I will be working full time at my regular job for the next several months. I think the additional income will be approximately $1,000 per month after taxes. I am frugal and so although I’d like to treat myself in some way, I’m focusing on increasing savings and paying down debt. I have $6,000 or so left to pay of my half of the low-interest (2.75 percent) HELOC. I have a modest amount in IRAs and a larger amount, although not enough, in my 401k plan. I might be filing for divorce in the near future, and that’s why I’d like to get the HELOC paid off relatively quickly. I’m in my early 50s and my children have finished college.
Any suggestions or thoughts? Thank you.
“Your” half of the HELOC? So, if you pay off half, and your SO does not pay off the other half, he can argue that it is a joint debt to be split after the divorce… I would be careful with that. Do you have money set aside for paying a divorce attorney?
Good point, @BunsenBurner. I have accepted that I might end up having to pay off the rest of the HELOC, but I’d prefer not to. I’ll add to the list of options the following: setting aside enough money to pay off my share of the HELOC but not actually paying it until after the divorce, if it occurs. Thank you!
I don’t think you should pay off the HELOC before filling for divorce. You may need that for negotiation.
even if you “set aside” the money, it will be half your H’s savings…it won’t be “your share” to put towards “your half”. What else can you do with it? You might as well go to Europe with it before filing. lol
What does your H do with money he earns?
What state are you in? Community Property laws may play a role. If your 401k is underfunded, put the money there., but understand that even that can be considered community property. Your best bet is to spend it on yourself, or on something that will only be of value to you. Is the plan for divorce mutual, or something you expect, or something you’re planning to file? Will it be amicable?
Yep, basically everything is marital property. But unlike my husband, I’m not going to attempt to hide the income. (He gets paid in cash, by a family member. He didn’t want to pay income taxes. Sigh. But I digress.) I’m leaning toward putting more into retirement accounts, even though they are divisible at divorce.
I agree with the people who say you shouldn’t pay “your half” of the HELOC. There is no such thing. Your half will be determined after the divorce starts.
If you are in a community property state, everything you have is 50-50, save for property that you had coming into the marriage. However, you could buy yourself some “stuff” with the money. If you don’t live in a community property state, you can and should squirrel some money away.
I would avoid paying down any debt. Try to keep as much cash as possible in your mattress or something.
Actually, because it’s a marital property state, right now, half that debt is mine. But I understand your point.
If I keep cash in the mattress, half of it is still my husband’s.
Someone I know made a “gift” , which was then about $11,000 to 2 relatives, with expectation it would be returned after the divorce. Just saying.
Do you file a joint tax return?
We do file jointly. We have done so throughout our marriage, and when he began being paid in cash and then suggested that we not pay taxes on his income, I decided it was better to keep filing jointly, so that I could make sure the taxes were actually paid. I know that I can’t protect myself fully against being held liable for his intentional and accidental screw-ups, but reporting all income that is actually deposited into the bank seems to be an essential step.
Thanks for sharing your thoughts, suggestions, and questions. One thing that just occurred to me is that because I highly value my time, and am not actually thrilled about working full time (I was asked to do so because of a crunch at my workplace), I could spend some of the money to hire people to do yard work (raking and shoveling). These are both my total responsibility now, because H lives with his parents and is almost never given time off to come to the house.
I just had a brilliant idea. Health care! But I don’t need anything that isn’t reimbursed. So how about a face lift? Ha ha. I need some humor, folks.
<<<
I could spend some of the money to hire people to do yard work (raking and shoveling).
[QUOTE=""]
[/QUOTE]
exactly! And take a nice vaca before you file.
Will you be expected to sell your home or “buy him out”? Depending on that answer, it may be wise (or unwise) to spend some on the house.
Since your H will likely claim that he’s earning NOTHING from his family member, you’re likely going to get hit with “spousal support” and a split of retirement.
I don’t know if “living with his parents” has a dollar value.
Do you need a new pair of Louboutins? 
I’m sorry you have to plan your finances around a deadweight H. Have you actually consulted a divorce attorney to see what you might expect in your particular situation?
@bunsenburner hits on a good point with the shoes. If your professional wardrobe needs updating, then do so before the divorce. I don’t think clothes get considered in splitting of assets, but I think jewelry sometimes can.
So, depending on your line of work, if you need some new corporate clothes/shoes, go for it now.
Same goes for your car…if it needs a repair, or the AC needs fixing, do that now.
Whether you are getting divorced or not, you should be maxing out your 401k contributions (about $23000 this year?), especially if you are getting a match from your employer. You may also want to look into an IRA for your ‘non-working’ husband. I think it could go a long way toward showing you were taking care of marital assets, not wasting them
Go to a spa weekend if you want, or on a cruise, or take your children on a vacation, but don’t do it to blow through the money, do it only because that’s what you really want to do with it. You worked to earn it, don’t waste it. Even if you only end up with half, it’s still half which is better than nothing.
Even in community property states (is that what you meant by
?) there is ‘community property’ and there is what a judge might find fair. Judges/magistrates/arbiters don’t like waste and they don’t like cheating. If you can show you worked while the other spouse gambled away everything, it often goes your way (the court can find that he got his half of the marital property and wasted it, can give him the fancy car which is no longer worth $45k but the court values it at $45k). Karma.
There’s no way I will blow through the money. My idea of a splurge two years ago was getting a root canal done three months after the tooth died (when I woke up several nights in a row in excruciating pain and wanted to kill myself). I will probably buy a new winter coat; the jacket I bought 27 years ago is starting to embarrass me.
I agree that half of something is something.
There are states where “equitable split” doesn’t always mean 50/50.
If the husband is “able bodied” and chooses not to “really” work, I don’t know if a judge will take that into consideration for spousal support. It would seem weird for the courts to order spousal support just so the ex-H can “work for low wages” working for relatives. But, I guess stranger things have happened.
Hopefully, depending on his age and health, a judge will say, “you could earn $XX,XXX per year, but you choose not to, therefore I’m not going to order your spouse to pay support.” But, who knows what might happen.
Get the best divorce atty in your area!
I agree with not wasting the money, but if she’s going to keep the home, and some modest improvements “here or there” will not increase value, but will make living in the home more pleasant, then go for it.
Or if after the divorce, she realizes that her “work clothes” are out of date and need replacing, then it would be better to update now.
@rosered55, GO GET A NEW COAT!!! Goodness, you deserve it! Get one you really, really love!