#PostDivorce #FinancialPlanning #RetirementGoals
Assess Your Current Financial Situation
After going through a divorce, it’s important to take stock of your current financial standing. Look at your income, assets, debts, expenses, and savings to determine where you stand financially. Understanding where you are now will help you make informed decisions about your future financial goals.
Create a Budget
With your income, expenses, and debts in mind, create a budget that aligns with your financial goals. Consider any child support payments, retirement contributions, savings goals, and other expenses you may have. Having a clear budget in place will help you stay on track and make informed financial decisions.
Set Financial Goals
Now that you have a budget in place, it’s time to set financial goals for yourself. Whether it’s saving for retirement, building an emergency fund, or investing for your children’s future, setting clear objectives will help you stay motivated and focused on your financial journey.
Seek Professional Help
If you feel overwhelmed or unsure about your financial situation post-divorce, consider seeking help from a financial advisor. They can provide guidance on budgeting, investing, retirement planning, and other financial matters to help you achieve your goals.
Focus on Building Your Financial Independence
Coming out of a marriage where finances were controlled by your ex-spouse, it’s important to focus on building your financial independence. Take control of your finances, contribute to your retirement accounts, and start investing in your future to secure a stable financial future for yourself and your children.
In conclusion, navigating your finances post-divorce can be challenging, but with a clear plan, budget, and goals in place, you can get back on track and work towards a secure financial future. Remember to seek professional help if needed and focus on building your financial independence for a brighter tomorrow. #FinancialFreedom #StartingOver #MoneyMatters 🌟
Seems like you’re doing fine. Make a budget and follow this flowchart: https://i.imgur.com/lSoUQr2.png
Re HSA, if you can max it out and invest it (pay your expenses out of pocket) you can reimburse yourself way down to line
You make a rough quarter million a year and feel like you’re off track?
Invest in as much as you can pretax to lower your taxable income. Might even be able to put yourself down a bracket for taxes plus saving for retirement!
Only put enough in your 401k to max out the match, then invest in other ways. You’ll do better. You can do a Roth conversion.
This isn’t a clear budget and that’s the place to start.
I’m going to guess your net income is somewhere around $14,000 a month? Take that and start subtracting fixed/regular expenses like your child support, mortgage, life insurance, groceries, utilities, etc.
For example, I’m guessing your mortgage payment every month is around $5,000. So $14,000 minus $5,000 = $9,000. If you’re spending $200 a week on groceries that averages to $850 a month, so $9,000 minus $850 = $8,150. Etc.
If all the things you *need* to pay every month exceed your monthly income or come really close, you have a problem. If they don’t, you’re off to a good start and the question becomes how much surplus you have and what your goals are with that money.
But honestly just the amount of income you make is your biggest advantage. Its hard to spend that much money in a month if you aren’t being willfully frivolous.
Don’t use hsa for your medical expenses (and make sure to invest the balance) and continue everything else you are doing.
I recommend looking into ‘Money Guy’ and the financial order of operations. I’ve been listening to their podcasts a lot.
(You probably have heard of Dave Ramsey as well but that’s essentially for folks who are terrible with money, it’s more like the AA of personal finance IMO)
You earn $250k/yr and have extremely sensible housing for that massive income, I just don’t understand what there is to sort out
I’m in a (roughly) similar situation.
1. I assume that you are now stuck with a high-interest mortgage post-divorce. This should be a target. Develop a plan for how long this would take to pay off, and keep in mind that refinancing is an option if rates go down a bit, but that will depend on how long it will take for you to pay this off. If you end up thinking you can pay it off in 3 years and 1.5 years from now rates go down, it might not make sense to pay the closing costs just to lower interest for 18 months… it’s all a numbers game but keep it in mind if rates drop.
2. If your car loan rate is higher than the mortgage rate, pay it off first… or if you just want to get rid of that one so it’s not a factor, that makes sense too.
3. Your $25k in savings is a good safety net. Make sure it’s in a place earning 4.5+% as that’s very easy now. One easy place to put it would be a fidelity brokerage where you can invest in something like SPAXX which should be pretty safe, but there are a billion routes you can go down here. Just make sure it’s not parked somewhere making 0.9% or something.
4. If you’re concerned about retirement, consider treating your HSA like a retirement account instead of a health spending account, but you can make that strategy shift at any time. Just another retirement vehicle.
5. For another retirement savings vehicle, open an IRA and contribute to it, your income will exclude you from the tax advantages but look into backdoor roth IRA conversions, they are very easy, common, and can allow you to enjoy the tax benefits.
Financially problematic marriages suck, that plus the divorce weighed you down, yes. But your income is good and you aren’t too old to get a good nest egg going by the time you want to retire. Remember that tax advantaged accounts are great (401k/IRA/HSA) but at the end of the day anything that increases your net worth will help you in retirement, So don’t fall into the trap of sort of feeling like extra mortgage payments are “thrown away”. The interest you are preventing yourself from paying will be a big factor in your net worth at retirement time.
That said, at your income, any tax advantages you can get are saving you a lot on taxes, so don’t skimp on 401k/HSA/anything else. Your income is high, and you probably aren’t seeking to be in this same tax bracket in retirement, so that is going to push you towards traditional vs roth basis on things like 401k contributions. It’s likely that it makes sense to defer those taxes until retirement when you “make” less. That isn’t enough to push you away from #5 above though, even though that’s a roth basis it’s still a tax advantage and you should pursue it.
As far as saving for kids, that’s a responsible thing to do, but the tax advantaged ways to do this aren’t as attractive as things like your 401k. Don’t sacrifice your retirement accounts to save for the kids, as retirement accounts get you more bang for your buck. idk your kids’ ages but say they go to college in 8 years,… if they have a fat college savings account, or you have a fat wallet because you aren’t paying mortgage anymore and are pulling in dividends of your own… either way you are set up to fund their college, so you have a lot of flexibility on how to save. So this is personally why I’d be focusing on net worth in general instead of college savings accounts… that said, you know yourself, if your discipline is less than A+ and you’d feel safer having that money in 529 accounts for the kids, do it, nothing wrong with that.
I have been there and dug my way out. I used the priority order from Dave Ramsey:
1) Get out of debt by paying off car
2) max out 401k. Your balance is low so skip Roth anns use traditional 401k
3) Fill up 529 plans to play for college
4) Pay off your home
5) Invest in rental properties, index funds, etc.
In 5 years you will be in a dramatically different position.
“are well beyond my income and assets and I’m feeling behind.”
So what? Stop looking to them and all their stuff. Envy is a killjoy. Be proud that you are ready to sort your lifestyle to make the life you want, and to show your kids how to adult. That means not trying to keep up with the Jones’, but leading a responsible life. Perhaps you are running with the wrong crowd.
“because of my expenses between home, car, child support.”
They are not very high. Certainly not by comparison to your inflow. Where do you think all that extra money is going?
“Bought in 2022 for ~$660, over invested but it is now valued around $750k and I owe $600.”
What does “over invested” mean here? Did you put 5% or less as the downpayment?
Being taxed very high because you are a high income earner, isn’t an issue. and stating it like this is called reverse-bragging. It’s just your life. Set aside all these things that do not matter, but are wasting your energy and thought process.
An HSA is for Health costs. That’s not the best savings or investing vehicle. It has its own place in your full financial picture. It’s a tax-advantaged spending account for that reason. Leverage something more useful for retirement savings, such as mega-backdoor Roth or backdoor Roth IRA.
“Child Support – $1376/month (non tax deductible in my state)”
They are *your children*, not business expenses. What you pay in child support, plenty of people incur in child care and make 1/5 what you make. You likely want to start saving for the kids’ education; you can do an Oregon College Savings Plan, for instance.
“for my two kids so they have something when I’m eventually unalive”
That’s not really a reasonable goal, nowadays. You want to live well, age well, and not be a burden to them. You want to have the resources to be there for them. You don’t need to leave an inheritance (unless you are a Rockfeller or Hilton or something; then how could you not leave something). Look at their ages. If your likely lifespan will take you to 80, how old will they be, and where will they be in their life’s arc? Perhaps you want a Term Life Insurance policy, a fixed rate for 20 years, which would cover things if something happens to you while you are trying to straighten out this lifestyle, and while they are still growing up and going to need education and support.
You need to identify your goals, then turn them into targets and tasks, such as: pay off the house in 15 years. You should be able to pay off the car in, what, 3 months max? The goal is to get out of debt, stay out of debt. Then, build your future.