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A member here recently asked me to share some information regarding finances to help all of us who will be on their own once they shed the Narc in their life. I do not have any special training or education in the area of finances, however, I was raised by two very practical parents who never made much, but still are living very comfortably due to their common practical sense. During my entire marriage, I was in a constant battle with my Narc over finances.

Even before he became totally unreasonable, he spent everything and did not worry about the future. I was told over and over again that I was old-fashioned and unsophisticated until I did some research. Of course, once I had some validation that I wasn't crazy it pretty much was the beginning of the end of my marriage. I finally had the courage to stand up to my Narc Ex and refuse to go into any further debt.

Going through the divorce process, I learned that there was a tremendous amount of secrets and financial infidelity. It was a huge blessing that I had a handle on my personal finances when going through my divorce. It made the process so much smoother. I will share with you some of the things we all should do and know and I hope you find this helpful.

If you are thinking about divorce or going through the divorce process you will need to submit a budget. This budget is used to determine child support and/or alimony. You need to go through every checking account statement and credit card statement and bills and try to document EVERY expense. Include saving up for potential maintenance and repairs on your home and car. Use past repair and maintenance bills to justify these anticipated expenses. Will you need new tires soon? Does the house need to be painted? Pad as much as you can as long as you have some documentation to justify it.

Leave nothing out: music lessons for your son, or soccer camp for your daughter, the prom, the 8th grade trip to WA DC, pet vet bills, vacations, postage, membership dues - anything and everything. The courts need to see a snapshot of the lifestyle you and your children have become accustomed to. Keep in mind that you are entitled to the lifestyle you have become accustomed to.

The budget and its supporting documents is what will determine the amount of support you receive - take your time and put in the effort to get it right. The budget you submit to the courts is really not a budget. It is how you used to spend your money as a married couple. Go ahead and keep the cable with the extra expenses for the wrestling channel or whatever. Go ahead and include all those restaurant, bar and vacation expenses.

Once you are divorced, you then can change the way you handle your household finances by doing the following: 

  1. Do whatever you can do, sell whatever you can to get a baby emergency fund of $1,000 and only use that fund for emergencies. This emergency fund will save you numerous times and keep you from having to rely on credit cards for life's little mishaps. 
  2. Avoid using debt. Avoid taking on any more monthly payments and instead SAVE for things you want or need. Try to get rid of items that have monthly payments like that expensive car that is weighing you down. Car payments are a major factor preventing you from "getting ahead". Do you want to be comfortable in retirement? Then re-think that shiny new automobile for a 2-3 year old (or older) one you can pay cash for. Let the Narc have the new car that has more owed on it than it is worth. Keep the beater that is paid for which has lower expenses.
  3. Having a budget or a spending plan is vital. You need to decide before the month begins what your money will be doing instead of wondering at the end of the month where your money went. Go through your bank statements, check register, old bills, etc. and figure out how much you spend on EVERYTHING. There is a free budgeting tool on the Dave Ramsey website as well as many other places.  For categories that require some discretion (food, clothing, entertainment) use cash in an envelope. Take out only the amount of cash that you are willing to spend and when the money runs out, you are DONE. Make a plan for every dollar you make and stick to the plan. Every dollar that is not used for basic living expenses will be used to pay down any debt you have. Go nuts and cut everything extra from your living expenses to get out debt as quickly as possible. You will be amazed how much money you can squeeze out by just paying attention to it. 
  4. Once you are out of debt, keep up being a frugal maniac who sticks to the planned budget until you can beef up your baby emergency fund to 3-6 months of living expenses. You will now sleep better at night and will have that smug satisfaction that will scare the sh**t out of your Narc should he decide to play any financial games with you.
  5. Alimony is taxable, child support is not. Check in with your tax person to see if you will need to set aside any money for taxes as early as possible. You do not want to be hit with an unexpected tax bill. Alimony is not earned income but it is still eligible to be used to contribute to tax sheltered retirement (IRA). If you are not working and only collect alimony, try to contribute as much as you can to your IRA. It will reduce your taxes and help you live when you retire. If you are employed, try to contribute at least 15% of your income to retirement. Take advantage of matching funds in a 401K and open up your own Roth IRA or regular IRA. Learn more about investing but realize doing anything is far better than doing nothing. I personally think the Boglehead website gave me the best investing information of all the books and websites I investigated. 
  6. If you were married for more than 10 years, you are entitled to half your Ex's social security benefits whether you ever worked or not. You will lose this benefit if you remarry. When you are negotiating a divorce, do not forget to plan for retirement. You are entitled to half of your Narc ex's retirement so make sure you know what he has. DO NOT cash out your half; just have it directly rolled into a new IRA in your name. This avoids a tax hit of a third of the money. Once it is in your name you can contribute more to it with alimony or other earned income. Watch that compound interest work for you over the years. Play with an investment calculator and see how wealthy you can be! Narcs do not plan more than 5 minutes into the future. You will get to experience karma if you put even a little towards retirement each month and live on less than you make. Patience and discipline will reward you in the future.
  7. Speaking of taxes, try to get the kids to be YOUR dependents if possible. This will lower the amount of taxes you will have to pay especially when they go to college. This year I actually got a refund and I didn't pay any taxes at all. Two kids in college gets you credits.
  8. Child support is not the children's money. It is money given to YOU so you can care for the child and offset the extra expenses of having the child under your roof. Do not sacrifice saving up an emergency fund and contributing towards your retirement and maintaining your household by treating the child support as some sort of savings plan to be used only for the child. You will be a burden on your children in your old age if you don't take care of yourself NOW.
  9. Do not become house poor just because your home has sentimental value or you do not want to move your kids. If your rent/mortgage is more than 25% of your take-home income you are house poor and will be struggling every month trying to catch up and every unexpected expense will be a crisis. Sell the house or find a cheaper apartment if you ever want to get ahead. Home is where you and your kids are. 
  10. I am always stressing the importance of life insurance on this forum. If you depend on your Nar Ex's support then you must insure it with term life insurance. If he gets hit by a train (I wish!), life insurance will take care of the loss in child support/alimony. You must OWN the life insurance policy and make the payments. You do not want the Narc to "forget" to pay or to change the beneficiary to his latest squeeze. If you own the policy, you can prevent this from happening. Get the policy in place or update the existing one before the divorce is final.
  11. Before the divorce is final change all the titles on the divided assets to reflect the one who actually owns the asset. House deeds, car titles, etc., because it will make future sale of these items less of a hassle.
  12. Update your Will or get a Will. You can get a Will (it needs to be specific to your State) down-loaded for less than $50 if your estate is not complicated. You want your assets that you fought hard to obtain to go to your children, NOT your Narc Ex. Your Narc Ex will get custody of your underage kids, most likely BUT you can appoint someone you trust to manage the finances until your children reach a specific age. My Narc Ex bought an expensive car with the kid’s college money while we were married. I could only imagine what he would do with the kid's inheritance after I am gone. Not happening. He would have to get money for my underage daughter by asking my sister for it first.

So far, that’s all I can think of for now. Once your kids are old enough, share your budget/spending plan with them. Show them your progress paying off debt and/or building your retirement. Explain to them why you are waiting to buy something because you are saving up for it. They need to know there is at least one parent who is an adult and in control. They soon will be adults also and need these skills as well. Please add any other financial facts that our group of women can benefit from knowing.

(originally posted by a member of our community)

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