Archive for August, 2010

Budget Blues

Monday, August 23rd, 2010

The truth of divorce is that it is a great destroyer of wealth. Very few people, caught in the vortex of a failed marriage, appreciate that their divorce will cast a long shadow on their lives a long time after the judge signs the divorce decree.

A couple in an intact marriage who managed a house and home quite easily very often find themselves struggling to manage two households as separate people. To some it comes as quite a shock to have to think twice about out-of-pocket expenses that once were incurred without a second thought. Or to tell a child reeling from the pain, suffering and dislocation of his parents divorce that he cannot go to camp this summer because the money is not there.

Custodial mothers in particular very often find their finances to be a pillar-to-post struggle where an unanticipated bill signals a crisis. Living paycheck to paycheck adds even more stress to the already stressfully existence of a solo mother.

To the point here, divorce very often means that the former spouses now each have to live on budgets – explicit plans that realistically show income and expenses. Very often this plans may require that the former spouses cooperate with each other, for example, paying spousal and child support promptly.

Divorcing couples face a myriad of decisions, particularly in the early days of separation and divorce, and the prospect of sitting down and making a budget, which many find unappealing under the best of conditions, is even less appealing in the wake of a marital collapse. However, a failure to face the fact that a divorce has changed financial circumstances, that a budget is now inescapable, and that the days of easy living are gone for a long time carries a stiff penalty. Separation and divorce are tough enough without the budget blues making them even more difficult.

Paying the Bills on Time

Monday, August 16th, 2010

Couples in the midst of a divorce very often lose many of their established routines, for example, who pays what bills when. It’s not that they don’t have the money; it’s just that in the enormous confusion and dislocation of a separation, one or both spouses simply forget to pay the bill.

Creditors are unmoved by such excuses. Late payments not only mean late charges (an expense that no one wants and divorcing couples can ill afford) but also increase the risk of damaged credit ratings. And the last thing a divorcing person wants to add to his or her list of woes and worries is a damaged credit rating.

Preventing late or missed payments usually means that the couple work out some kind of interim routine about paying the bills. Prompt payment of the regular bills (mortgage, utilities, property taxes) is worth cooperating with a separated spouse.

Many divorce financial planners recommend that the separating couple immediately cancel any joint credit cards and transfer the unpaid balance to a card in the name of the spouse who will responsible for its payment.

When it comes to bills, divorcing couples should remember joint and several liability. This means that a creditor can move against either spouse for a bill that is in both their names.

Teen years mean “…all sorts of new costs”

Wednesday, August 11th, 2010

The divorced parents of teenagers very often come into conflict and disagreement about the expenses associated with their children in these years. Divorce parenting means paying for a third or fourth computer for the children’s other home. And parents, particularly divorce parents who may feel twinges of guilt about the situation, are particularly vulnerable to the maneuverings of the adolescent children who want everything in sight.

It is easy to see how an enterprising teenager can pay one parent against the other when Mom says no to the iPhone and Dad say well, maybe…

These expenses are not small, and they easily exhaust normal child support payments.

Parents know that children are expensive to raise and parents do not look upon their offspring the same way they might a business expense. Nevertheless, divorcing parents should realize that their children become more expensive as they move into adolescence, and that the expenses are seldom covered by negotiated child support arrangements. “[P]rom expenses, cheerleading, sports gear, cars and car insurance, allowance and college visits and applications,” says a California Morgan Stanley Smith Barney financial analyst, are only a few of the items that add up to “…all sorts of new costs.”

See You in Court (Again)

Monday, August 2nd, 2010

There’s a popular song with a refrain that goes: “You never can say goodbye. No, no, no, you never can say goodbye.”

That’s what happens when after a divorce former spouses face each other in court again when one asks the judge to modify a court order about spousal or child support or both or the terms and conditions of custody and visitation.

Very few divorcing couples consider that long after their divorce, they may be still be paying for it in legal bills occasioned by modifications, which are court orders to change previous court orders.

These court actions, even when they come about for good-faith reasons, have a way of bringing out the worst in the party hauled back into court as the defendant or respondent in an action. The party must answer the allegation, which means more legal bills.

Modifications can become an expensive item that must be faced. One cannot appeal to eliminate child support, for example; however, one can appeal for a change in the amount due to changed circumstances. Courts entertain motions to modify spousal and child custody and support because of a change in circumstance in the lives of the either the custodial or the noncustodial parent, in the case of custody, or in the lives of the payor or the payee, in the case of alimony. Changed circumstances very often involve the reduced or increased income of one of the parties. Very often the custodial parent (usually the mother) seeks to modify the child support because of increases in the cost of living.

Sometimes couples can head off the need for court appearance by taking care in the language of separation agreements. For example, some separation agreements provide for automatic escalator clauses that eliminate the need for court-ordered modification.

Sometime former spouses see one another again in court when the custody and visitation routines break down, or when the custodial parent attempts to remove the child from easy visitation by the noncustodial parent.