Hi - I'm a regular poster in newcomers but the wheels are slowly grinding toward divorce and I am gathering information to understand the financial issues (and other types of issues) I'll be facing as a potentially divorcing mom working part time with two kids nearing college age.
Thought there'd be a book everyone's read (like the Dr. Spock of separation) and am finding nothing really compelling to recommend one source or another. In a question I posted over at Divorced but not Done, I wrote:
"I already recognized the need for IC and a lawyer. But I really feel like I need financial support too. That could be a recommended book at the very least, if anyone here read one that helped them."
Anyone here have a suggestion? What really helped YOU?
Thanks for any input.
Adinva 51, S20, S18 M24 total 6/15/11-12/1/12 From IDLY to H moving out 9/15/15-3/7/17 From negotiating SA to final D at age 50 5/8/17-now: New relationship with an old friend __ Happiness is a warm puppy.
Check out wife dot come for good financial information for women and financial info about divorce. One of the women who runs it also has a book for women on divorce (she's a financial planner).
As for general finances, it's good to learn the joys of being frugal - check out The Tightwad Gazette books by Dacyzyn, and listen to the Dave Ramsey show archives online.
Also - if you own a home, consider your options carefully. One thing I didn't take into account in my divorce was this: my H wanted to sell the house ASAP so he could buy the property he was renting. I knew I couldn't afford to keep the house anyway so I went along with selling it, even though we'd only filed a few months before and hadn't gotten the settlement done.
It sold immediately and we didn't finish the divorce for another year and a half (negotiations, plus it's just a lot of paperwork!)
But I couldn't buy a new house until the divorce was final, because I needed my alimony to be included in my income for qualifying (even though I was putting a huge down payment) and the lenders wouldn't count it until the divorce was final, and they wanted to see a year of cancelled alimony checks.
I was ok because the market in my area stayed pretty much down the whole time. BUT - I could have gotten scr*wed if the real estate market had rebounded quickly - selling my house at the bottom of the market and having to buy a new one at higher rebound prices.
Since the real estate market has been bottomed out for a while here, it may or may not start picking up in your area. So I would recommend, if you're selling a house and buying a new one, wait to sell until most of the rest of your divorce is done.
Or, if there is equity in the home and it's really where you want to stay and you can afford it - consider trying to keep it. Usually this is a mistake for women, they get in over their heads and take too much of their share of marital assets in the form of illiquid equity. BUT - right now, when values are down, it could be a better investment than it usually is.
H thinks we'll continue owning the home jointly and sell later when the kids go to college and split it then. I wondered about buying him out but he thinks that's a bad idea.
Adinva 51, S20, S18 M24 total 6/15/11-12/1/12 From IDLY to H moving out 9/15/15-3/7/17 From negotiating SA to final D at age 50 5/8/17-now: New relationship with an old friend __ Happiness is a warm puppy.
Hmmmm...wonder why he thinks it's a bad idea for you to buy him out?
Possibilites:
1) It would leave you cash-strapped with a large payment and no liquid funds (very fair - this is why it usually isn't such a great idea for the wife to keep the house).
2) You wouldn't be able to qualify for a new mortgage in your name only and he wants the kids to be able to stay in their old neighborhood for now
3) He thinks the value of the house is going to increase and doesn't want to let you buy it from him at its current depleted value.
Which of these do you think is the answer? How much is the house worth and what do you owe on it? Could you afford the payments AND repairs?
I don't know how horrible it would be owning it with him. Doesn't seem horrible. I'm sure there are complications we're not thinking of.
Adinva 51, S20, S18 M24 total 6/15/11-12/1/12 From IDLY to H moving out 9/15/15-3/7/17 From negotiating SA to final D at age 50 5/8/17-now: New relationship with an old friend __ Happiness is a warm puppy.
Well - here's the potential downside of keeping the house yourself:
Many women make the mistake of trying to keep the family home (mostly because they don't want the kids to experience more disruption). So they trade, say, their share of their H's pension and of the savings accounts for the equity in the house.
Then they end up with the house, a sizable mortgage, and very little cash. They struggle to make the payments, then pay for the inevitable repairs and maintenance (new roof, painting, plumbing repairs...).
Then there's a large expense or you lose your job. You don't have enough savings and you can't make the mortgage. The house goes into foreclosure or you have to sell it without being able to afford repairs to get top dollar. You end up losing the house equity AND you already gave up your share of the pension too.
On the other hand - if you make a good income on your own, if the house payments would be equal to or less than rent, if the house is newer and in good repair, if you would have enough savings to pay for the unexpected - then it may be a good idea to keep the house. Just ask yourself, if you were looking for a house to buy now, would this house fit into your post-divorce budget? Don't buy more house than you can afford.
Thanks KML, good points. We refi'd and the mortgage now is waaaaay less than the rent would be on a much smaller place. Add to that the property taxes and it's about the same as the rent on a much smaller place. With light rail being built out to our town I think the value will go up significantly.
I'm not sure what my budget looks like yet but the house will cost about half my take-home from my job.
Adinva 51, S20, S18 M24 total 6/15/11-12/1/12 From IDLY to H moving out 9/15/15-3/7/17 From negotiating SA to final D at age 50 5/8/17-now: New relationship with an old friend __ Happiness is a warm puppy.
So - do you mean the current mortgage-and-taxes payment would be half your take-home pay? If so, you certainly wouldn't be in any position to buy your H out of his half. IF you will be getting child support and/or alimony, so that the house payment drops to about a third of your total income, then you would be ok - but still unable to buy your H out (assuming there is equity in the home? If there's no equity, then there's no real buyout - you would just need to be able to qualify for a new loan in your own name). So splitting the house payment and selling once the kids are grown may be an ok option for you. The down side is, if the house goes up in value, you probably won't be able to afford to buy your H out at that time, so you'll probably have to sell and downsize.
Does your H have a pension or 401k? Do you? These are the kinds of questions you need to consider. What are the marital assets and debts, how will you divide them?
Certainly it's not a great idea to keep the house if payments will be half of ALL your take-home income (work and child support or alimony). The general rule of thumb is to keep your payments no more than a third of your take-home income.
