Divorce is expensive. While some listeners have the resources to pay for a divorce, others do not. Some of you are struggling to balance day-to-day expenses with fees incurred by attorneys and other team members.
In several previous episodes, I have talked about how to pay for divorce:
- EP 2: How to Pay for Your Divorce
- EP 38: Can I Take Money from My Joint Account?
- EP 48: Why You Need a Secret Fund before You Get Divorced
- EP 61: How to Get Your Spouse to Pay for Your Divorce
- EP 57, EP 63 and EP 64: Information about Divorce Loans
This episode covers some options that have never been discussed on the show before. Way back in Episode 2, I listed four options to pay for your divorce. The fourth was “be creative.” This episode is going to cover five creative ways to pay for your divorce.
I will caution you that this advice is general, and that your specific circumstances will vary. There could be legal complications or financial consequences down the line for some of these options, so consult your attorney and/or accountant.
The five creative ways to pay for divorce are:
1) Ask friends and family for help.
Consider going to your family or friends for help. They may be more comfortable if you structure it as a loan. To set up the repayment terms, you can find a template for a personal loan online. Then you will show your friends or family members that you are serious about paying them back.
2) Sell stuff.
Look around your home for things you could sell. You may have electronics, art, collectibles, physical goods, old cars, and cameras. They could help you get enough money to cover some of your bills and regular expenses. But be careful when selling things; your spouse may ask you to reimburse them for any joint property later on.
3) Take out a new credit card.
If your credit is good, you can consider taking out a new credit card. I do not advocate taking out a lot of debt; it always comes back to haunt you later. However, it may be a viable option if you are struggling to cover team members’ fees (or even just groceries).
4) Borrow from your retirement investment accounts.
Rules vary greatly among retirement accounts, but some will allow you to borrow from them.
- 401(k) plan — Some 401(k) plans will allow you to borrow 20-50% of the plan’s value at a low interest rate.
- IRA — IRAs are more difficult to borrow against. You may have to pay taxes and penalties. It is a little bit tricky. But if you have a short-term need, you can use a rollover to have access to those funds tax-free. You will need to deposit the amount you took from a qualified IRA rollover account within 60 days.
- Investment account — You have the option of taking out a margin loan. These loans are complicated, so I do not necessarily advocate them unless you understand them.
5) Take out a home equity line.
With this option, you are borrowing against the value of your home (which must be worth more than you owe). This route requires a lot of approvals, including your spouse’s (if their name is listed on the home).