Divorced. Unwed. Children. Pets. It doesn’t matter the combination when it comes to taking care of business and making ends meet. There are many parents who share joint custody, but the children primarily lives with either one or the other. For most, the primary custody belongs to the mother.
When the other parent is sending child support it never seems enough. We recently met with Jennifer Schultz who is a divorced mother of two. She never thought her world would consist of one income and an inconsistent monthly payment [child support] that barely covers daycare expenses.
As we sat with Jennifer she was reminded to never complain in front of the children as they are innocent when it comes to single parenting.
Mark, the estranged husband, visits the children on the weekends and feels that his monetary contribution is more than enough to financially support the children. He pays $400 per month. Is that really enough?!! If he was physically in the household he would contribute 100 % of his paycheck. Let’s take a look at what a single parent is working with…
As previously mentioned, single parents have the financial and emotional weight resting on his or her shoulders.
Jennifer’s net income is $1850 per month.
She has solely taken on the financial obligations since the divorce. Here’s her list of obligations.
Household expenses: $425
Insurances: $ 135
Disposable Income: $140
She doesn’t have a car note, which is good because there’s no room in the budget.
If Mark decides not to continue payments she’s treading water. In the meantime, Jennifer needs to reconsider her living expenses.
1. Refinance the mortgage:
She’s currently paying 10.75% in interest rate. When the couple initially purchased the home they had an 5/1 ARM. The fixed rate became variable after five years. Since the divorce, Jennifer never considered refinancing for a lower rate. It would be in her best interest to refinance for a 20 year term instead of 30 yr.
2. Make sure you’re covered.
The existing value of life insurance is only $50,000 for herself and $5,000 for each child. She needs to seek term insurance that will cover all her needs. Since she has an existing mortgage, small children and other liability she needs to increase the coverage.
3. Save for an emergency fund and college tuition.
The disposable income that she has remaining at the end of the month should go toward building an emergency fund. Jennifer will also need to look into a 529 College plan that will lock in the current college tuition. A financial planner will be able to answer her questions more in detail.
“Love yourself enough to support yourself.”
Property of SMG, LLC
Reported by Bahiyah Shabazz, MBA