Getting a divorce is never easy. Quite often it can turn out to be down right messy if you don't handle the process properly. The most important thing to remember during a divorce is to try to put emotions aside. Divorce can be a big economic set back and that's not really what one is thinking about when one is in the middle of it.

But that is precisely when you need to be thinking about your finances before the ink dries on the divorce decree. Making decisions based on emotion can threaten your finances for the rest of your life. A 1996 study by the Social Science Research Council in New York City found that one year after a divorce, a woman's standard of living falls about 30% on average, while a man rises 10%. As Ivana Trump once famously said “Don't get mad, get everything.” And that seems to be a pretty good advice for Thai women who are contemplating a divorce.

It is quite often that people do make big mistakes in divorce and unfortunately, they have to live with the mistakes for many years. So what are the mistakes people make most often in divorce?

Mistake #1 : Giving up control of their divorce—usually to their lawyer. Your lawyer is trained in how to represent your interests in court and you need to listen carefully to the advice your lawyer gives you. But this is not your lawyer's divorce. It's yours and you are the one who's going to have to live with the results.

Mistake #2 : Poor Inventory. The first rule of thumb is to make sure that you have a thorough inventory of what you own and what you owe before you begin negotiating. You should make copies of everything including statements of savings accounts and investments, vehicles titles, deeds of real estate, even frequent flier miles. And don't forget about the contents of your safety deposit box.

Mistake #3 : Discovery Trap. Spending too much time and money letting lawyers gather information. The legal term for this is call “discovery” which includes interrogatories, requests for documents, admissions and depositions. Lawyers love discovery because it turns little cases into big cases and it keeps lawyers thoroughly in control of your divorce.

It is better to gather the information some other way if you can. You and your spouse might be able to simply exchange the information you need. The use of a financial preparation kit is a great way you and your spouse can gather the information you need before you even go to see attorneys or mediators.

Mistake #4 : Friends in Need . Allowing family or friends to intervene. It is important to remember that this is your divorce and no one can or should tell you how you should get through it. Don't be afraid to rely on your own judgment.

Mistake #5 : Poor Tax Planning . People negotiate, reach agreement and get divorced without thinking through the tax impact of the concessions they are making. It is not all that unusual for one of the spouses to get a nasty surprise several months or years after the divorce, when they realize that they are facing a big tax bill they didn't know about.

Mistake #6 : Being Overly Generous . Quite often one of the spouse is not ready to for the marriage to end and decides that he or she can win the leaver back by “being nice or generous” by agreeing to far less than fairness would indicate. The advice here is that more often than not it is too late to salvage anything at this stage.

Now that you are aware of the pitfalls and mistakes that people make most often when going through a divorce, here are a few more tips on how to get started:

Open your own bank account and obtain your own credit.

If you have a joint account, your instinct may be to channel half of the money into your personal one. It is, after all, your money too. The advice here is do not inflict financial pain on your spouse as revenge for emotional hurt. A less-adversarial approach is to build your savings account with some of your own income and wait for the court to fairly divide all the assets.

When applying for credit, use your own full name rather than your husband's name. And in the event that you and your spouse already have joint credit, be sure to check your credit history for any contingent liabilities.

Divvy up debt fairly.

Be sure to include mortgages, home equity loans, credit card debt and any auto or student loans in the negotiation process. Divorcing couples can pay off the debt, trade debt for assets or split the debt.

Look for hidden benefits.

Certain benefits may not be there after the divorce, especially company's provided retirement plans and stock options. Then there's health, life and disability insurance. Your children may be covered under your spouse's insurance plan, but unless you can obtain coverage from your own employer, insurance may be a whole new set of expenses for you each month.

Be careful how you split investments.

Don't just look at the investment amount but the “ vehicles” that the money is invested in. Make you that you don't end up with illiquid shares, tax nightmares, high cost mutual funds or too-risky ventures while your spouse end up with Siam Cement shares and government bonds.

Furthermore, remember to choose the investments that will work best for your future. Things often change radically after the divorce and you will need to re-think your financial goals. Here are some of the main points you need to ask yourself:

• What's your future earnings potential compared to your spouse's?

• Do you have adequate retirement savings?

• Are your investments right for your goals and your risk tolerance?

To help answer these questions, consider consulting an investment planner. Refer to our article on “Hiring Financial Help”.

Take care of the loose ends.

Once you are through with the formal process of a divorce, make sure that all the loose ends are taken care of such as change beneficiaries on all wills, insurance plans etc. Moreover, it is a good idea to try to be highly disciplined about your financial affairs by creating a personal balance sheet by listing all monthly cash flow needs, such as rent, insurance, debt payments etc. This will give you a good idea of your needs and wants – and whether you can afford them.

Time Value of Money

When you are negotiating with your spouse about money issues in divorce, you will almost always end up comparing money today with money down the road. If you are going to make sense of these issues, you need to understand the concept of Time Value of Money.

• If you are offered Baht 100, would you take it?

Most people would say yes.

• But what if you are offered Baht 100 today or the same Baht 100 three years from now?

Most people would take it today, thank you very much.

• What if you are offered Baht 100 today or Baht 200 three years from now?

Most of us would have to stop and think on this one.

This is where the “cost” of money comes in. The extra amount you demand if you are going to have to wait to get the money is call a premium because….

• You don't know what Baht 100 will be worth in 3 years from now.

• You don't know if the payment will be made 3 years from now.

• You would like to take the Baht 100 today to spend it or to invest.

One way of comparing one stream of payments with another is to discount both streams of payments back to their “present value”. This is done by using a discount rate that everybody agrees to be fair. By using a discount rate of 6%, for example, one can compare 3 streams of payments that look completely different:

Stream of Payments Net Present Value

Example #1: Baht 10,000 today is worth Baht 10,000

Example #2: Baht 12,000 in 5 years from now is worth Baht 8,967 today

Example #3: Baht 200 per month for the next 5 years is worth Baht 10,345 today

Divorce often forces you to negotiate on the basis of money today vs. money down the road. You must have a good firm understanding of the time value of money if you are going to negotiate effectively.