In our last blog, we discussed how we use budgets in mediation to ensure that parties have a realistic idea of their expenses and agree to terms that allow them both to live comfortably.
But we’re aware whenever we mediate in New York City and on Long Island, we’re not budgeting for just any place. We’re budgeting to live in New York! The expression usually is – Go big or Go home! But in New York, if you go big to go home, you could go bankrupt!
New York is one of the toughest towns to find decent housing. According to StreetEasy in 2015, “the typical household in the city will have to spend 65.4 percent of its annual income on median asking rent!!” And Long Island gets its own shout out as one of the highest taxed areas in the country!
So it’s not surprising that the greatest financial concerns couples often have when divorcing in New York City and on Long Island is how will each find an affordable new place to live.
When a couple divorces, they are faced with the old adage: Two can live cheaper than one.
We’ve found in our practice that unless couples are in the top .1%, most face the prospect that two separate households aren’t easily affordable.
Recently a couple with a combined income of $400,000 faced the daunting task of renting two apartments in Park Slope. They shared custody of their two children. They wanted apartments near each other, and also they wanted to remain in the same school district for their kids. Their current rent of $5,000 a month was doable when the family income was $400,000. But each made about $200,000 a year. Which meant neither parent felt he or she could afford to continue living in the family home.
When we help couples work on their budgets, the first item we often suggest each party tackle is housing because until you know you have a roof over your head and how much that roof costs, it’s hard to budget for anything else.
While it may seem like an insurmountable task to work on housing in a mediation, it could and should be done. We help you by:
1. First having you face the issue: Many parties haven’t even discussed when they want to start living apart. You and your partner might not have the same agenda. Or worse, both of you might have the same agenda – each was planning to take over the apartment lease on your own!
2. Encouraging you to take a proactive approach. Don’t wait until the ink is dry on your Judgment of Divorce or the lease is up on your marital home to start looking for an apartment or a house. Right from the beginning, check out different neighborhoods, the costs of rentals in an area. Or the price of a home or apartment. Test out a commute from a new neighborhood to work.
3. Discussing how you can keep home costs down while giving your kids what they need. That means setting priorities. That couple with $200,000 a year in salaries both felt that the Park Slope schools were the biggest priorities in their children’s lives. Which meant renting in the area. The tradeoff was sacrificing space. The father rented an oversized one-bedroom and gave the girls the bedroom. The mother rented a junior four and slept in a small nook.
4. Brainstorming living options with you and encouraging you to consult a financial expert if you’re unsure how much you can really spend. We’ve sometimes found that parties really don’t know how much their housing will affect their bottom line. Have you calculated the additional cost of commuting if you leave the city? Are you reluctant to buy because you’re concerned about mortgage payments, but you haven’t factored in the various tax benefits of owning property?
Post-divorce, living in New York City or on Long Island, can be a budget buster. But as mediators, we help parties realistically prepare for living apart. So that after the mediation ends, a new house can really feel like home.