Living above one's meansSubmitted by Financial Planning Solutions, LLC on June 15th, 2017
Sometimes when I am looking over the expenses of a new client, I see their incomes are not really enough to support their lifestyle. A couple going through a divorce can only exacerbate the situation.
Once they are divorced, the situation only gets worse as they now have two households to run and are used to living a certain lifestyle.
At a recent meeting of the Association of Divorce Financial Professionals, we discussed a case one of my colleagues was working on. As I scanned the numbers, it became clear that these two were going to have some serious issues once the divorce was finalized. They actually had serious money issues now.
Even though they both earned a good living (in excess of 250k), their expenses actually exceeded their income. Like many in this situation, they relied on credit cards and home equity lines of credit to make up the shortfall. They had very little saved for retirement and basically nothing saved for their kids' college expenses.
How do we get in this situation? Whether single, married, or divorcing, it all comes down to overspending. "You only live once" is a phrase I have heard many times. All we have to do is log onto Facebook and see photos of people having a dream location wedding in the islands, dinners out at fancy restaurants, European vacations, or that new car.
Don't get me wrong. There is absolutely nothing wrong with any of these things IF one can afford them and they don't distract us from our important life goals.
Whether single, in a relationship, or divorcing, it is critical to have a plan. A plan does not mean never going out to eat or buying a pair of pants. It means communicating your financial and life goals with a Certified Financial Planner® practitioner and getting a plan together.
We are here to help.
All the best.
Rick Fingerman, CFP®, CDFA®, CCFS®
Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. Financial Planning Solutions, LLC (FPS) provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client. Information herein includes opinions and source information that is believed to be reliable. However, such information may n