The Divorced Dadvocate: Divorce Support For Dads

278 - Single Dad Money Reset

• Jude Sandvall • Season 6 • Episode 278

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Divorce can flip your financial world overnight, and the hardest part is often not knowing where to start. We walk through a simple, repeatable system to rebuild from the ground up—so you can stop guessing, start planning, and lead your family with calm and confidence.

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SPEAKER_00:

Hello and welcome to the show. I sincerely appreciate you tuning in and listening this week. Our topic is rebuilding your finances from scratch. Something that if you are contemplating going through or post-divorce, I'm sure that you can all appreciate. But before we jump into the topic and get into specifics, let's welcome Nate and Devon to the Divorced Advocate community. If you have not checked out the community yet, go to thedivorcedavicate.com. We've got re resources for you wherever you're at in your divorce journey. And we've got resources that are free to paid resources. So whatever you need, wherever you're at, we have something for you. Check out the event page too, fellas. We've got a ton of stuff going on that are free resources, QA's every single month. I know the holidays are coming up. That can be a very challenging time, no matter where you're at in your divorce, even if it's been a while and you are post-divorce, but we've got all kinds of support there. So jump on one of the calls, get uh get in and around guys that uh know what you've got going on and can support you. Check it out all at thedivorceddavicate.com. All right, the the single dads budget. That's what we're gonna talk about. And divorce is tough for single dads. Often the the financial part of it feels like kind of like a reset button, if you will, without really even knowing where everything's gonna go and how everything's gonna transpire. Child support, new living arrangements, the uh the emotional toll, it just oftentimes feels like our financial uh you know our finances are in a a mess or really in just a flux, right? Um but it doesn't have to doesn't have to be that way, and it doesn't have to stay that way, guys. Rebuilding your your financial foundation is possible. And this is what we're gonna talk about. We're gonna talk about six steps and we're gonna walk you through those step by step. And I do want to say that wherever you're at in listening to this, even if you're just if you're if you're contemplating divorce and you're listening to this, it's very, very important because I was I was even just talking to to a guy yesterday. It happened to be at a kid's birthday party who was who is contemplating divorce, and I was chatting with him about the fact that there's a right way and a right way that you can do this that can make it much easier. And so if you are contemplating that, this is going to be very, very important. If you're in the middle of it, and say you've already submitted the the financial disclosures and you're negotiating stuff, this is equally as important because there are things that you can do that are going to set yourself up, everybody up for success post-divorce. And if you're post-divorce and maybe you didn't didn't have guidance through this and and you're working through some of the challenges we're going to talk about, this is important too because you can get back on track and you can get things sorted out. So wherever you're at, this is really, really important. And the first one is just to face the numbers. Like I said, if you're going through this, you're you're having to some extent face the numbers and know what's going on. So you can't really hide from it, but I do know a lot of guys that go through it and just don't really think through it and don't focus on it enough, or or weren't even the ones that were very much in charge of their finances. So they kind of just go with whatever the agreement is and feel like it's going to be okay. Now, that that's a that's a strategy, that's a way to do it. But oftentimes I find that post-divorce that can will turn into some sort of challenge. What that challenge might be is different for everybody, but sorting this out and work through it in a in a logical manner up front is way, way, way more just better in in general. And it just gives you a uh peace of mind post-divorce. So this first and and crucial step about getting honest, the first thing you need to do is you need to list all of your income sources. Now, you probably did that on a financial disclosure. If you haven't been through divorce yet, you're going to have to. It means all of wherever you get income, primary salary, side hustles, and if you're going to potentially get child support or alimony payments. So that's happening more and more these days with some of us dads. So be realistic about what these payments are and when they're going to start and and their exact amounts. So that's gonna that's going to definitely help you to know what's coming in. And then this the second thing that you need to do, this is all within first step one, which is knowing what your numbers are. You need to track every single expense. And when I say every single expense, I mean for at least a month. And again, if you're just going, if you're just starting divorce right now or you're in the middle of it, do this as well. This is going to help you immensely put together a plan or to negotiate out your whatever the settlement is going to be in your divorce. But for at least a month, meticulously record every dollar that you spend. You can use a spreadsheet to do it, an Excel spreadsheet. There are apps like Mint or YNAB or just a notebook and just write down. But you want to categorize and document everything: housing, utilities, groceries, transportation, childcare, entertainment, subscriptions, and whatever miscellaneous cash items, if you're buying whatever at the food truck or at the gas station or you're buying scratched lotto tickets or whatever it might be. You need to know every single dollar that you are spending so that you can put this into your budget. And then the last thing you need to figure out with your numbers is what are your debts? What are your credit card debts? What are your personal loans and debts? What are your car loans, your mortgages or rents? Get an absolute clear picture of what you owe to who you owe it. And another really important part is what is the interest on all that. So what I suggest is finding a way to document that within a spreadsheet, because then you can put everything in, and then we're going to talk about things at in the last step that things change. So it gives you a good idea of what you've got going at that given time. But then you're also able to make changes and adjustments to it, or and or you're able to project out and figure out what you might need to do if you need to figure out what your income needs to be and you need to increase and increase your income, or if you need to figure out how you need to reduce your debt, how much do you need to reduce? You can do that easier within a a spreadsheet. And if you don't know spreadsheets, or you don't know, that's that's fine too. Use a a notebook or whatever manual process you want to do it. But I find that spreadsheets can be very, very helpful because it helps you just look at potential future ways or or things that you can adjust really quickly. Okay, so that's step one. You got to know your numbers, you gotta face the numbers, you can't hide from it anymore. You're gonna be forced during the divorce to deal with some of this through your financial disclosure. So if you've never done anything, that's gonna be a time, and then that's a great time to work through these steps and start putting things together. But even if you're after the the facts and you kind of just let things happen and you've got your agreement and you're in a little bit of chaos, get it together, put it all in one place. It does take a little bit of an effort, but I'm telling you, the effort that you're gonna put into it is gonna give you much more peace of mind throughout the throughout just your day and nights and in general. Step number two, crafting your new your new budget. Now that you know where your money's going, you know everything about it, you need to put together a budget. And fellas, I cannot, for those of you like myself, so I've been on both ends of the spectrum. I've been really great about a budget, very detail-oriented to the penny, and I've been on the other end of the spectrum, and I can tell you being getting a budget together is huge. And and for me, that's why I mentioned the peace, it's the peace of mind, knowing what's getting spent, how much money you have. It seems at least my experience has been that if I know how much money I've got coming in, if I know where it's going, if I if I know what my finances are and I feel comfortable with that, other things in my life feel much more stable and steady. So so if you haven't done it and you're just kind of not like try it, just try it because I'm I'm telling you, it's gonna give you some some peace of mind. So, so what you got to do when you're crafting your budget, and and I just also want to say this some of this stuff is very cursory, right? We're gonna we're I'm talking in in generalizations, it's gonna be very specific for you to do for your own situation, but I also highly, highly recommend talking to a certified divorced financial analyst during this process to help you. And and the analysts that that we work with are gonna do this exact thing, they're gonna talk really specifically. And you may have heard our episode a month or two ago about that and kind of some of the things they're gonna take you through this entire process. And I'll tell you, I wish I would have had that going through a divorce. It is a huge thing. But one of the things they're gonna talk about is prioritizing your needs over your wants. When your budget is tight and it's gonna be a tight budget, no matter it's gonna be a dip, it's gonna be a tight budget no matter how much you make, because it's just a math problem. You're going from one household into two. It's gonna be more expenses, so it's gonna be a lifestyle change. So, so when that it's tight, essential expenses have to come first. So that's knowing your difference between your needs and your wants. Housing, food, utilities, transportation, uh, childcare, those are all non-negotiables, right? And then everything else is going to be a want, and those wants can be adjusted. So when you've figured out what your wants and your needs are, you will need to allocate what your income is, and you're gonna need to assign a specific amount of money to each spending category based on your tracking from that step one, right? So you've got your spreadsheet or however you've however you've compiled how you're spending every single one of your dollars, and then you're gonna allocate all of that income into the different categories that you're gonna spend them on. Now there's a it's a simple rule that you can that you can use. It's called the 50-30-20 rule. Many of you have probably heard that. 50% is for needs, 30% is for wants, and 20% is for savings and debt repayment. So the 50% for needs is really pretty straightforward. It's housing, utilities, groceries, transportation, insurance, minimum debt payments, and stuff like that. Wants, the 30% is gonna be stuff like dining out, entertainment, whether that's going to a game or going to watch a movie or something else, hobbies, new clothes. Hopefully you have clothes already, but maybe new clothes or vacations or anything like that. Those are gonna be wants. Those are gonna be things basically. If you think about, hey, can I live with this or without it? Stuff like, well, I need food, I can't live without that, so I got to be able to go to a grocery store. Uh, I need housing, so I need to be able to pay my rent or my mortgage payment. I need a vehicle because I need to get the car. I need a vehicle or I need money to pay for the vehicle, so I need to go to work so that I can pay for the rent or anything else. But I mean, transportation also that could potentially be a need because if you have public transportation or an alternative way to get to work, or maybe work from home and you don't need that. So, I mean, this is going to vary for different people in different lifestyles, right? And then the 20% for savings and debt repayment, emergency fund, retirement, additional debt payments, other than just the minimum. And then as a single dad, your needs category might initially also be higher due to child-related expenses. So you're going to adjust these percentages to fit your unique circumstances, like I said. So some of those wants, some of those wants might be a little bit a little bit skewed or just a little bit higher, if if you will, because you do you do have you do have kids. And so there's there's a minimum lifestyle that's that you want to be able to function and and operate in. But again, this is going to depend on you. This is going to depend upon your lifestyle, it's going to depend upon your family. So those 50 that 50, 30, 20 is is a is just a guidepost, or just guideposts for you. But you want to if if it is tight, you just you want to really, really try to keep within this. And if you need help with what a want, the difference between want and need, and I'm not being facetious here. I'm there's seriously, there I thought there's people that I talk to that seriously don't know or don't understand the difference between a need and and a want. I think for the most part, guys that I do talk to, and specifically divorced or divorcing dads like like you guys have a pretty strong understanding because you have a pretty strong idea of what things are going to be like post-divorce because you've thought through the financial thing first. It seems to be one of the first things that that us dads think of when we're when we're approaching this or going through this process. Okay, so then that we're still in crafting your budget. Talked about 50, 30, 20. The next thing is thinking about how you're going to integrate child support and doing this very carefully. The child support, as you know, is designed to cover your children's expenses, not necessarily your own. And ideally, these funds should be directly allocated to things like, and so let me just be clear. I'm talking to the dads who think or are receiving child support, uh, which is happening, like I said, more and more these days. So they're to be allocated thing to things like the kids' share of housing and utility costs, food and clothing for them, school expenses, extra extracurricular activities and medical care. I would highly recommend setting up a separate account or a st or even just a distinct line item in your budget to manage these funds so that you're ensuring that they're used for their intended purposes. And why this is important, guys, is if you can document this and you can demonstrate this post-divorce, if there's any kind of issue or accusations or whatever, if you if you unfortunately get into something like this, if you've got this all documented and there's a question about it, you can easily say, This is the dollar amount that I've been given. This is what I've spent. I it's it it will be very straightforward and makes things much, much easier to mitigate post-divorce and could actually save you a whole buttload of money of not having to go back to court and then have to fight this out and demonstrate this in divorce. And then if you haven't documented, you're gonna have to go back and you're gonna have to figure it out anyway, and then you're gonna have to bring it to court if you're taken to court. So if you do it up front, it can be very, very helpful. Okay, that's number, that's step number two, creating your budget. So the step number one was knowing all of your numbers. Step number two is crafting that budget. Now, step number three is managing child support payments. So I just touched on this, but but the the it takes very careful planning and management. First off, first off, understand what the order is. So if you're post-divorce or you're just you're you're just getting done with your agreement, understand what the order is. If you're not yet, then you need to understand what that is, what that's going to mean, what the order is going to mean, the exact amounts, the payment schedules, and the stipulations. It's gonna mean also how how it's gonna factor into your budget. How are you allocating these funds specifically for your children's needs? If your child support fluctuates or is sometimes late, budget conservatively using only what you can reliably expect coming in. Now you won't know that until you get down the road and kind of see what happens with with your ex. But just understand, also know and understand what is expected for extracurricular or or other expenses that's that are happening with the kids, because some of that it should hopefully be clearly laid out in your your agreements. But oftentimes I see that this does not happen, and then questions come up and then arguments happen. And if that happens, I the the only the only people that suffer are the children, because then it becomes more difficult to be able to allow them to be able to do some of the things that they might be wanting to do, or to be able to just simply provide for them if you haven't clearly laid these things out in your agreement. So if you can communicate with your ex and you do have a good co-parenting relationship, open communication about this stuff is really important, especially big bigger expenses, kids' trips for schools or things like braces or medical stuff that comes up. It can be really, really helpful. But if you can't, hopefully you have your agreement. And so, guys, if you're going through it or you're just thinking about it, get that agreement airtight. One of the things we do I do when I'm coaching is we we go over the agreement in very specific detail and we talk about hey, have you considered this? And what about this, and what about that? And making sure that you're dotting as many I's and crossing as many T's is absolutely critical. You do not want to have anything left up to interpretation post-divorce because that means if you guys can't interpret it the same way, then guess what? You're going back to court, it's gonna cost you thousands of dollars, and then the judge is gonna interpret it for you. And that might not be the interpretation that you had. So take the time going through it as contentious as it might be, just make sure that you do that. Okay, so that's step number three. Step number four is finding, I'm calling it finding room to breathe, but what that is is cost cutting. So if you find yourself in a situation where your budget looks like, hey, like I have too much, I have more, I have more expenses than I have income. So I need to trim something somewhere. And it's and it's good. And we're gonna talk about this too, and in going over the regular on a regular basis to to to to uh assess this. But here's here's a few things to look at when trying to cut costs. The the number one, I the number one thing I see is reviewing your subscriptions. So we've gotten to this place in the world where, and I've got it too, where these subscriptions are on autopilot, they come out of your account or to your your credit card or wherever just automatically. And some of them you just forget about. So go through your statement, see what's coming out. Hopefully you figure that out in step one, right? And you know what your subscriptions are, but cancel anything that is not a need, right? That is only a want and that, or that you're just not using streaming services, gym services, apps, whatever they may be. There was a point where I just I was able, I did the the math about the the gym memberships and what that costs a year versus what I can do where I can go buy some of the minimum amount of gym equipment that I could get in my house and have a workout and figure the the workouts out still in my house and you know, maybe outside or whatever, and not being able to and not going to the gym and cutting that that membership. So it's stuff like that. And sometimes you're probably gonna maybe have to get a little creative with stuff too. The second one, cooking at home, that I see is huge. You're gonna be maybe surprised. Some people are, it depends on what's your lifestyle, but eating out even fast fast, just eating out and just not even, just especially fast food is significantly more expensive than preparing meals at home. Again, it's it's convenient and faster. I know and understand the challenges with schedules and kids, but figure out how to schedule to get to the grocery store, to meal plan, work your work it win in with your kids. It's a great opportunity to connect with kids, but start cooking at home. And I'm just gonna say it's a good cost-cutting one, but it's just a good one in general to do with uh with your kiddos. So cook at home more. You can negotiate bills, and this goes this goes into so you figured out what your your cable bill is or what your internet bill is or if they're combined together. You can call and you can try to and you can try to negotiate something with them that's that's lower. Another one is insurance costs. Insurance costs always seem to be going up. Not all insurance people will call you every mu uh every year and and talk to you about those. So check your insurance providers, see if there's ways to save save money on on your insurance and get better rates. Uh loyalty programs, those are often sometimes sometimes great ways to save a little bit of money here and a little bit of money there. Credit card points are also another one. If you can finagle and you've got the the the wherewithal and the ability to pay stuff on credit cards and pay it off every month so that you can build up loyalties and even get some cash back returns, but making sure you're paying off. Sometimes those are great opportunities as well to make some money and to cut to cut some costs. So that's step number four is finding some ways to cut your cost. Now, step number feet number five is setting some financial goals. So all everything we've talked about is really assessing where you're at, getting yourself stable to where you know what you're spending, what your income is, what that's what that all looks like, cutting costs if necessary, all about the budgeting. And now you're setting your financial goals for what you want it to look like in the future. So it's not just cutting back, but now you're talking thinking about building forward. So one of the things you need to have is an emergency fund. It's critical. We don't know what's gonna happen with whatever in life in general. You need to aim for three to six months of essential living expenses. So all those, those, all those deb debits that you that you put together, your expenses and what your debits were, all of your expenses for a month, you're gonna figure out what three to six months of those are, and then start building up a savings fund for that. Even if it's just a small amount,$25 a week, that you're doing that after a period of time, that's gonna that's gonna build up. You invest that in an interest-bearing account or investments or something, that could also help to build some more money while it's sitting there and waiting. But make sure that you can put that together and you can get that together. That emergency fund is gonna be huge. It's gonna be another one for me. Again, it was a peace of mind knowing, hey, something breaks down on the car, I have the money to be able to fix it, I don't have to stress too much. Next thing in setting new financial goals is a debt repayment plan. If you have high interest debt like credit cards, figure out a plan to tackle that. It could be a plan of uh the debt snowball, which is paying off your smallest ones and then going towards paying off the big ones, right? Like a snowball. Or it could be the debt avalanche, which is the opposite, paying off the highest interest rate ones first and then and then the lower interest rate ones after. If you can find zero balance stuff, again, sometimes you might get have to get creative or or lower cards where you can transfer balances for a period of time as well. That can help too. And so you might have to get creative again. Also, it's gonna take a little bit of time, guys. It's gonna take effort and paying attention to this stuff, and you you're gonna sometimes sometimes you're really just gonna have to carve out this time, maybe on the weekend or a time during the week after work where you don't have the kids, where you have to sit down and do this and pay attention to it. Because it if it especially if it takes creativity, then you're gonna have to research, you're gonna have to talk to people about it. If you have a financial planner, a certified divorce financial analyst or somebody, you're gonna have to sit down with them, you're gonna have to come up with these numbers. So, but take the time, I'm telling you, it will definitely be worth it. The next financial goal to to plan for is your kids' future. It's gonna be this would be college or trade schools or or something, but you're gonna want to start trying to put something away for that, as well as your retirements. So the less you need to contribute later, if you're contributing now, you know, compound interest is awesome. It could be an IRA, it could be a 401k, it could be 529 for the kids for the college, but and and it doesn't have to be large amounts, guys. So it can be small amounts to start out, but the point is to start doing it and and and just do it regularly and do it consistently. Uh, and the last one is fund money. Don't make your budget so restrictive that it's unsustainable. Allocate a small amount for guilt-free personal enjoyment. This keeps you motivated. And so that could be a fun, that could be a fun fund, right? Say that fast five times. It could be a fun fund where you're just putting maybe excess change in a jar. You could do it be do a fun thing with your with your kids. But again, if you're just doing something small, and it and it doesn't have to build up to be huge, it could be build up to where you're gonna use it, and then maybe there's something that you all want to go do and do together. It doesn't have to be something big and fancy and huge, like a big European trip, but it could be a fun camping trip or it could be a fun outing to do something that you saved up. And while you're doing it, you're also teaching and modeling phenomenal financial uh awareness for your kiddos to be able to do this. Something that in this day and age of instant gratification, teaching them to put together a fun fund and save even just your your coins and some loose change and extra money that you get into that and build up over time, and then you have the satisfaction of spending that on something is just an awesome, awesome lesson for them. Okay, so that is your future financial goals and putting those together. And the last one we're going to talk to and alluded or talk about and that I alluded to earlier is review and adjust. You need to be going over this budget and paying attention to it on a regular basis, even if it's just once a month looking at it and and assessing it and reconciling your your your your budget to what you actually spent. Some of this is a lot easier these days with QuickBooks and some of the other online uh mint and some of the online software that that will do it automatically for you. But you gotta look at it, you gotta see where you might have overspent because that's gonna happen. Where can you save money and cut, like we talked about in one of the steps? Quarterly, at quarterly, but at the very least annually, conduct a thorough review and make your different adjustments because this what it's what this is gonna do is this gonna help you plan. All right, do I need to make more money? Maybe I need a side hustle, maybe I need to look for a new job, or maybe I need to start pushing for a promotion in my existing job, whatever it might be. If it comes down to I've I've cut all of my expenses to as far down as I can, and I still am struggling, I need to maybe go to school so that I can earn some income, whatever. It's gonna help you to assess what you need to do in creating a plan and going forward. So at the very least, you're gonna do a thorough, thorough review annually and go into this in intimate detail. And then the last, I just want to sign it, say, and this will be my final point, which is be patient and forgiving with yourself. This doesn't have to be perfect. And if you've never done this before, it's not gonna be perfect, even if you've done it before, and you guys know it's not perfect. It is it is adjusting, it's information. There's gonna be months where you're gonna go off track. The key is just to learn. It is to make an adjustment and then get back on course. Just like anything like we talk about with working out, with any of the self-care. If you're going to fall off the wagon, do you just get back up? Do you keep trying again? And then eventually you get the hang of it and you'll get better at it. So, so it in it's not rebuilding your finances and figuring this all out is not a sprint. It's a marathon. So, what you're thinking about is long-term for yourself and for your kiddos. It's going to take discipline, it's going to take honesty, it's going to take a willingness to learn and to implement this. But I'm telling you, by taking these practical, step-by-step actions, you're not only going to regain control of your money, but you're going to set a an amazing, powerful example of resilience and financial responsibility for your kiddos, which ultimately that's what we want is to have them be healthy, functioning adults. So by doing this, that is going to go a long way for helping them to do that. Gentlemen, thank you so much for listening. I hope that you found some value in these six steps for rebuilding your finances from from scratch. I know that this can help you and it will help you. Also, if if it if you've enjoyed this, please share far and wide. We've had an increase in downloads over the past month. It's a credit to you sharing. I think a lot of you have been sharing on social media. That is a great place to get the word out about this. Uh, share far and wide, leave us a star rating. Those help immensely too to get other dads that are doing keyword searches that find us. They see great star ratings, or even better, they read one of your comments and leave a comment, leave some details about that. I read all the comments on every single one of the podcast platforms and the social media platforms. And I sincerely appreciate when you give us your when you give us your feedback and you tell us how it's impacted you. But that also encourages another dad that might be mired in whatever he's going through during his divorce to reach out and get involved in the community too. So you have the power to be able to make an impact on other dads going through that just by leaving a comment or a star rating or sharing this on your social media. So I appreciate it. I sincerely appreciate you listening and tuning in this week. Have a terrific week and God bless.

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