Mitigating the risk of losing 50% in divorce

How to explain ERE, arranging family matters
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fiby41
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Mitigating the risk of losing 50% in divorce

Post by fiby41 » Tue Sep 10, 2019 8:05 am

Finding FIRE compatible spouse is hard enough. Possible strategies:
1 proactively look out for such a financially compatible person
2 have relationship with who you were going to have it with anyway, but then keep finances separate
3 don't tell them about your FIRE hobby, but when you actually pull they plug they might feel betrayed
4 gradually introduce and try to get the other person onboard after establishing a relationship

This leads to interesting implications:

Single FIRE where no matter if the person gets in a relationship later or not, the finances remain separate. (2, 3)

Shotgun approach/ couple FIRE (1, 4)

Things get intertwined when the knot is tied.

On one extreme of the axis we have:
The statistic that the probability of your spouse leaving you skyrockets up when you have lost your job. It would take superior skills than mine to convince anybody that it was I who left, the job didn't leave me, and how there's a difference.
On the other extreme: Child-support hedge-funds.

I want to have children eventually. What are my options for realising the best case scenario: my spouse to not leave me and dismiss the FIRE obsession as a personality quirk; worst case scenario: leave in peace and not come back to sabotage ERE?

2Birds1Stone
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Re: Mitigating the risk of losing 50% in divorce

Post by 2Birds1Stone » Tue Sep 10, 2019 8:10 am

By the time I tie the knot next year, I will have reached my individual FIRE number. So as long as those assets remain separate (logistically), they would be considered premarital and thus not subject to the 50% rule. I did not plan this, but it could be a strategy.

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Re: Mitigating the risk of losing 50% in divorce

Post by jacob » Tue Sep 10, 2019 8:22 am

1 is the best resulting in a power-couple.

2 may or may not work. Even if you can keep finances entirely separate, it would be hard to separate the rest of your life if you have entirely different life goals.

3 is the worst (don't even try).

4 is the most realistic. I'd say gradually introduce and try to get the other person onboard while establishing the relationship. The worst thing that can happen is that they're scared away saving you the problem down the road.

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Bankai
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Re: Mitigating the risk of losing 50% in divorce

Post by Bankai » Tue Sep 10, 2019 8:39 am

Remember that marriage is not obligatory for a happy relationship. If you're worried about losing money in divorce, not inviting government to your relationship in the first place takes care of that.

Jason
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Re: Mitigating the risk of losing 50% in divorce

Post by Jason » Tue Sep 10, 2019 9:23 am

Hide/don't disclose your assets. It's very common. It's different than separating finances. I know people who put money in friends/family accounts before getting married. I would personally have an issue with it before embarking on a marriage, but because you have not mentioned your philosophy towards marriage and are atomizing financial matters, it's an option.

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Ego
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Re: Mitigating the risk of losing 50% in divorce

Post by Ego » Tue Sep 10, 2019 10:00 am

Choose your spouse well. That will mitigate most of the risk. If at that point you are not 100% sure that the prospect of marrying the person is worth the remaining risk then don't get married.

Marriage is hard. It required two fully committed adults. If one partner enters with anything less than full commitment then it is doomed to fail.

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Lemur
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Re: Mitigating the risk of losing 50% in divorce

Post by Lemur » Tue Sep 10, 2019 10:09 am

I discovered my spouse before learning about FIRE/ERE concepts. At this point in my life, I was naturally frugal and saving money + investing in random stocks (just didn't know my end goal...my goal was 'invest and be a millionaire or something). Anyhow, and this is not romantic in the least bit but I looked for a long-term spouse based on specific character traits...wanted someone who wasn't 'spendy' and had a open communication style (my previous relationships involved women who would be angry and I didn't know why like the classic meme would suggest). Long story short: been married 5 years and my spouse owns a business (unexpected as she had no income when we married) and it worked out really nicely. We're both putting away a solid amount of money every 2 weeks (~2k give or take) I really got lucky in that sense. I introduced FIRE concepts when I discovered and while we are still one 'wheaton' level so apart, I would say we've naturally aligned. Both of us come from working poor families ...odds were stacked against us to have this saving money mindset together. Again...I am very lucky.

If I lost half my assets I don't think it would so much matter in the long-term (short-term would suck) because I can live on a lot less...alimony and child support would be an expense but that wouldn't be forever either. My own spending habits are a level lower than my spouse's (though my spouse is certainly frugal compared to your average consumer American).

So based on my anecdotal experience...3 would be a disaster don't do that. Open communication policy is key imo. Do 1 or 4.

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unemployable
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Re: Mitigating the risk of losing 50% in divorce

Post by unemployable » Tue Sep 10, 2019 10:41 am

Number 2 does not work in practice.

If you're really worried about this, put everything in a trust.

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Dream of Freedom
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Re: Mitigating the risk of losing 50% in divorce

Post by Dream of Freedom » Tue Sep 10, 2019 12:14 pm

Get a prenup. Communicate clearly why it's important to you.

Frita
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Re: Mitigating the risk of losing 50% in divorce

Post by Frita » Tue Sep 10, 2019 12:51 pm

+1 to Ego
+1 to Jacob

Who you marry is the most important decision of your life. If you don’t agree on core values, it will be tough going; however, any long-term relationships will have rocky patches. We change and grow in sometimes different directions at varying paces. DS51 is not as frugal as I am but he has come around. I have learn to not be so cheap and move into the frugal realm. :) We are resourceful with skills on complementary areas. We have weathered ongoing medical issues (and the resulting financial ones) and the death of our daughter when she was four years old. I do observe that such experiences drive a wedge into many marriages (This is an observation, not a judgment or comparison to boost my esteem.). Before we got married we talked about wanting to be FI so that neither would have to sell out for a paycheck and that we’d stick with each other regardless of what happened.

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Ego
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Re: Mitigating the risk of losing 50% in divorce

Post by Ego » Tue Sep 10, 2019 12:53 pm

Dream of Freedom wrote:
Tue Sep 10, 2019 12:14 pm
Get a prenup.
Respectfully disagree

viewtopic.php?t=3898&start=75#p55176

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Ego
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Re: Mitigating the risk of losing 50% in divorce

Post by Ego » Tue Sep 10, 2019 1:13 pm

2Birds1Stone wrote:
Tue Sep 10, 2019 8:10 am
So as long as those assets remain separate (logistically), they would be considered premarital and thus not subject to the 50% rule.
Are you sure about that?

bigato
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Re: Mitigating the risk of losing 50% in divorce

Post by bigato » Tue Sep 10, 2019 1:43 pm

In my mind, this is extremely simple. Keep finances separate and as a bonus you won't ever need to fight about money. If they say it is not "romantic" or some such emotional description, that'd be a major red flag and a deal breaker in my book. Get a prenup or don't marry at all. If you decide to have children, discuss the financials beforehand so that whoever stays at home gets properly refunded on the loss of wage and career setbacks.

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unemployable
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Re: Mitigating the risk of losing 50% in divorce

Post by unemployable » Tue Sep 10, 2019 1:49 pm

Ego wrote:
Tue Sep 10, 2019 1:13 pm
Are you sure about that?
It's incorrect. Ask Jeff Bezos.

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jennypenny
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Re: Mitigating the risk of losing 50% in divorce

Post by jennypenny » Tue Sep 10, 2019 1:50 pm

I love this topic because it's one of the few where Ego and I are in complete agreement. viewtopic.php?t=3898&start=75#p55191

Everyone is different, but it's odd (to me) that some of you are willing to risk big declines in the stock market but balk at the same kind of potential losses if due to a divorce. To my mind, you have much more control over the outcome when investing in a marriage, and the returns on a good one are immeasurable.

@fiby41 -- Don't marry anyone who isn't worth at least half of your net worth to you (as in you'd give 1/2 of your net worth right then for the privilege of marrying them). Then work your ass off to make it a success.

Jason
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Re: Mitigating the risk of losing 50% in divorce

Post by Jason » Tue Sep 10, 2019 1:52 pm

Ego wrote:
Tue Sep 10, 2019 1:13 pm
Are you sure about that?
The key word in that sentence is "remain." And you never know what you could end up fighting over.

https://nypost.com/2019/09/10/north-car ... nds-penis/

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Ego
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Re: Mitigating the risk of losing 50% in divorce

Post by Ego » Tue Sep 10, 2019 2:00 pm

@jenny, yep, 100% agreement.

Tonight Mrs. Ego and I are spending the night in a large 6 euro per night municipal hostel with about 40 others. Tomorrow we celebrate our 26th anniversary and we'll probably spend it in another cheap hostel. Que románticos.

Seppia
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Re: Mitigating the risk of losing 50% in divorce

Post by Seppia » Tue Sep 10, 2019 3:00 pm

The important part is picking the right partner, and look to be compatible in the stuff that matters.
In my experience, being somewhat aligned in how you see money matters, your view of family matters, having a common idea of what "having a great time" means matters, "yes but I love him/her" doesn't matter and is usually a very bad sign when uttered.

Ego wrote:
Tue Sep 10, 2019 2:00 pm
@jenny, yep, 100% agreement.

Tonight Mrs. Ego and I are spending the night in a large 6 euro per night municipal hostel with about 40 others. Tomorrow we celebrate our 26th anniversary and we'll probably spend it in another cheap hostel. Que románticos.
Fantastic. Big congrats

I agree 100% with you and jp.
I'm VERY old school in this regard. It's 2019, nobody forces anybody to marry any more.
If you're not sure, just don't do it, but if you do, make sure you are fully committed.
Burn the ships as you said.
Life is hard, and anything less than 100% commitment from both sides = almost guaranteed failure.

Marrying my wife has been the best decision I've made in my life.
Fun fact: I proposed in a rental car garage

Frita
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Re: Mitigating the risk of losing 50% in divorce

Post by Frita » Tue Sep 10, 2019 3:14 pm

@Ego

Congrats on 26 years and enjoy your hostel vacation! DS51 took me to Taco Bell (dollar menu and water as a beverage) for our first year anniversary. I knew then he was a keeper. ;)

anesde
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Re: Mitigating the risk of losing 50% in divorce

Post by anesde » Tue Sep 10, 2019 3:58 pm

+1 to Ego and JP

I think a good measuring stick for this is whether or not you would trust your partner with half (better yet, all) of your assets. Would they spend it whilst you would prefer to invest or save? Would they value it the same way you do? Do you generally view money, spending, saving, investing the same way? Can you openly discuss finances in any context?

I’m currently engaged and very much adhere to Ego and JP’s outlook. Whilst I love my SO, am attracted to her, want the same family, want to live in the same places, etc my main reason for knowing it’s the “right” move is that we’re aligned in our values and finances. I don’t view it as a gamble but rather a logical next step towards creating the life that I (we) want.

If I didn’t “get lucky” so to speak I simply wouldn’t marry. I would be perfectly fine being a lifelong bachelor if I never managed to break out of the string of material obsessed girls that seemed so prevalent in my 20’s. Fun nights out for sure but never had any desire to fit a square peg in a round hole.

EDIT: I should clarify that I agree with Jacob on Option #4 from the OP. That basically what I did but I’ll caveat that if this is overly difficult it’s probably a sign that you’re not really a great match. My SO thought ERE was a bit crazy at first but her natural instinct was frugality/saving so we weren’t really that far off. For her it was more about realising that there’s an option to leave “Plato’s Cave” and what that means for future freedom - not worrying about having less stuff. Not really all that different from myself actually.

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