Expect a significant lifestyle change
Finances after a Divorce
by Jeanette L. Soltys
A Financial Safety Net for Single Moms
13 Secrets to Successfully Taking in a Roommate
Ways to Reduce the Financial and Emotional Costs of a Divorce
Financial Questions for People Getting Divorced In Their 50s
As a divorce attorney and divorced single mom, I am familiar with the challenges faced post-divorce. I've helped hundreds of people through the divorce process, and the most difficult area of adjustment involves finances. It doesn't matter if your joint household income was $400,000 or $40,000, everyone experiences a significant lifestyle change after dividing one household into two.
Most of my clients have difficulty accepting the financial realities of divorce. Holding on to unrealistic expectations only holds you back from making plans to move forward financially and achieve happiness. Your lifestyle is going to change, and it will change significantly. Remind yourself that it's just "stuff," and money doesn't buy happiness. Accept this, and make a plan for how to live well on your new budget. Failing to do so will lead to financial disaster, which is not uncommon after divorce.
Even if you can afford to stay in the marital home, ask yourself if it is necessary. Is it realistic to clean a house that may be bigger than you need and care for the lawn and landscaping yourself? If not, can you afford to pay someone to do these tasks? What will you give up to afford this? Is the tradeoff worth it?
In my situation, I kept the house and my ex moved to an affordable apartment down the street. The house is small and manageable, but I wasn't prepared for the amount of work involved with the big yard. Initially, I paid someone to maintain it. However, I was unhappy using money that I could spend on more "fun" things, so I learned how to do this chore myself. Mowing grass is something I had never done before and something I planned to never do. Before marriage, I lived in a townhouse for this very reason. But life changes and we have to adapt.
Another way to have plenty of wiggle room in the budget is to get a roommate. I can hear the protests. "I'm 35 years old!" or "I can't move strangers in with my child!" Well, this 36-year-old single mom attorney does this, and it's fabulous. My current roommate is a 35-year-old therapist with two great kids, and at the end of her lease, a teacher and her 9-year-old daughter are moving in. The camaraderie and support from living with another single parent who has been through the same life transitions is invaluable. My roommate and I help each other out with childcare, take turns grocery shopping and cooking, share household chores, compare notes on men we date, and lend an ear when the other has frustrations involving co-parenting. With the right roommate, a house that was filled with unhappiness and arguments can become filled with laughter and friendship.
I now have an extra $800 per month in my budget, and living with a roommate in my single family home is several hundred dollars less per month than a small apartment in an inferior school district. I put some of this money into savings, and the rest is spent on vacation.
I am regularly surprised by the large car payments clients take on relative to their income. Over-extending yourself causes stress that is much worse than downsizing your house or downgrading your car. A rule of thumb is to keep your car payment at no more than fifteen percent of your after tax monthly income. Even that is high for someone with student loans and/or credit card debt. My own car payment is 7% of my take home pay, and with my student loans, savings goals, and desire to travel, a higher car payment would be a stretch.
Unless you are a millionaire, you should buy used. Cars are a terrible investment, and it's best to let someone else take the hit on depreciation. A very reliable sedan can be purchased for well under $15,000 and will last you for years. Keep your car payment low to give yourself breathing room.
Want to pay off your car faster? Consider refinancing into a lower auto rate.
Last week, I spoke with a client who makes $35,000 and has completely unrealistic lifestyle expectations. She nearly cried when I told her to trade in her expensive car, and that opening a store credit card to furnish her apartment with all new items is a huge financial mistake. Many newly divorced people make excuses to use credit cards, justify it by defining wants as needs, then end up with an extreme amount of financial stress and often in bankruptcy. Do not even use credit cards. With your now smaller household income, it will be hard enough to budget and adding consumer debt just makes your life more difficult.
Retain what you can from the marital home, even if it's not new or exactly what you want. Fill in with inexpensive finds from Craigslist or yard sales. Then over a few years slowly replace things, or if you are like me, embrace that having a little kid means it's better to have inexpensive household items.
Would you like to
pay off your credit cards
in less time
for less money?
Other Budget Busters
I once complimented a client on her new hair color, which resulted in her angrily saying, "Thanks, but it's only this color because now I can't afford my hairdresser!" This client was clearly not past the acceptance stage. There are many small things that most of us can cut out to save money. Pick up a personal money management book and commit to sticking to a realistic budget.
Letting go of the notion that money can buy happiness and accepting that you must downsize your lifestyle are two of the first steps in creating a fulfilling life post-divorce. Trying to hang on to a lifestyle you can't afford sabotages your fresh start by creating a stressful financial mess. Divorce can be freeing, and part of this is letting go of the "stuff" and creating a new, independent life void of the stress of an unhappy marriage. Don't replace one source of stress with another by failing to budget appropriately.
Reviewed August 2017
Jeanette L. Soltys practices family law in the Atlanta area, with an emphasis on contested custody cases and adoption. She is passionate about assisting clients through difficult life transitions and helping them achieve an outcome that is best for their family.
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