A divorce is not just a time of emotional upheaval, but it can lead to a long stretch of financial turmoil as well. For moms that gave up their careers to stay at home with the children, a divorce can thrust them back into the job market — and many aren’t prepared. One woman from California received advice from a financial expert to help her regain her financial footing while re-entering the job market.
The woman and her ex-husband divorced after 14 years of marriage. They have three children, ages 6, 10 and 12. The woman did not have legal representation during the divorce and as a result, was not aware that she was entitled to half of her husband’s retirement funds. The financial expert told the woman to consider hiring an attorney to draft a Qualified Domestic Relations Order — also known as a QDRO — and have it filed in the jurisdiction where her divorce was handled. The administrator of the ex’s retirement account could then put the funds into her name.
The expert also told the woman that she needs to finish getting her teaching certificate, as this will help her in her job search. Currently, she is working part-time as a barista. That income, an alimony payment of $600 minus $272 to keep her and the kids on her husband’s insurance plan, and $1,900 in child support each month is not enough for her to make it on her own. As a result, the kids and she are moving in with her mother.
In addition, the woman should look for a credit card in her name in order to start building up her credit score. The expert advised the woman to charge a small amount each month and pay the balance in full. This will help raise her credit score from where it is right now at 620.
Finally, the expert said the woman needs to begin paying more than is due each month on her car loan. This will help the balloon payment — $9,000 — from being financially devastating.
Unfortunately, this woman’s story is all too common. It shows how easily a spouse can lose on assets that are rightfully due when legal advice is not sought during a divorce. A combination of experienced legal and financial advisors can make the transition to being single easier.
Source: Los Angeles Times, “After divorce, a mother needs a financial overhaul and more income” Ronald D. White, Mar. 16, 2014