I am fearful of refusing because I worry she will make me into the villain.
Why are you fearful of this? In her eyes, you already are.
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The truth is, I am now in serious debt and I am reticent to spend on almost anything right now. The kids are clamoring for more extracurricular activities and more material things, and I am more concerned about rent, tuition, and food bills. They did not ask for D, and I feel terrible that I cannot provide them with the things they want. This just worsens my resentment of STBXW.
Similar situation here. We used to go on trips every year with the kids and take them to all sorts of places. Now, I can't afford that stuff anymore. However, I found that doing free stuff (and there are tons of free things) to be much more rewarding and they will remember it just as well, if not better. Take them fishing. Build models. Play games. Play tennis. Whatever. Just do it. Be the best you can and they will see. Be careful about all this buying stuff...
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On another note, I have joined a dating website. I have already "met" a couple of women. These short-lived exchanges over the website have been invigorating. I have not even made it to the phone stage, but I did get a personal email address. I am so missing intimacy in my life - as you have all heard me lament before. I am going slowly, but I think I am ready to test the waters a bit. If I wait until I have healed completely or until my finances are sorted out entirely, I will never start.
Might want to check with your lawyer first before any dating is done if you two are married...even if you are separated, you are still married.
There are moments in this life when you are so confident in the rightness of your actions, that not even for a second do you consider the option that you might be wrong.