Is Your Alimony Ending Soon?
In the past, alimony was received for a lifetime. Now, in most states, there is no longer permanent alimony. The amount of time an ex-spouse receives alimony is frequently based upon the number of years of the marriage. In some cases, alimony may last only for a few years.
The general intent of alimony is to allow the receiving ex-spouse time to become self-sufficient. Whether alimony is received for a few years or many years, the receiving ex-spouse needs to be prepared when the alimony stops. Often, time goes by too quickly, and the ex-spouse does not realize they are in financial straits.
This article will discuss how to address the impending reduction of income when alimony is no longer received.
Assess your current situation
First, you must understand your current financial. This means knowing whether your household is running in a deficit or a surplus. In other words, are your credit card balances increasing or are you able to put money towards savings.
If you are not sure, here is a quick description on what to do:
- Use a piece of paper, open an Excel or Google doc spreadsheet or other app.
- Write down or enter what are you spending and earning now.* Include all of your income, i.e. alimony, child support, other funds and all of your expenses. Do not leave anything out.
[GreenBox]*If you are using only one bank account for all of your transactions, then your monthly bank statements have these amounts. This step is not about categorizing expenses.
- What’s the difference between your income and your expenses? Do this calculation for several months, if not for the year.
What Do the Numbers Mean?
- If you have a positive amount, the closer it is to your yearly alimony, the better. You may only need to make a few minor changes.
- Close to zero means that you are currently living within your means, but once the alimony ends, that is no longer the case. You will need to make changes to your spending and/or find other means to pay the bills.
- If you have a negative amount and it is a large, you have to change your spending habits immediately and/or create another a source of income to make up the shortfall.
Steps You Can Take
- Seek advice from professionals, i.e. your accountant, financial advisor, or financial coach.
- Find or begin a support group.
- Make more money yourself.
- If you work for a company, you can make yourself more valuable and ask for a raise.
- Consider starting a side hustle.
- Are there expenses that can be reduced?
- Maybe you need to move, take on a boarder, or live with another divorcee and split expenses.
- Are you paying expenses for your grown children? You have to be honest and let them know you don’t have the extra money to help them out.
You must understand and account for all of the money (income) you receive and all the money you are spending on a monthly and yearly basis. If the alimony were stop today, would you be able to pay all of your bills?
Don’t wait until you receive your last alimony check. Make changes now while you are still receiving your alimony.