Divorce can (and often does) kick big holes in your financial plans. You go from living as a couple, sharing one home, sharing expenses, to carrying all your living expenses by yourself. If you have children, additional costs come in to play when your family situation changes.
I’ve been separated/divorced from my first husband for almost 13 years. I remarried more than 11 years ago. While I never asked for or expected spousal support (alimony), we did have two children together, and child support was part of our divorce agreement.
We separated when our kids were just babies – our youngest was only 3 months old. In the early days, he paid me support based on a verbal agreement; later on the amount was written into our custody agreement based on Federal guidelines in Canada. As a single mom, I depended on that support. Even after I remarried, that monthly amount was an important part of our family budget.
Without going into a lot of personal details, our divorce was not always friendly. We spent several years battling over custody (costing us each tens of thousands of dollars – so stupid!), and eventually, my ex-husband quit his job to go back to school full time – leaving him unable to pay his child support. The judge ordered it to continue to accrue, but that did me no good when I had bills to pay.
This was my first lesson in not depending on that income source for our day to day expenses (I should have known better, he wasn’t exactly financially reliable when we were married either, but that is a post for another day).
Fast forward almost 10 years. After a few years of struggling, things got better. My ex got a job after graduating, and started paying support again. Bruce (my current husband) got a better job too, and I landed a terrific position with a fairly large company. Things were going well. We built a new house, and other than our mortgage and a line of credit, were mostly debt free. A few hiccups happened, but nothing we couldn’t handle.
We had a plan – we would use the child support money to help pay down our debt! That way, we weren’t depending on it. And that plan was great – right up until one of my sons decided to go live with his dad. Now instead of him paying me support of over $700 a month… he doesn’t have to pay me anything, and I have to pay him $112 a month! On top of that, my son moving out had tax implications that cost us another $100 a month in government benefits we had been eligible for. Total net loss? Almost $950 a month. OUCH. And while our monthly expenses did go down a little when he left, they did not go down ~$1000/month.
So where did that leave us? Well, not in a total bind, because we had been using that money for debt repayment and “extras”. But it did leave us at a point where we were basically making minimum payments on our debt again. And considering how much we owe on our line of credit (and the minimum payments are interest only), that means we could be in debt forever, unless we find more money to throw at the debt.
Now, the most important thing is, my son is happy and doing well at his Dad’s – so he’s not moving back in any time soon. I’m happy he’s happy. I was dumb thinking things would never change, and failing to plan accordingly. So since September I have revised our budget (and revised, and revised…) to find a way to make this all work.
My advice? Try hard not to rely on child support. Use it for the kids needs, bank it for their education, use it to build your emergency fund. But if at all possible (and I realize sometime you need that cash to survive), do not use it to pay for necessary expenses. If something changes and you lose that income, you’ll be glad you aren’t relying on it to buy groceries!