocks, perhaps subconsciously sabotaging the divorce process. Maybe they really don’t want this divorce or maybe the anger and hurt is so intense they just want to lash out in some way to take revenge on the other party.
At the other end of the spectrum is the complacent or indifferent spouse. They may be so demoralized by the other person or so emotionally drained by the divorce itself that they just don’t care anymore and make hasty decisions just to get it over with. Weeks, months or years later when they realize what they have done to jeopardize themselves financially, they regret the agreements they have made. Often they need to hire an attorney again and try to modify things or even go back to court but it may be too late and some things just can’t be “undone”.
If you are facing divorce, be sure to surround yourself with professionals who can help you see the big picture and not make emotional decisions. Make sure you see the financial projections for not only one year or five years, but also for your own retirement. When you look at the graphs and numbers be sure you understand them. Ask questions and more questions until you do. No matter how many times I have to explain something to a client, I want them to be completely aware of all the pros and cons of a decision.
Here are just a few items to think about:
Is your spousal support modifiable or non-modifiable?
Are you considering all the tax implications when dividing the assets in a tax-deferred account versus a taxable account?
Did you consider the fact that the spouse who receives spousal support has to pay taxes on that money while the spouse paying the support gets a tax deduction?
Have you researched your cost of living after the divorce when you move to a new home or apartment?
Do you know how much it will cost you and how long it will take to get re-educated and/or get up to speed in your occupation?
In any decision or point of conflict ask yourself this: How is this decision going to affect me in the long run? Why am I holding out for this one particular item? Is it worth the fight?
There are many more things to look at but these are just a few to get you started. Above all protect yourself from the potential consequences of emotional decision making. Surround yourself with professionals who can help you understand the pros and cons of your decisions and help you make sound decisions that are not based only on emotions.