One of the most stressful parts of getting through divorce is dealing with all of the financial implications. Parts 1 and 2 in this series looked at finding a new place to live, and permanently separating your finances from your ex. Today we’re looking at budgeting for your newly single lifestyle.
When you were married, there were a lot of expenses that you shared with your wife. For example, you shared one mortgage. Now, you are on your own with mortgage or rent to pay. But it doesn’t end there. Let’s dive right into the kinds of expenses you can expect now that you’re divorced.
Working out a budget from the beginning, will help you make informed decisions as you begin your life after divorce.
Alimony and Child Support
These are hefty expenses that you may not be able to avoid. As part of the divorce decree and custody arrangements, you may be required to pay a periodic (usually monthly) amount for alimony and/or child support. Unless you go back to court and have the amount changed, consider this a fixed expense every month for the ordered duration.
Shelter and Utilities
Unless you land in jail for not paying alimony or child support, your living expenses for housing and utilities will consume a significant portion of your income each month. Creating a budget will help you choose a house or apartment that you can afford.
Remember that even if you have kids, you don’t necessarily need all the space you had in your marital home. A small house or a two-bedroom apartment may be enough for the time being. Your new housing isn’t permanent and it’s okay to rent instead of jumping into a new mortgage.
You’re going to have basic expenses to factor in regardless of where you choose to live. To start with, you’ve got a mortgage or rental payment every month. If you’re in an apartment complex, you may also have to pay for a parking space.
If you will be responsible for your own utilities, be sure you know which ones and approximately how much they will be. Gas, electric, cable, water & sewer, and trash removal are common utilities. For things like gas and electric, the utility company may be able to tell you the average cost for service at that address. The basic cost of rent may be cheap, but if the utilities will suck you dry, that rental house is no bargain.
Food, Clothing, and Other Stuff
If you aren’t sure of the amount you need to budget, keep track of what you are spending on food. Not just the grocery store bills. Include those daily large coffees and the carryout pizzas. It all adds up, and this number will help you out later.
You can create a separate line for pet food and supplies, too. We know you would starve before you let Old Blue go hungry.
Any other expenses for clothing or anything else you can think of, needs an expense line. Try looking at your bank records from the last couple months for point of service debits if you need to refresh your memory.
Your budget isn’t just about alimony and household bills. There’s still more to factor into the equation.
Be Prepared for Child Care Costs
Depending on your arrangement with your ex, you may have the kids even when you have to work. In that case you’ll probably need childcare. The cheapest option is to ask friends and family to help out. Grandparents usually love spending time with their grandkids but they may resent being used as a free babysitting service. If you call on family and friends, make sure you don’t do it too often and offer some kind of gift or gesture in return.
If the kids are already in a care situation they are comfortable with, try to work out a proportionate sharing of the cost so you can keep them with a familiar caretaker.
Your budget should include line items for gasoline, maintenance (oil changes, tires), registration and inspection fees, and auto insurance.
Be realistic about your gasoline expenses. If your kids live just down the road, that’s great. However, some guys aren’t so lucky. Travel costs can quickly become a huge chunk of your budget. Whether you drive 45 minutes to pick up and drop off your kids several days a week, or upward of an hour to see the kids twice a month, it still adds up. Pro tip: It’s better to estimate high on your monthly gas expenses, in case of rising gas prices. What is the highest price-per-gallon you’ve paid in the last year? Don’t think it can’t go back there.
Pro tip: It’s better to estimate high on your monthly gas expense, in case of rising gas prices.
If you’re on speaking terms with your ex, work on a compromise. Maybe you can arrange to meet half-way between your two houses or maybe you alternate pick-up/drop-off duties. If the kids are old enough you can look into getting them public transport passes. Most cities offer student discounts. This option could save you money, and has the added benefit of teaching the kids responsibility and independence.
If you’ve moved out of state, you’ll have to budget for long-distance travel. When flights are your only option, make sure you plan ahead and check out online discount sites. Keep track of frequent flyer miles that may help offset some travel costs later on.
Debt Payments and Insurance
Your budget will need to include monthly expenses for credit cards, car payments, and any other recurring payment, like medical and dental bills for you or your kids.
Make sure you budget for your car insurance, and any other insurance you may require. Does your divorce decree obligate you to carry a life insurance policy for the benefit of your children? Do you have health insurance premiums to pay that aren’t already coming out of your paycheck? Make a budget line for each one.
The Who Are You Kidding Expenses
If you buy a 30 pack of beer every Friday, or smoke two cartons a week, make sure you have a budget line that accounts for those repeating expenses. Include it under “recreation” but don’t kid yourself that it isn’t showing up on your bottom line.
Want to join the local skeet club or plan to spend every other summer weekend river rafting?
Whatever it is, own it, enjoy it and put it on your budget. It’s your budget.
Creating a Basic Budget While Getting Through Divorce
The first step to creating your budget is to get it down in black and white. Mint.com has come up with some very useful budget templates you can download to help create a budget that works for you. Either download a free template or create your own spreadsheet. Old school? Get out your pencil, paper and calculator.
Make sure you have a line on your budget for every one of your expenses, even if you don’t pay the bill every month. For example, if you pay your car insurance quarterly, take that amount and divide by three to break it down to a monthly amount.
You won’t spend this, you’ll put it in the bank and only spend it when the payment is due. If you have any variable expenses (bills), budget monthly for the higher amount of the bill.
Next, account for your income. For budgeting, use your net income, also called take-home pay. The net income is what you will use to pay the rest of your bills. Don’t include income from seasonal or occasional jobs since it’s not reliable. If you are paid hourly or on any kind of variable contract, use the minimum income you’d expect to create your budget. Try not to rely on overtime pay to balance your budget. As we’ve learned from the recent recession, overtime is the first thing to get cut when the economy is slowing down.
It sounds like you’re cheating yourself but you’ll be grateful for it when your budget is covered by your base pay, and you can save any extra income from a good month.
When Your Expenses Are More Than Your Income
If you get a negative number when you subtract your expenses from your income, you’ve got some work to do. Getting through a divorce has taught you to be resourceful, right? Take a look at your draft budget and decide where you can make some cuts. If at all possible, you want a positive figure so that you can allocate some money to a savings account or to paying off outstanding debt. If that’s not possible, just make sure you get to zero. No negative balance!
Look over your expenses line by line. Do you need a land line and a cell phone or can you get by with just your cell? Do you need home internet, or is your data package large enough that you can use that in emergencies and use the library or a coffee shop to get wi-fi? Do you really need the super-amazing sports package the cable guy wants to sell you, or can you watch the game with a buddy if you really want to see it?
Remember that budget line for groceries? If a chunk of that was fast food, you can start using a travel mug for coffee and stocking up on frozen pizza to save some bucks.
Adjusting Your Income
Your income is your income, right? It won’t change unless you get a raise at work? Not necessarily true. Are there optional amounts deducted from your pay each period? Take a hard look at what you are purchasing. Some fancy optional insurances, like cancer policies, might have seemed affordable when you were part of a two-income household, but is it appropriate for you now that you are in the midst of getting through divorce?
This is a tough one, but consider your contributions to a 401K, or other retirement plan. If you are swamped with debt that needs to be paid off, you may need to dial back those contributions for a year or more, until you are more financially stable.
Those athletic shoes your kid outgrew in two weeks? Wash them and sell them online. You may not get what you paid for them but every penny helps.
Do you have a particular talent or skill? See if you can turn it into a job. For example, if you love playing guitar you could look into teaching lessons in the evenings or on Saturdays. It will give you some extra cash but also keep you busy when the kids are with their mom.
Extra Budgeting Resources
There are thousands of tools online that can help you create a comprehensive budget for getting through divorce. Creating and living by a budget is a part of your new lifestyle, and just like getting on with life after divorce, it will take time to adjust.
If your budget isn’t working, it’s okay to revise it. Your life is changing, and so will your budget. Just keep tracking your spending and fine-tuning your budget until you get it right. It won’t take as long as you think!
Tell us in the comments how your budget fared while getting through divorce.
If you are a Financial Advisor who is interested in providing services to men facing divorce, we’d like to help by connecting you with the Guyvorce Community. Because every little bit helps. We know. We’ve been there.
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