How not to blow your divorce settlement; a very personal look at how I got things so wrong and what I would do differently in the future. 

Ending up with a nice big cheque can be fun but learning how not to blow your divorce settlement can be harder than you think. Have you ever found yourself with an extra £100 in your pocket at the end of the month?  Well, imagine having tens of thousands of pounds, maybe even 100s of thousands in a divorce settlement. Yours to do with what you want.

Happy days, I hear you all say! Or maybe not. Before you hot-foot it down to the local Lamborghini showrooms and treat yourself to something exotic, perhaps you need to take a minute to look at the reality of your situation. As tempting as it may be, having a pile of money burning a hole in your pocket can get you into a whole lot of trouble and even debt.

My own experience had me spending money like water with little regard for the risk. It didn’t matter as there was always more in the bank, right? Within 18 months I left myself unable to pay the rent and with no proper job.

You see, it’s all great while you're enjoying yourself being Charly big spuds and your money-making schemes are paying Off. The reality is though, you can’t live your life like this day to day and get rich quick scheems rarely last.

This isn’t a hard luck story more an insight into one person's stupidity. A warning. It’s also not advice just a recollection of how it's easy to spend and far harder to make especially in your 50s. I will also at look at how I now invest my money, again not advice but a snapshot of how I wish I had gone about my investment and money management from day one.

So, without further ado, let's explore the best way to waste a small fortune.

Before the Divorce settlement.

Mistake 1

The first mistake I made was one that so many divorcing dads make. I got myself the most expensive solicitor I could find. Note that I said I could find, not necessarily afford, as at the time I couldn’t afford him or his services but that could wait until after the settlement, or so I thought.

The solicitor was working out of central London and he came highly recommended by an ex-girlfriend. She had successfully used him and the firm he worked for in her recent divorce and stupidly I believed that he could help me too. All he helped me do was to part with a rather large amount of money which I did not have, nor could I find.

During our initial meeting, I had asked for an estimate of costs to get to court and a settlement. £16,000 I was told. That was okay, maybe he could secure me a big win I thought.

For this huge sum, I expected he would do a great job representing me in court. Maybe argued a great case, and worked his magic securing me a great big fat divorce settlement. Well, rest assured he didn't. How wrong I was.

After the first 3 months of exchanging paperwork between solicitors, we had gotten nowhere. We had gone backwards. The solicitor was busy creating points of contention to justify more and more work for him and his practice. Things I had never, and would never think about as issues had now become major bones of contention. What’s more, the more we argued the more my soon-to-be ex stuck her heels in. It was a disaster. After getting the first 3-month bill I nearly had a heart attack, and it was rising daily. We were further from a court settlement than ever. I was out of my depth. I diss-instructed him immediately and tried to scrape together the money.

I borrowed it from the only place I could find which was my business. I had a savings account for tax, so I used that to pay the solicitor bill. I would pay the tax out of the settlement. Or that was my plan.

Divorce Settlement Mistakes 2 and 3

I did the classic counting my chickens before they hatched.

With the very real feelings of rejection, fear and depression over the breakup I let my business decline. Maybe I am being hard on myself, but I do believe that I let the foot off the gas far too soon.

The two years of separation saw my profits dwindle to less than 25% of what they had been before the separation. I was increasingly taking out money from the business that it just couldn’t afford. This had huge repercussions when I finally did get my settlement and I tried to raise a large mortgage. No chance of that with such poor yearly results.

When you know you have a large sum of money coming you start to live life as though you already have it. It’s human nature and we are all guilty of it to some degree or another.

I went into business tycoon mode too soon and took my foot off the work accelerator. This was without any real money to back me up. Inevitably the divorce took a huge amount of time. Longer than I ever imagined and with my much-reduced income I was now seriously in debt.

I had maxed out several credit cards, a large overdraught facility and borrowed from my family.

It all needed to be paid back out of the settlement. Plus the tax money I paid to the solicitor.

Debts were mounting up. They all had to be repaid out of the settlement money.

After the Divorce Settlement

Mistake 4

This is where most dads I have spoken to and helped have gotten it spectacularly wrong, me included.

With 6 figures burning that hole in your pocket, it’s very easy to think it will last forever. I certainly did and I spent it at an alarming rate. £50 here, £100 there, the odd hotel, takeaway every night, new clothes, treating the girlfriend, not to mention the holidays. In those 12 months, I think I must have travelled more than the rest of my life put together. I also treated people like I had won the lottery. I lent people money with no regard to whether or when they would pay it back. Some still haven’t. I also partied hard. Don't get me wrong, I had a fantastic time but all in all, I wasted 10s of thousands of pounds on nothing I can put my hand on today.

Divorce Settlement Mistake 5

The one thing I always wanted was a Lamborghini. Who wouldn’t? I knew I couldn’t afford a new one but a second-hand Gallardo to use at the weekends and take the ladies out. Hell yes. If I needed the money, I could always sell it, right?

Yes, I had the money to buy it, but could I afford it? No is the true answer. The running costs of a supercar are astronomical. On average, they do 12 miles to the gallon and even a minor issue costs several thousand, not to mention insurance, tyres and servicing. And no, you never get back what you paid for it. Toys you cannot afford are short-lived and in reality, show a lack of maturity in your thinking.  You are far better off putting your time money and energy into something that makes you an income and buying the toys when you can afford them than spending your capital. I did treat myself to a new motorbike, which in fairness I still have and adore. Money well spent.

Divorce Settlement Mitake 6

Another big mistake I made was to believe in the hype surrounding the stock market, particularly cryptocurrencies.

The markets were doing great and I knew enough to get by or so I thought. I opened a trading account and deposited a 6-figure sum.

I joined a popular investing advisory group and proceeded to scatter my funds around.

Having had some knowledge of Bitcoin and some of the bigger cryptocurrencies, and like so many others at the time, I wanted the big bucks that were being made. Again, with little thought or consideration, I put a large chunk into the crypto markets.

Things went amazingly well. The market had been on a huge rally for a while now and things were looking good. Soon I had made a 50% gain on my investments. Life was sweet.

Just a little more and I would take out my initial sum and work with my profits. I had more or less given up my business at this point and this was my new path to Easy Street.

Because of my lack of knowledge, I let emotions take over and I panicked and sold at all the wrong times. After losing all my initial profits I steadied the ship. I looked to Bitcoin to get me back into profits, I went all in as it hit its 69k high. I believed the hype, it was going to be over 100k. My lack of knowledge once again showed as fear and greed took over. I chased the markets down, selling at the wrong time and buying at even worse times.

I eventually cashed my account out with less than half of what I put in. A huge lesson was learnt. I do still trade on the stock market and I believe in the future of cryptocurrencies but I don't spend more than I can afford to lose and secondly, I don't rely upon this for my income. More importantly than both those things I also got educated by taking an online trader course which whilst this won't make me rich has helped me understand the market much better.

Mistake 6 Renting

As I mentioned earlier, due to not working my business accounts were so poor, I couldn’t raise a mortgage to live in the area I wanted, so I rented. Still, I was required to prove my income and affordability.  I ended up agreeing with my landlord I would pay my rent 12 months upfront, every year, otherwise there was no deal and no house.

My reckless spending was coming back to haunt me and I was spending a fortune on rent without paying off any mortgage of my own. Effectively, I was buying someone else's house for them. It was in this period that things hit rock bottom. I had run out of money and ideas.

I knew that I had to change and start to put my life back on track and get control of my future. I couldn't go on like this otherwise I would end up homeless and looking for a 9-5 dead-end job building someone else's dream.

The break I needed.

Luckily I had ad the epiphany.

While looking for opportunities to start a new business, one I could run from home, I stumbled by accident upon an advert by a young guy talking through the opportunities that were presenting themselves on the internet. He talked through the advancements of the internet, the leveraging of other people's products, time and experience and the combination of learning how to market on the internet. I was sceptical and I'm sure you would be too but I was desperate enough to learn more.

What did I have to lose? It was free to watch and I had a free hour on my hands.

It's the best decision I ever made.

With some hard work upfront, and trusting a proven track record I am now rebuilding my future. It's better and more optimistic than ever before. Even though I am in my 50s I am rebuilding stronger.  It has been a huge learning opportunity as well as a great financial one and I feel privileged to be part of a fantastic community of online entrepreneurs.

If I were to blow my settlement again.

Explore the World – I would still use some of the money to plan weekend getaways or short trips to new places with my kids. I would create memories that will last a lifetime. Travelling is never a waste, as it enriches all our lives. Taking trips to Vegas with your mates is a waste.

Try Something New – I always wanted to learn surfing.  Maybe you could take up a new sport or hobby? Whatever it is, use the money to sign up for lessons that interest and enrich you. Learning new skills or engaging in hobbies brings you joy and also adds value to your life. Learn something that will benefit you not leave you disillusioned and regretful.

Invest in Education – This is what I finally did. I took a course and enrolled in an online education program. Investing in your knowledge and skills can lead to improved career prospects or personal growth. This way, you are not only spending but also investing in your future. This is something I am so grateful for and wish I had done from the get-go.

Giving Back

Instead of just wasting your settlement on fleeting moments, make choices that offer long-term benefits. Remember, you have the power to enhance not only your life but others too. Invest in the future, indulge in new experiences, or support a worthy cause. Ultimately, the best way to spend your money is on things that align with your goals, values, and aspirations. So, make the most of it and embark on a journey that enriches your life in more ways than one!

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The future best me

Ade.