We’ve all heard the horror stories about someone losing big in a litigated divorce.
Their lives are turned upside down:
Dad is forced to rent a basement apartment and believes he can only retire at eighty.
Or Mom must move back in with her parents. She gives up all the little pleasures she took for granted – lunch out, even a movie becomes a luxury.
In Mediation, we concentrate on how to practically divide your families finances, so both parties with their children can live comfortably after divorce.
We ask our clients to fill out the monthly budgets we provide, so they have a realistic idea of their living costs post-divorce. And they can find ways to compromise with each other in mediation to make both of their budgets work:
What You Should Include in Your Budget of Monthly Expenses Post-divorce:
THE THREE BUDGET BIG SHOTS:
We divide our budgets into three categories that cover most of your living expenses: SHELTER, TRANSPORTION & PERSONAL >EXPENSES.
We ask you to approximate how much your share of the budget will cost and how much will be needed for the children while under your care.
SHELTER: You’ve thought of the big items: rent or mortgage payments, real estate taxes or co-op maintenance.
But what about all the small items that add up: heat, utilities insurance (tenants or home), air conditioning, home repairs (which can become with major costs), cell phone, house phone and cable bill?
And when you consider shelter costs, you need to factor in where the children are staying most of the time. Are they spending equal time with both parents, and both parents need to provide them with their own rooms? Or even if the children stay only for a weekend in a parent’s home, they still need some space they can call their own and have privacy.
TRANSPORTATION: Do you travel by car? If so, is it paid for, or do you have to calculate car payments in your monthly budget? Car insurance and maintenance need to be factored in too, along with the price of gas (which does fluctuate). But don’t forget tolls – which you can guarantee will always go up!
If you travel only by subways and trains, then the same is true. Here today, higher tomorrow!
A factor to consider in transportation is, how do you get to work? If you live in Manhattan, and when you were married had a car only for the luxury of occasional getaways, maybe this is a smart cost to cut. (And rent a car for those trips). Also are there any extra costs for the kids traveling to school or extra-school events?
PERSONAL EXPENSES: This includes everything else in life! But don’t be intimidated in calculating these expenses. When determining them, prioritize and start with the necessary expenses: non-reimbursable medical expenses, life insurance, medical insurance, children’s school costs, debt repayment, psychotherapy, orthodontics, babysitting and clothes. Yes, some of you will be very pleased that clothes are included; we’re not necessarily talking about the latest Prada, but you do have to keep up appearances, and dress approximately for work (so yes to Prada if you work there!). Also the kids obviously need clothes. Food too, and it may or may not include eating out.
There are luxuries you might have to cut back on. Facing that reality is hard. The amount you spend on haircuts, sports, clothes, restaurants, entertainment, etc. But at least you know that you’ve set your priorities correctly so that you and your children can live comfortably.
In our next blog, we talk about the most effective way of filling out the budget: Yes, you can approximate, but don’t hesitate to investigate certain costs early!