Help me keep my finances together post divorce

[Anonymous]

Anonymous wrote:I hate to be cold hearted but even with the RSU's you can't handle a mortgage of that size - maybe 50-65% of that size. I'd hate to see you put yourself in a position where you can't make a mortgage payment and the bank starts coming after you. That will be far more stressful on you and your children. Can you downsize in the same school district or even rent for a couple of years until your income grows? This is part of the pain of divorce but it will only get worse if you dig a deep financial hole. Do you have a parent, sibling or good friend who can help you think this through?

+1 on getting some good advice from a pro or a trusted family member or friend. I was lucky that when I went through my divorce my brother sat with me and we went over everything I had and all of my expenses and then we laid out a plan. It wasn't what I wanted to hear but it was what I needed to hear. I sold my house, moved into a nice rental in the same area and quickly I was able to rebuild some savings. I'm not yet ready to buy a house but I'm fine with that. If I had tried to hang on to my house I could well have lost it. It was a bit of tough love on the part of my brother but he was right.

[Anonymous]

Anonymous wrote:No, I can’t downsize and stay in the same school district. We bought this house 12 years ago and extensively renovated (like tore it down to the foundation and rebuilt it) just a couple years ago). I’m in N Arlington so I can afford other houses in my neighborhood, but they’re only $100k less for so much more work, whereas this house is maintenance free. If I sell this house I can walk away with a huge chunk of change, but go where?

OP - I would sell and move. How old are your kids? The only possible way you could do this is to rent a room or tiny 1BR with your ex, and rotate who is home with the kids, with the other one staying at the other location.

But even then, I hate to say it could work, because if you are the higher earning spouse, your combined HHI was at most $400,000, and I can't imagine having a $1.1m mortgage on that income.

[Anonymous]

Anonymous wrote:No, I can’t downsize and stay in the same school district. We bought this house 12 years ago and extensively renovated (like tore it down to the foundation and rebuilt it) just a couple years ago). I’m in N Arlington so I can afford other houses in my neighborhood, but they’re only $100k less for so much more work, whereas this house is maintenance free. If I sell this house I can walk away with a huge chunk of change, but go where?

To a place you can afford!

[Anonymous]

Assuming your mortgage is actually PITI and using 28% of gross as the maximum you want to stay under, that puts you at needing a HHI of 240k. With your RSU you will be well over that. Given your other debts and obligations (child support, CC payment and student loans) are pretty small relative to your income means 28% is probably doable. The DCmum crowd will scream, but a portion of your major expense is actually building you equity so the mortgage payment is not completely lost.

That said, if you are moving from a mortgage payment that was about 14% of the gross HHI to 28%, plus all the bills, you are going to have to start budgeting.

[Anonymous]

Can you rent out the basement?

[Anonymous]

Anonymous wrote:

Anonymous wrote:No, I can’t downsize and stay in the same school district. We bought this house 12 years ago and extensively renovated (like tore it down to the foundation and rebuilt it) just a couple years ago). I’m in N Arlington so I can afford other houses in my neighborhood, but they’re only $100k less for so much more work, whereas this house is maintenance free. If I sell this house I can walk away with a huge chunk of change, but go where?

OP - I would sell and move. How old are your kids? The only possible way you could do this is to rent a room or tiny 1BR with your ex, and rotate who is home with the kids, with the other one staying at the other location.

But even then, I hate to say it could work, because if you are the higher earning spouse, your combined HHI was at most $400,000, and I can't imagine having a $1.1m mortgage on that income.

Adding onto this, I am assuming you are in Lyon Village, because you (i) have a mortgage of ~$1.1m, but (ii) would still walk away with a "huge chunk of change" if you sold, and (iii) other houses would cost just $100,000 less than yours. At least, I can't think of any other neighborhoods in N. Arlington like this. If that's the case, and you are dedicated to staying in that school district, you need to look for rentals - perhaps small ones, for the time being, and then look to buy a (much less expensive) place when your kids are in middle/high school, and the geographic areas open up. It really would be foolish to disrupt your financial future to stay in the new house, as much as you want to.

[Anonymous]

Anonymous wrote:Assuming your mortgage is actually PITI and using 28% of gross as the maximum you want to stay under, that puts you at needing a HHI of 240k. With your RSU you will be well over that. Given your other debts and obligations (child support, CC payment and student loans) are pretty small relative to your income means 28% is probably doable. The DCmum crowd will scream, but a portion of your major expense is actually building you equity so the mortgage payment is not completely lost.

That said, if you are moving from a mortgage payment that was about 14% of the gross HHI to 28%, plus all the bills, you are going to have to start budgeting.

You are advocating that someone who is newly divorced, with credit card debt, student loans and child support obligations to continue on with a mortgage that is nearly 5 times his or her salary, because in 2 years s/he'll receive RSUs that maybe bring the mortgage closer to 4x his or her salary?

That is, frankly, crazy.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Assuming your mortgage is actually PITI and using 28% of gross as the maximum you want to stay under, that puts you at needing a HHI of 240k. With your RSU you will be well over that. Given your other debts and obligations (child support, CC payment and student loans) are pretty small relative to your income means 28% is probably doable. The DCmum crowd will scream, but a portion of your major expense is actually building you equity so the mortgage payment is not completely lost.

That said, if you are moving from a mortgage payment that was about 14% of the gross HHI to 28%, plus all the bills, you are going to have to start budgeting.

You are advocating that someone who is newly divorced, with credit card debt, student loans and child support obligations to continue on with a mortgage that is nearly 5 times his or her salary, because in 2 years s/he'll receive RSUs that maybe bring the mortgage closer to 4x his or her salary?

That is, frankly, crazy.

Yes that is exactly what I am advocating. The total DTI ratio, including the child support costs, is currently 37%. Almost all the debit is not related to deprecating assets like a car or CC debit, so it is the least bad type of debt. While a DTI ratio of 37% is higher than I would like to see, it is not panic worthy outside the DCum crowd. Knowing where the CC debit came from, having a strong desire to stay in the current home and having a known future increase in salary means it is definitely worth trying to make ends meet for a while.

[Anonymous]

OP here. I included life insurance in my bills. I’m pretty sure I can pay off that CC in just a couple of months. I get hives from debt, so I imagine that will be gone soon. Do that leaves the mortgage and the student loan. I’ll keep driving the paid off car as long as I can. No vacations, very little eating out, no shopping. I really want to make this work for my kids. At least for the next few years I want them to have something that *isn’t* changing for them.

Yes, I could rent out my basement. There’s a full wet bar down there with a dishwasher, full bath.

[Anonymous]

Anonymous wrote:OP here. I included life insurance in my bills. I’m pretty sure I can pay off that CC in just a couple of months. I get hives from debt, so I imagine that will be gone soon. Do that leaves the mortgage and the student loan. I’ll keep driving the paid off car as long as I can. No vacations, very little eating out, no shopping. I really want to make this work for my kids. At least for the next few years I want them to have something that *isn’t* changing for them.

Yes, I could rent out my basement. There’s a full wet bar down there with a dishwasher, full bath.

Rent out the basement. Sounds like a plan.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here. I included life insurance in my bills. I’m pretty sure I can pay off that CC in just a couple of months. I get hives from debt, so I imagine that will be gone soon. Do that leaves the mortgage and the student loan. I’ll keep driving the paid off car as long as I can. No vacations, very little eating out, no shopping. I really want to make this work for my kids. At least for the next few years I want them to have something that *isn’t* changing for them.

Yes, I could rent out my basement. There’s a full wet bar down there with a dishwasher, full bath.

Rent out the basement. Sounds like a plan.

Yep. This is a good idea. Do you have a separate entrance there and an egress window in the bedroom?

[Anonymous]

Anonymous wrote:
Yes, I could rent out my basement. There’s a full wet bar down there with a dishwasher, full bath.

That is absolutely what you should do! Basement apartments in your area rent for $1400 a month. That would help you a great deal.

[Anonymous]

You need to move. Find a townhouse for 400 or 500k

Move to another area near your job.

Move move move.

Or find a rich BF stat.

[Anonymous]

How much can you get for the basement? Doubt it would be enough with that HUGE mortgage. I'd sell, move and get a roommate. get a Townhouse.

[Anonymous]

Anonymous wrote:OP here. I included life insurance in my bills. I’m pretty sure I can pay off that CC in just a couple of months. I get hives from debt, so I imagine that will be gone soon. Do that leaves the mortgage and the student loan. I’ll keep driving the paid off car as long as I can. No vacations, very little eating out, no shopping. I really want to make this work for my kids. At least for the next few years I want them to have something that *isn’t* changing for them.

Yes, I could rent out my basement. There’s a full wet bar down there with a dishwasher, full bath.

I understand where you are coming from and wanting to provide the consistency for your kids. But you are making the number 1 mistake women make post-divorce. You cannot afford to keep the house. And you are sacrificing financial stability which as a single mother needs to be the top priority.

If you could rent your home for a profit then perhaps it would make sense to keep the house for a while and see what your life looks like in 5 years.