#DivorceFinancialStress #AlimonyWorries #FinancialPlanningAfterDivorce
Understanding Your Financial Situation
Feeling overwhelmed after a divorce is completely normal, especially when faced with new financial responsibilities. It’s important to take a step back and assess your current financial situation. Here are some key points to consider:
– Your monthly income and expenses: Knowing exactly how much money is coming in and going out each month is crucial for creating a budget that works for you. Take into account your salary, alimony, child support, and any other sources of income.
– Assets and liabilities: Understanding your net worth, including savings, investments, and debts, will give you a clearer picture of your financial health. Take inventory of your taxable brokerage accounts, retirement savings, and cash reserves.
Creating a Financial Plan
Once you have a better understanding of your financial situation, it’s time to create a plan that works for you. Consider the following steps:
– Budgeting: Develop a detailed budget that outlines your monthly expenses and allocate funds for essential costs such as rent, utilities, groceries, and transportation. Be sure to prioritize saving for retirement and emergencies.
– Cutting costs: Look for areas where you can reduce expenses, such as dining out less, finding cheaper alternatives for entertainment, or exploring ways to lower utility bills. Every little bit helps when it comes to stretching your budget.
Exploring Additional Income Opportunities
Increasing your income can help alleviate financial stress and provide you with more breathing room in your budget. Consider the following options:
– Part-time work: Look for part-time opportunities that fit your schedule and offer the flexibility you need. Remote data entry or other work-from-home tasks can be a great way to supplement your income.
– Freelancing or side hustles: Consider leveraging your skills and expertise to offer freelance services or start a side hustle. This can be a great way to generate additional income while maintaining your current job.
Seeking Support and Guidance
Remember that you’re not alone in this journey. Many others have gone through similar experiences and have found ways to navigate post-divorce financial challenges. Consider seeking advice from financial professionals, support groups, or online resources to help guide you through this process.
Final Thoughts
While it’s natural to feel stressed and uncertain after a divorce, it’s important to approach your financial situation with a clear plan and a positive mindset. By taking proactive steps to manage your finances, seek additional income opportunities, and seek support when needed, you can regain control of your financial well-being and move towards a more stable and secure future. Don’t hesitate to reach out for help and advice as you navigate this new chapter in your life. Stay strong, stay positive, and remember that with the right mindset and strategies, you can overcome any financial challenges that come your way.
You’re probably going to need to move to a lower cost of living area and sell your car. You presented no other controllable variables.
How old are you? And why don’t you lump sum instead of DCA the $150k?
How long do you have to pay alimony? If it’s just a year you could penny pinch and try to get a cheaper car. If it’s longer than that you need to find somewhere cheaper to live.
You’re 38 with 1M in cash and investments. Stop contributing to the 401K to help ease the burden.
You just got $200k in cash. Your total alimony obligation is $77,400. Take that money and park it in a separate HYSA. Have the alimony directly drafted from that.
Pay off the car. You should still have $100k left over. Park 6-8 months of expenses in a HYSA and invest or save the rest for a home payment.
You just created $2k a month in additional cash flow.
You don’t mention your age but if your NW is almost $1 million, is it possible to scale back the 401k contributions?
Yes, it’s going to be tough. Move into a much smaller home. I moved into a 525 sq ft apartment and somehow carved two bedrooms out of the place. It’s really tight, but both my son and I have our own rooms. My room used to be a large walk in closet!
Since alimony is for a defined period of time. Could you just take the total you will have to pay (~$70k) and put that in a HYSA or SPAXX and just use that bucket to pay alimony while keeping your salary for your ‘true’ living expenses? It seems like once the alimony is gone you will have a better financial picture.
The major issue is the new rent. What if you buy a small 1 bed there, what would be the cost?
Radical idea. Stop renting. Buy a duplex or truplex with some of that 200k and rent out the other side reducing your housing cost. Also sell the car and get something used that will get you point A to B
Parking the $200k in a HYSA at 5% is the way. For the 1st 6 months, despite reducing the balance by $1500/mo, you will still earn over $800/mo in interest. The interest will cover approx 53% of your alimony payment. At month 18, your balance will be approximately $173k and your alimony will drop to $1200/mo. You will still be earning over $700/mo in interest so now the interest will cover approx 58% of payment. At month 61, your alimony payments will stop. Without the interest, your balance would be $122,600. But by having interest cover over 50% of your payments over 60 months, you should still have over $150k left
You could get an apartment mate. It doesn’t affect your kid’s visitation.
People still get alimony in 2024? She must’ve had a hell of a lawyer.
Maybe use some of your cash windfall to pay off your car. That’d free up some cash.
I agree with the others — it’s stressful but you have the capital and investing resources to get through this financially.
Take a pause, breathe, then start crunching numbers and you got this.
Could you buy a home???
Because I didn’t see anyone mention it – I would switch some, if not all, of your 401k to traditional. For one it’ll “give” you back the money you’re paying on taxes. But now that you’re single you’re about to jump up tax brackets. I make about the same after 401k/health insurance as my parents have as retirement income, but I pay almost double them in taxes thanks to the single filer bracket. So you’re about to pay a lot more taxes. Plus you need something to fill up the bottom brackets when you retire anyways.
Why are you doing a ROTH401k when a regular 401K would be better based on your income level? It would also give you an extra $300~ a month in your budget if you made the switch.
You need a raise. I manage one person in a nonprofit and make the same as you in a HCOL area.
Based on the volume of people you manage, plus your education level and age (which I am assuming but I guess it’s possible I’m wrong means a higher experience level), you are very underpaid, my friend. Lots of great tips here to use your existing capital in smart ways, but if I were you, I wouldn’t waste my time trying to find remote work data entry jobs. Find a new FTE. I don’t know what industry you’re in, but I bet you can make almost double that in base salary if you make a jump elsewhere.
How do you have $325k in a Roth IRA? Is that maxed out annually since your late teens?
honestly you are doing better then most in your situation
All these headaches, meanwhile his ex is going to find some richer dude to prey upon and she’s going to spend his cash to live a good and happy life.
You are managing 24 people for $95k!?! Time to polish that resume because you are underpaid.
I agree with the others about parking the entire amount of alimony in a high yield savings account and having it auto-deducted. That would take that expense out of your monthly budget.
Are you planning to buy a house or condo in the next few years? If so, park the rest of that $200k in another HYSA to save toward d that purchase. Money you need within the next five years shouldn’t be invested in something as risky as stocks. There’s a lot worse positions you could be in than to have $100k+ just sitting and waiting for the right moment to buy property.
Since your retirement accounts, so far, are in Roth funds, you could afford to change current retirement contributions to Traditional 401k investments. This would defer both federal and state income taxes (if any), giving you a little more room in your monthly budget. And it’s easy enough to change contributions again in the future when your situation changes.
Lastly, your income seems low for the level of responsibility you currently have. Instead of looking for a low-paid side job, consider brushing up your resume and using your recent experience and responsibilities to obtain a better paid full time job in management elsewhere.
Know that this anxiety you’re experiencing is normal. Putting together a plan you can live with will improve things a bit.
FWIW – money tends to flow in and out like this over the decades. It sounds like you’ve done a good job saving when it was easier and you can scale back a bit now. Expenses and income will always fluctuate, but they will swing back in a positive direction too. If you have a pension and that much for retirement saved, get your 401k down to the match max, earn interest off the house sale and then exhale. Your past choices have you well prepared.
I would ask your attorney to contact her attorney and see if you can buy out the alimony for a lump sum payment now for $50k. Make sure the attorney files a motion & final judgement ending your obligation. That saves you $27.4k. In my experience lump sum offers are almost always accepted. Doesn’t hurt to ask.
Aside from the financial advice, go find a better main job, not a side job. Managing 24 people with a masters should be worth way more if you truly are somewhere the rent can’t go below $2500/mo. Especially with the experience now.
How are you paying alimony when you’re on ~120k? I thought alimony was rather rare (10% of divorces)
Just genuinely curious