Co-parenting and Money
Money matters for most people all the time, especially families dealing with co-parenting and money issues that likely were never resolved. Today’s economy brings stress especially during and after divorce. What may be a tight budget for families becomes even more difficult when parents are separated, divorcing or already divorced.
Here are some tips which may help you as you start to navigate the waters of co-parenting and money matters.
Have A Budget
Make a budget, even if it is a “loose” one. If you are in the process of divorcing and you will likely be the primary care giver of the children, your budget should not assume you will receive child support. For a variety of reasons, approximately 68% of those entitled to child support receive only some or none of their support. Make sure that nothing critical in your budget, such as food, clothing or shelter, depends on receiving support.
Pay Child Support on Time
On the other hand, if you anticipate that you will be paying support, make sure that your budget includes this making your child support payment on the first each month. Failure to pay child support can result in a fine, a judgment against you or even jail time. The effects on your children of having to do without basic needs cannot be measured, but obviously take a great toll.
Handle Your Joint Accounts
As you are approaching a divorce, make sure that all joint accounts are closed and that
you open an individual bank account in your sole name. This is a time when co-parenting and money matters need to be handled powerfully, and setting up your own account is a powerful statement!
Credit Cards
Credit cards can be a sticky situation and if one of you has not worked outside the home,
qualifying for a new credit card can be difficult. You might consider deciding which party will be
awarded each credit card and remove the name of the other person. The credit card company may issue a new card with a new number and this is ideal.
Be aware though that even a court order won’t help you with a credit card compant if your ex spouse doesn’t pay their bill. The credit card company is not a party to your divorce and if the party against whom the debt was allocated by court order does not pay, the credit card company will likely come after the other party. For this reason, make all efforts to have your credit cards have zero balances at the time of the divorce. Consult with a financial expert.
Look at Savings Accounts
It might be a good idea to use savings which generate little interest to pay off credit cards which have high interest rates. Also, home equity loans and lines of credit are lower than credit card interest rates. They can be used to pay off credit card debt. Beware, however, if you fall behind on the monthly repayment of these, you put your home in jeopardy.
Design a Plan
Design a plan to pay off credit cards. Pay the minimum on all cards except that card
with the highest balance and highest interest rate. Put any extra money you may have towards
paying off that bill first. When that one is paid off, move on to the next one and keep at it until all
are paid off. Consider closing the cards as they are paid off and keep only one or two.
Sometimes, balance transfers without interest for a period of time can be a good way to proceed
provided you close the card you transfer the balance from and do not build up another balance.
Mortgages
Also, be aware that mortgage companies are not parties to a divorce either and do not
care who was ordered to pay the mortgage in the decree. If the mortgage is not paid, the
mortgage company will seek payment from both parties. It is recommended that the decree
contain a date by which the party awarded the home should refinance the home to remove the
name of the other party from the mortgage.
Consult Financial Experts
Consult with a financial expert regarding tax provisions for “head of household” and
“Child care credit” deductions or credits on your federal tax return. There is also the child dependency exemption which should be awarded to the parent who will benefit the most from the deduction. This deduction and the resulting tax savings from this and the other allowabledeductions should be considered when calculating child support.
Examine Your Credit Rating
To manage your credit rating, close as many accounts as you can. Do not apply
indiscriminately for new ones. Most times that you do, your credit file will be reviewed and each
time this happens, you run the risk of lowering your credit score. creditkarma.com provides free
credit reports. You can sign up for the service and check your credit score as often as you like
without effect on your score.
Managing your finances effectively will help ease the stress that comes with co-parenting and money issues.
