Getting divorced and starting over - I need budget help!

**bjl584** · 10-14-2011, 04:09 AM

When my friend went through his divore a couple years ago his attorney really screwed up. The deal was that his ex wife got to keep her car. My friend's alomony payment to her was the exact amount of the car payment. She would then take that money and make the car payment with it. However, she decided to take that money and go shopping with it at the mall. The car was repossessed. Since the car was never taken out of my friend's name his credit got trashed and he was forced into filing bankrupcty. And, there wasn't a thing that he could do about it. So, as far as setting up seperate accounts and dividing assets, make sure that you and your attorney cross all your t's and dot all your i's. Don't let your ex have access to any assets or accounts that may still have your name attached to them.

**disneysteve** · 10-14-2011, 04:36 AM

Very sorry to hear about the divorce, Jenney. Hopefully, it works out for the best for all involved.

Being a person (and half of a couple) who doesn't work from a budget, I'm probably not the best person to give an answer to your question other than to ask more questions. Why do you feel you need a computer program to tell you how much you have to spend? If you record all of your transactions and balance your checkbook each month, you should know how much money you have. It is pretty simple to sit down with paper and pencil and add up your monthly expenses to know what your needs are. Figure out how much you want to put in savings each month and make your spending match no more than what is left.

If you feel you need to deal in cash to keep things in control, paper envelopes work just fine. Put X amount in the grocery envelope, Y amount in the clothing envelope, Z amount in the entertainment envelope and so forth. No software needed.

Start with a basic guideline such as 50/30/20 - 50% of income for needs, 30% for wants and 20% for savings, or tweak that as needed for your circumstances.

As for the joint debt, certainly that needs to get out of both names ASAP. If you can each transfer your share of the outstanding balance to solo accounts, that would work. Make extra sure that the joint account is closed and that it isn't possible for him to call the company and reactivate it without your knowledge. I'm not sure what steps you need to take to accomplish that. Your lawyer can probably advise you on that. Also, be sure to pull your credit report and make sure he hasn't opened any accounts in your name that you don't know about. It happens all the time in divorce situations and sometimes the other spouse doesn't find out about it until it is way too late to deal with it. You probably want to put a freeze on your credit so no new accounts can be opened in your name without your permission.

Originally posted by neatdesign View Post

I'm not exactly sure what kind of budget approach I'd like to employ, which makes it difficult to decide what kind of software to get.

I feel like I need something more substantial, something that will guide me into living within my means.

Also, I'd welcome any suggestions on ways to separate finances in a divorce, particularly joint CC debt. I'm thinking that the best option would be for each of us to open a new CC account and do a 0% APR balance transfer and divide the debt that way. Any other ideas?

**thomsoad** · 10-14-2011, 07:29 AM

I have just been using Excel spreadsheets for years. I get paid bi weekly so I usually have it broken down for the month into 2 pay periods. Just input your paycheck and start subtracting bills and your "allowance". Works beautifully and is free.

**feh** · 10-14-2011, 08:58 AM

Originally posted by disneysteve View Post

Being a person (and half of a couple) who doesn't work from a budget, I'm probably not the best person to give an answer to your question other than to ask more questions. Why do you feel you need a computer program to tell you how much you have to spend? If you record all of your transactions and balance your checkbook each month, you should know how much money you have.

+1

I've been using mint.com for a year now, and all the info/data you could ever want is right there. You can create a budget and track spending against it.

**GREENBACK** · 10-14-2011, 10:51 AM

I use a simple composition notebook and break things down into my major categories of spending. It's very simple, accurate and cheap. I suppose there are advantages to using various programs to do this but I don't see the need to spend more than a couple of bucks to accomplish the same thing.

**skydivingchic** · 10-15-2011, 11:32 AM

I've used Mvelopes for a number of years now and absolutely love it. DBF uses YNAB. They both are based on the envelope method of budgeting, so the concepts are similar. The main differences I see are the way in which credit card transactions and overspending an envelope are handled. Here are some details about how these things differ.

CC transactions:
In Mvelopes when I make a CC purchase, I assign it to the correct spending envelope. The program does a behind the scenes transfer from that spending envelope to the "money for CC" envelope (which it created when I set up my CC in the program) for the amount of the transaction. So if I made a $50 purchase at the grocery store for example, my groceries envelope would have $50 less in it and my "money for CC" envelope would have $50 more in it. The CC account would now be $50 dollars more negative. When it comes time to pay my CC bill, all the money to pay the CC off in full is now sitting in my "money for CC" envelope. It is a simple matter of doing an account to account transfer from my checking account to my CC account. Mvelopes automatically takes the money from the "money for CC" envelope in the amount of my payment and adjusts both the checking account and CC account balances accordingly.

From what I understand of YNAB, there is no type of money for CC thing. So, when you make a CC purchase, you would assign it to the correct spending envelope and that balance would adjust accordingly. When you pay your CC bill, it is a simple matter of writing a check from your checking account and recording it in the program.

Overspending:
In Mvelopes if you overspend an envelope, that envelope will go negative. It is then up to you how you handle that. You can transfer money from other envelopes to make up for the overspending in that category. Which envelopes you chose to transfer from is up to you.

In YNAB, overspending this month comes out of the pot you will be funding from for next month.

Monthly funding:
Having one month's worth of buffer so that you are not living paycheck to paycheck is pretty well hard coded into YNAB. That means that paychecks you receive in October sit in your account until November, when you would fund all your envelopes in full for the month of November. I understand there are ways around this, but it is a pretty fundamental part of the program's philosophy.

In Mvelopes, you choose your funding cycle, whether that is monthly, per paycheck, weekly, or some other cycle. Monthly funding is easier in that you only have one funding profile to deal with, but it is not as fundamental a premise as it is in YNAB. Personally, I fund monthly and have found that my cash flow has smoothed out tremendously because of it. I highly recommend doing things this way. But not everyone (including me in the beginning) has the resources to do this or it just may not make sense to a given situation, so it is nice that Mvelopes allows this flexibility.

I'm not sure what you mean by category envelopes vs. overall monthly envelopes. Mvelopes lets you create as many envelopes (and category envelopes) as you want and call them whatever you want. There are some default category envelopes, but you can delete and/or rename about anything. I have very few category envelopes and the ones I do have are to separate various savings goals in a single savings account as opposed to having categories of spending. YNAB also allows you to do that as far as I know.

Personally I prefer Mvelopes, but I believe they are both solid budgeting programs and would recommend either one.

**snafu** · 10-15-2011, 06:08 PM

Divorce is very stressful so I suggest you start this change by letting neutral outsiders make budget suggestions for your consideration. List your Income Gross/net, any contributions to retirement/access to employer contribution, Fixed expenses like rent, utilities, contract commitments like auto/cell plan,CC debt and applicable categories. You can choose a program when you know what you need long term.

**expo09** · 10-18-2011, 01:47 AM

You don't need software to work out your finances. You need a spreadsheet and a calculator. How you look at your finances is more important than software to tell you what you need to know. Simply work out everything you spend every month and compare this with how much you earn. Then you will know how much (if anything) you need to cut back on.

It's not easy when you have to significantly change your lifestyle to fit your new financial situation, but when you get used to it and start to manage your finances it should get easier. Good luck!

**riverwed070707** · 10-18-2011, 07:20 AM

Originally posted by thomsoad View Post

I have just been using Excel spreadsheets for years. I get paid bi weekly so I usually have it broken down for the month into 2 pay periods. Just input your paycheck and start subtracting bills and your "allowance". Works beautifully and is free.

I agree. I use mint to track my spending and an excel sheet to budget. I do not care for the budgeting tool on mint. I'd be happy to send you my template if you're interested.

**Nightfly** · 10-18-2011, 09:35 AM

Mint has its supporters and detractors, and spreadsheets have limits. There are other free budget planner alternatives to Mint (I'm a little biased: I created one of them). But whatever tool you use - use something. Having your income and expenses written down and planned out will actually save you money and direct it toward worthly goals. Good luck.

**neatdesign** · 10-18-2011, 05:35 PM

Grrr... I wrote up a post last night and could have sworn it went through but it didn't for some reason. Anyway...

Thanks for everyone's feedback (and encouragement). I understand the paper/pen approach, but the truth is that I suck at math and would prefer something that's going to take care of the calculations for me. That, plus it would be more convenient for me to have something I can access online, particularly if it has an accompanying Android app since I use my phone constantly.

Also, I like the idea of having some kind of system, like Mvelopes or YNAB, to help me get in the mindset of actually BUDGETING. For years I've taken care of the bills and made sure everything was paid on time, but I never got the hang of setting up an actual spending plan and sticking to it. One of the reasons is because I could never get my husband to get on board with it, and I found it impossible to follow a budget when he wouldn't cooperate. Now that I'm going to be on my own again, I am looking at this as a fresh start for me in many ways, one of them being having a budget.

**disneysteve** · 10-18-2011, 05:42 PM

Originally posted by neatdesign View Post

Also, I like the idea of having some kind of system, like Mvelopes or YNAB, to help me get in the mindset of actually BUDGETING. For years I've taken care of the bills and made sure everything was paid on time, but I never got the hang of setting up an actual spending plan and sticking to it. One of the reasons is because I could never get my husband to get on board with it, and I found it impossible to follow a budget when he wouldn't cooperate. Now that I'm going to be on my own again, I am looking at this as a fresh start for me in many ways, one of them being having a budget.

Let me make a radical suggestion. Not everyone needs a budget. The only people who need a strict, to the penny, written budget are the folks who can't otherwise keep their spending in line with their income. My wife and I don't have a budget. Never have. Likely never will. We are both mentally aware of what we have and are good about not spending money we don't have. If the problem you had in the past with budgeting was your husband, you might be just fine now on your own without a formal budget.

**bjl584** · 10-19-2011, 08:40 AM

Originally posted by disneysteve View Post

Let me make a radical suggestion. Not everyone needs a budget. The only people who need a strict, to the penny, written budget are the folks who can't otherwise keep their spending in line with their income. My wife and I don't have a budget. Never have. Likely never will. We are both mentally aware of what we have and are good about not spending money we don't have. If the problem you had in the past with budgeting was your husband, you might be just fine now on your own without a formal budget.

I'm one of those people. I really have no idea how much I spend in a month on any given thing. But, I do know exactly how much money I save and how much money I have.

**disneysteve** · 10-19-2011, 08:46 AM

Originally posted by bjl584 View Post

I'm one of those people. I really have no idea how much I spend in a month on any given thing. But, I do know exactly how much money I save and how much money I have.

Yep. That's me exactly. I don't know what we spend on groceries, dining out, gas, clothing or many other things. I do know that 23% of my gross income goes to savings each month and 50% of my wife's income goes to her 401k. I know we have no debt except our mortgage and we are prepaying that. I know that every bill gets paid in full and on time every month. That's really all I need to know as far as I'm concerned.

Getting divorced and starting over - I need budget help!