Divorce is Expensive (Especially with Kids in the Picture)

This past weekend I was helping my aunt figure out her budget and set up a Mint.com account. She was recently laid of from her long-time job, which wouldn’t have been a big issue years ago when she was still married with a household income of over $300,000. But going through her budget, suddenly even $10,000 a month of after-tax income looked very tight.

It certainly doesn’t help matters that my aunt lives in a very expensive part of the country. She now rents a lovely (yet small) 3br/2ba house for about $3400 a month (which isn’t that bad considering I currently pay $2350 for a one bedroom (my town is just even more expensive than hers.) She has a sizable amount saved up thanks to her marriage (and no prenup, worked out in her favor) but without a job she still could burn through that well before retirement age (she’s in her early 50s now.)

She had a basic budget scoped out in Excel but it didn’t include everything. I helped her turn her excel sheet into a more meaningful budget and then built a budget plain in her new Mint.com account to align to these goals. Of course, the goals aligned to $10,000 after-tax income per month. She’s starting her own business now and has a few potential clients but businesses can have up months and down months. It’s very possible she’ll do better on her own than what she earned employed full time, but it’s certainly scary, even with a serious sizable amount in the bank, without a regular paycheck and home equity.

This is exactly why it’s so important to me to save up a lot before I have children. I certainly don’t expect to get divorced but I’m also marrying a man who will always make less than me (unless I decide to go into a lower paying career, then who knows.) People think I’m crazy to be so concerned about this but my aunt is the perfect example of someone who can’t even get by on $10,000 after tax per month. She doesn’t even spend a lot on shopping or makeup like I do. Her shopping budget is under $300 per month, including clothes for the kids!

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2 comments

  1. Mr. A says:

    Has she thought of downsizing and reducing her expenses? What about relocation? I’d suggest that she looks to lower her expenses down to around $3-4k a month with about $1500 into housing. That may require relocation and she could still be close to family by just relocting farther out from the city.

    If she only has a $300 discretionary shopping budget, where is she spending the other $6,300 a month on her expected $10k income.

    It makes a lot of sense to make the money in a big city, save up, which it appears she has.. then relocate where you can easily live off of $2k a month and retire.

    1. Joy ( User Karma: 0 ) says:

      Her kids are still in middle school so it’s very important for her to live close enough to their school so she can get them there in the mornings before work. That makes sense. She lives in an expensive area but not in the most expensive area — it’s just overall expensive and would require moving very far away before seeing a sizable reduction in rental costs. Once her kids graduate HS I’m sure she’ll consider moving somewhere cheaper, but that’s still many years away. The other $6k is going to health insurance, kids costs (they are rather expensive w/ camp, school activities and such), food, and really it didn’t seem like – when I looked at her budget – anything was too crazy, but the $ definitely added up. In any case, she has enough savings where she’ll probably do fine, especially if her business takes off or she gets another job, which I’m sure she will. It’s just crazy to me that she really needs $10k a month after tax to afford her life. It doesn’t seem very fancy at all. She has a reasonably nice place but it’s not a mansion or anything. It’s a small house she’s renting with 3 bedrooms and 2 baths on barely any land.

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