In my experience as a divorce mediator, I have come to the conclusion that many couples who go through a physical separation prior to divorce do not give enough thought to whether it is financially feasible, and they do not go through the financial picture and numbers.
I believe separating in this way is an emotional reaction to trying to relieve some of the stress in the short term, but what is not being considered is that it may have long term financial repercussions for not only the couple, but for their children as well.
Splitting one household into two on the same combined overall income is always going to be a costly proposition. You will now have two housing payments, utilities, cable, internet, and other expenses for both residences, etc. And unless there is an increase in income, you are going to have to find ways to tighten your belt in order to make ends meet.
There is nothing worse than when I sit down with clients and work through their living budgets to find that there is not enough income to support the separated living arrangements. This creates an extra added stress that could have been avoided if some financial planning had been done.
Preparing Financially for Your Separation
As you begin preparing for your separation, take a look at your income, expenses, assets, and debts to help determine what you will need to live on. This will give you a good general idea of what your budget might look like when you are living separately, so you can keep these things in mind as you go into mediation.
A standard part of the mediation process here at AMS is to build out budgets during session, so you can make financial plans for your future. We will go through your income and expenses with you and look at ways that you can make your post-separation budget work.
For example, there might be some items that could be pared back or cut out, such as eliminating cable TV or reducing the amount of money you spend on eating out. You could also look for more affordable alternatives for essential items such as car insurance, your cell phone plan, or your gym membership.
When it comes to household debts, there are a number of ways to attack this. For example, you might be able to refinance the mortgage on the marital home to a lower interest rate, which would produce a lower monthly payment. You will probably want to do this anyway to transfer the title if one of the spouses is keeping the home.
It is strongly advisable to try to pay off as much of your credit card debt as possible before separating. And for whatever you cannot get rid of, look into contacting your credit card providers and try to negotiate a lower rate 0 percent interest for a limited time.
In some cases, making your budget work might require some creativity, and this is where mediation can be especially helpful. We may be able to provide you with some options that you might not be aware of that have worked for other couples, or for some spouses, the mediation sessions might get their own creative juices flowing and allow them to come up with some innovative solutions of their own.
I encourage all separating couples to go through the process of reviewing your finances with us during mediation sessions before committing to any monthly expenses (such as housing). It is very helpful to do some initial prep work ahead of time, but it is best for couples to wait to mediate before they commit themselves to anything.
You may want to reach out to accountants and other experts to help you with some of your financial issues, but unless they specialize in divorce, they may not be aware of all of the options that are available to you. We also work with experts during the mediation process when it is needed and appropriate.
Contact AMS for Experienced Divorce Mediation Services
If you are considering divorce or you are ready to file, mediation is one of the best ways for couples to work out budgeting and financial issues and other terms and conditions of their separation. At Advanced Mediation Solutions (AMS), we have been doing mediation exclusively for several years, and we have helped numerous couples develop peaceable and workable divorce agreements. We provide in person sessions or virtual mediation, and we are ready to get started whenever you are.
To learn more about how we can help you, message us online or call us today at (856) 669-7172 for a free consultation.