By Alexis Yancey, KERA News
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Dallas, TX – Do you know how to handle a financial crisis? Better yet, do you know how to prevent one? The Consumer Credit Counseling Services of Greater Dallas will be providing help with a series of live webinars throughout the month of April, which is financial literacy month. KERA will be highlighting some of the webinars in our Monday economy segments. Today, reporter Alexis Yancey explores one of the webinar topics, surviving the financial drain of a divorce.
When Monica Hochberg's 14-year marriage disintegrated, she and her three children had to learn how to live on less.
Monica Hochberg: We had our lifestyle set up in a certain way with two incomes and going to one income was an adjustment for all of us.
Monica had a 5-year old son and two older children in college. She realized she needed help maneuvering through the finances of divorce.
Monica Hochberg: I was spending more of my income, less was going towards college tuition for the older kids and more was going to my everyday maintenance of life, bills, food and things of that nature.
Todd Mark is vice president of education for consumer credit counseling services. He says for Monica, the first step in surviving divorce is reworking her budget.
Todd Mark: Look at the expenses and things that were covered in the past that aren't covered any more. Is your health insurance going to stay in place? What about life insurance? If you have kids are you talking about childcare costs, after school care?
Divorcing spouses face dividing homes, cars and furniture; usually one party ends up paying for a new place to live, utilities, food, insurance and transportation.
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Todd Mark: Maybe you had one car together as a couple and now if the other person has the car, you're forced to go out and buy a car on your own. Even if a judge says the house is hers, the car is his, know that joint responsibilities remain joint responsibilities even after the divorce. If somebody falls delinquent on the house it doesn't matter, it's still your credit that's in jeopardy.
If bank accounts and credit cards are in both names, Mark says ex-spouses will have to re-establish individual credit. And, some may have to learn banking and investment skills.
Todd Mark: Often times, there's someone that's the head of household when it comes to finances and they do all the banking and the other person may be financially illiterate as to how those things work and they suddenly have to really educate themselves on the basics of checking, savings, electronic bill pay, picking stocks, mutual funds.
Retirement is another issue.
Todd Mark: If it's amicable, it's going to be split up in half but it isn't always done that way. It may be decided what he got in retirement is his and what she got in retirement is hers and it may not be equal.
Monica and her husband spent two years letting their emotions cool off before amicably settling their finances. She got help from an accountant and kept their house. Then her husband bought another one near by so they could raise their son together.
Monica Hochberg: We'd seen people go through really very expensive, brutal fights over finances and the emotional toll it takes on the people involved and especially, the children involved. Taking the time to let the emotional storm sort of work its way through before putting pen to paper, we had allowed ourselves to sort of naturally fall into a rhythm that was good for our son, good for us.
Mark says you need to work out all your finances before you sign your divorce papers and Monica was wise to ask for help. Because once the agreement is signed, there's no going back.
Todd Mark will talk more about divorce this Thursday, April 1, during a webinar on Surviving Financial Crisis, Dealing with Divorce. You can check a schedule for all the webinars and sign up by going to KERA.org/economy. Webinars are being offered in English and Spanish.