Planting the seeds for a bright financial future

Financial Futureby Barbara Badolato, CSW

As we fling open the windows of our home to let fresh air in, tend to our gardens and enjoy the lengthening days, we turn our thoughts to putting our personal house in order.

If you’re going through a divorce or are you already divorced, and you’re spending more time arguing than getting along, perhaps it’s time to take a fresh look at the sources of your disagreements.

With hot-button issues such as money, the key is to be realistic, positive and cooperative. A consultation with a mediator can uncover options to solve seemingly impossible situations. The goal is to find mutually helpful solutions in order to minimize tensions with your former spouse and improve your quality of life.

Oftentimes, money can get in the way of an otherwise peaceful relationship with your ex. The first step in defusing this ticking time bomb is to get a handle on where you stand financially. Gather documents relating to debt and expenses, including mortgage and credit card statements. Then, create a monthly budget that realistically accounts for your spending.

The transition from one household to two usually requires a scale-down of lifestyles, as most former spouses don’t have the means to live as comfortably separately as they once did together. You can take steps to minimize the difference between your current and former way of life: cut expenses, bring more money in, or do some combination of the two.

Expense Reduction

Cutting expenses need not be painful, and there are certain steps you can take now that will reduce your monthly expenses without changing your lifestyle at all. The first place to look is your mortgage. With rates on a 30-year mortgage still near historic lows, hovering at around 3.5%, refinancing an existing mortgage with an interest rate of 5% or higher can save hundreds of dollars each month. Similarly, converting from a 15-year to a 30-year mortgage can reduce your monthly payment significantly.

If you carry high balances on your credit cards, which usually come with interest rates of 18% or more, consider converting credit card debt into a home equity loan. In addition to enjoying lower interest rates, you’ll benefit from the mortgage interest deduction on your income taxes. And if it is becoming impossible to keep up with even the minimum payment on your credit card bills, perhaps it’s time to talk to a debt consolidator, who can combine all of your debt into one lump sum, reduce your interest rate and help you pay off your debt in often as little as five years.

Income Generation

Another way to improve your financial standing is to bring more money into your household. If you’re not working, considering looking for part-time employment. If you currently work part-time, think about how you might turn that part-time job into a full-time engagement. For those who are currently working full-time but not bringing in enough money to cover the household expenses, it may be time to take on a second job.

An important benefit to finding full-time work is health insurance coverage. If you’re not yet divorced and get your health coverage from your spouse’s employer, once you divorce the clock starts running. You can maintain coverage under COBRA, an expensive option, but for only three years after your divorce. Getting a full-time job may make you eligible for your own health insurance. If your employer doesn’t offer this benefit, look to the state exchange New York State of Health, a marketplace for low-cost health insurance. For information, visit https://nystateofhealth.ny.gov. No matter which route you choose, don’t leave yourself uninsured. Without health insurance, unforeseen medical expenses such as surgery could wipe out your savings and leave you bankrupt.

Affordable Childcare

You may be reluctant to return to work if you have young children at home, fearing that the cost of childcare will be prohibitive or that your children won’t be in a nurturing environment.  Look to some creative, practical solutions. First, if your neighbors also have young children, consider taking turns caring for one another’s kids. That way, you know your kids will be close to home and there needn’t be any exchange of money.

Another alternative is to ask family members to pitch in with childcare duties. Grandparents, aunts and uncles and close family friends may be interested in caring for your kids a day or two a week.  Since those closest to you might be reluctant to ask for payment, consider a barter arrangement. You could, for example, run errands for your relative in exchange for babysitting.

If your children are in public school, you’re likely in the best position of all. Most schools have both morning and after-school programs. Your kids will be served a snack, will have the opportunity to finish homework and can socialize, all before they return home. An added bonus to your kids finishing their homework at the after-school program is that you’re then able to spend quality time with them back at home.

Springtime is a time of rebirth and reassessment, for our relationships and for lifesetyles. I wish you many warm, sunny days, and the peace of mind to enjoy them.

 

barbaraBarbara Badolato is a certified social worker and a partner at Divorce Mediation Professionals. She has twenty-five years of experience working with couples in divorce mediation, and she specializes in the emotional aspects and financial concerns of couples going through separation and divorce. She is active in the training and continuing education of other mediators in the field and has made numerous presentations at programs and conferences sponsored by The New York State Council on Divorce Mediation, The Academy of Family Mediators and the Family and Divorce Mediation Council of Greater New York. Barbara has been affiliated with Stony Brook University School of Social Work as a field instructor, and is also in private practice working with individuals and doing couple’s therapy.

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