Please help me plan post-divorce budget

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Please help me plan post-divorce budget

Unread postby LovingDadof2 » Tue Oct 24, 2017 6:07 am

I am wrestling with my budget, post-divorce. In particular, I am struggling to determine if I should refinance into a 15- or 30-year mortgage? State is NJ and 2 kids under 10.

Currently, I have our last 3 years expenses (all CC and bank transactions) in an Excel workbook. I did this exercise to determine our joint household budget and have a very good handle of where all our money went. I have now tried to create a separate budget for myself living in our existing home as I get ready to refinance.

If I eliminate all her direct expenses (car insurance, retirement contributions, etc.) and cut kids clothing and grocery expenses in half, I then would be able to pay the 15-year mortgage. I am entertaining this idea as it saves over $120k in interest payments by cutting the years down to 15. I have even thought about getting a 30-year and trying to pay it as it were a 15-year, but the interest is so much more upfront on the 30-year mortgage that there's an extra $70k in interest due to different rates over the first 15 years.

Am I being realistic cutting the groceries and clothing expenses in half? Should I only reduce these expenses by 1/3? What unforeseen expenses am I missing outside of replacing some bedroom furniture? I can only budget so much and won't know the true numbers until I actually live it. Those that have made the transition, please let me know of what expenses I may be forgetting? What did you do? Would you do it differently regarding mortgage duration and budgeting.

My other wildcard in my budget is CS. Right now I am trying to negotiate a buyout for SS (I prefer to remove the "modifiable" risk for the future). If I can buy her out of SS, STBX agreed to factor that SS buyout into the first few years of CS calculations. The issue is when the 2-3 years are up and she asks for a CS modification. The CS payments will balloon (more than double) from what I am currently paying now. This will be a tough new cost to handle, but that's a few years away.

I am aware of the old trick of low-balling CS, waiting 30-days and then asking the State to increase CS. I have been informed that since we are doing an agreement ourselves via a mediator and will just be submitting it to a judge (i.e., CS not ordered by a judge) it will be a lot harder for her to argue a change of circumstances since she agreed to the CS number. Can anyone confirm this? If she gets CS modified after 30-days, 15-year is probably not best option.

So anyone that's been through this, what do you recommend? Implementing severe austerity measures now, learn to live on this tighter budget for the next 15 years? Or am I crazy even contemplating, get a 30-year mortgage to provide myself a wide buffer. Please help me plan.
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Re: Please help me plan post-divorce budget

Unread postby Trevor » Tue Oct 24, 2017 7:44 am

Well, if your clothing budget is a grand per month, sure, cut that down. Not knowing your starting point makes it impossible to get that detailed. Kids under ten grow like weeds.
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Re: Please help me plan post-divorce budget

Unread postby Campfire » Tue Oct 24, 2017 9:22 am

What interest rate are you looking at? I have a 3.625% rate on my 30 year so it makes zero sense for me to pay it off any earlier. I can likely make a higher return on investments. Plus, mortgage interest is tax deductible so my true rate is somewhat less than 3.625%.

So why are you focused on paying off your mortgage with historically low interest rates?
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Re: Please help me plan post-divorce budget

Unread postby lovingfatherof2 » Tue Oct 24, 2017 9:51 am

My mortgage rate is the same on a 30 year. I should have it paid off in the next 3 years (5 years total to pay it off). Then I will rent it out and buy another house, pay that one off then rent it out and so on and so on.

A far as budgets go its quit simple, especially for men. Live poor, live like you make no money at all. Every penny you don't spend you pay off all your debt with including your house. Once that is accomplished you invest every penny you bring in. This takes a massive amount of sacrifice but you get used to it.
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Re: Please help me plan post-divorce budget

Unread postby LovingDadof2 » Tue Oct 24, 2017 11:07 am

Campfire wrote:What interest rate are you looking at?

3.90% on a 30-year.

Campfire wrote:So why are you focused on paying off your mortgage with historically low interest rates?

Because of my age, I don't plan to be working for another 30 years (until I'm 80.) I also hoped to help my children with college if possible. If I go with the 30-year and pay off early in 15 years, the interest alone in selecting the 30-year loan is $70k. My additional, out of pocket cost of the 15- (vs. the 30-year) would be $95k over the 15 year life of the loan.

Yes, I agree an investment should return just as much or more baring no significant correction, but being this is the 2nd longest bull market in history, I am not sure I want to bet it continues for another 10+ years?

I think it boils down to, would I bank the savings between the 15- and 30-year and invest that money religiously? While I am very thrifty, I would hate to fall into the habit of being comfortable with the 30-year and hence want to discipline myself now with the 15-year but don't want to trap myself.
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Re: Please help me plan post-divorce budget

Unread postby dad2grls » Tue Oct 24, 2017 4:14 pm

I've read tons of case law and I've never heard anything about lowballing child support and then asking for an increase a month later.

What would even be the point other than to rack up more legal fees.
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Re: Please help me plan post-divorce budget

Unread postby Trevor » Tue Oct 24, 2017 5:51 pm

To get a deal done.
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Re: Please help me plan post-divorce budget

Unread postby lovingfatherof2 » Tue Oct 24, 2017 6:09 pm

Ive seen quit a few women ask for less than state guidelines and of course the STBXH agrees, hell, why wouldnt he.

Then a couple months later that same divorced couple is back in court because she wants state guideline support. Judge grants it every time from what ive seen.
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Re: Please help me plan post-divorce budget

Unread postby kenpatric » Mon Nov 27, 2017 1:05 am

Before planning a post-divorce budget, you should Map out a budget because it is crucial as you go for the separation settlement you need. To make your journey easier and simpler, I will suggest you to set aside two things: your feelings/emotions and the past.

I encourage you to think about this planning attempt as a chance to look straight into the present. If it is important, advise yourself that budget numbers are not about the past. They’re about right now.

Next, try to make this economic/financial planning more attractive. I recommend you call the spreadsheet a SPENDING PLAN as opposed to a budget. When all things considered, the aim is to recognize what you’ve to spend. And after that to allocate what you need to spend, to address your needs. After requirements have been met, at that point consideration can be given to your needs.
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Re: Please help me plan post-divorce budget

Unread postby Minerva » Tue Dec 05, 2017 3:09 pm

At 3% interest I don't see the value of forcing yourself to dump extra cash into your mortgage. If you have a solid emergency fund built up (like 3-6 months), then you can always throw your extra money every month into the 30 year. The difference is that if things change or you lose your job or something bad happens, you still have some breathing room instead of going into foreclosure because you wanted to save on the interest.

If you make a ton of money and the 15 year is a small drop in the bucket then it's a different story, but you sound like you have a lot of unknowns......
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