Reader’s case: Three divorced mothers worry about unemployment

Firecrackers were early retirees in the world travel. She once lived in one of Canada’s most expensive cities, but instead of drowning her debts, she refused home ownership. The result is a 7-figure portfolio that allows her and her husband to retire and travel the world at the age of 31. Their stories have been published on CBC, Huffington Post, CNBC, BNN, Business Insider and Yahoo Finance. By far, this is the most shared story in CBC history, with their viral videos about money on CBC earning 4.5 million views.

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It’s been a while now, and it’s time for another reader case! This person immediately caught my attention because I have developed endless admiration for single parents since I became a mom. Sometimes I can hardly put my shit together and I have wanderers who can help me. But is it alone? Yes.

This reader is experiencing a difficult situation of divorce and has to take care of one, not two, but three children! My heart is really given to her. Hopefully I can get her financial situation well so it will relieve her burden because it is already hard to be a mom, but must it be done when experiencing a divorce? The mission is impossible.

OK, let’s get started!

Dear Millennial Revolution,

First, thank you so much for owning this blog and sharing a lot with me and the community. Your story is an inspiration, and most of it resonates with me. I really appreciate you all teaching me about FI, and how to live abroad, and how it is usually different from most people.

I’ve always been interested in FI and am a long-time reader of MMM and have since been locked on other blogs (such as yours!). At the time, my husband and I were very interested in being FI and worked hard to save and be frugal, usually financially shrewd. I have three kids since (still have them :)), and recently, we decided to end the marriage. So now, I am a divorced mom of 3 children. My ex-wife and I basically decided to allocate our finances to 50-50. And, it’s weird, but before we broke up, we were basically in FI, but now we’re breaking up financially, like I can’t completely revolve around the financial situation. Technically I should be in the same place as before, but when I calculated it, for some reason, I was worried and didn’t think I was still there. So I’ll contact you to see if you can help me with this! Any suggestions would help – I feel lonely about it because no one around has similar ideas and it’s hard to talk about, especially as a divorced mom!

Added content about me, and my main question: I have a high job, but my company is going through changes and I might get fired. Plus, my ex and I now share our house together. But in the end, he wanted to sell his part, which meant I would have to buy his part and build a new mortgage…I didn’t expect it, and it would be expensive!

So my main question is: If I do give up, can I basically retire? Will I be fine? How long can I last? I also want to still travel and enjoy life.

• Your net annual income: $170,989.73/year
• Your monthly expenses: $5738 (including day care ($986 per month) and mortgage paid off within one month, day care fees will cease in fall 2026)… So, in the future, it will be close to about $2800 per month .
• For any debts you have, please include:
• mortgage:
  • Interest rate – 3.15%
  • Your minimum monthly payment – $1952
  • Outstanding Balance – $2344.05
• Any fixed assets you own (home, car, etc.)
• Residence- Currently worth $450,000, although the price may be close to $800,000
• and the investments or savings you have (cash, bonds, stocks, etc.)

• 401K: $561k
• Stocks that are not yet owned by the company, so I don’t include them
• Personal Brokerage Account: $65K
• Roth IRA: $27K
• Traditional IRA: $28K

Thank you very much for any suggestions and suggestions!

–Mom 3

First of all, I’m sorry to hear about your divorce. That’s really bad. I wish I could do something to change this, but unfortunately since I can’t, the only thing I can offer is to help you with your financial position. Hopefully it will at least relieve some stress and help you get some peace of mind.

So, without further ado, let’s do math!

The MO3 fee seems to be high now, but her house will be paid off within a month and once her child is out of daycare, her expenses are down $1,000 a month, which will help her finances a lot.

But the problem with her ex-wife trying to sell their homes means that if she wants to keep her home, she will have to buy his part, which adds financial stress. She also fears she might get fired, another financial hurdle.

Let’s break down these situations:

Summary:

status quo:

Since her home will be paid off next month, her monthly expenses will be reduced to $5738 – $1952 (mortgage) = $3786 per month, or $45,432 per year. Then, starting next fall, daycare costs will drop, reducing her monthly expenses to $2,800 a month.

This means her savings will be $170,989.73 starting next month – $45,432 = $125,557.73 per year, and will soar to $170,989.73 next fall next fall – $33,600 = $137,389.73.

This means her FI number starting next fall is $33,600 x 25 = $840,000. By next month, she can save up to $125,557.73 a year. Assuming they don’t sell the property, this is how long it will take her to arrive at FI:

Wow, due to her high salary and hard work savings, she will arrive at FI within one year! So she is right to say she is almost FI.

But then two dark clouds shrouded on the horizon:

1. Had to buy part of her ex’s home
2. Fired.

Let’s run both cases.

Bought his house

She mentioned that she might be able to sell homes for far more than the assessed homes, but unless you want your ex to swim in the money, they go out! If they were to write something on paper, she would owe him $250,000 and based on her high income, it was insurmountable.

If we think she needs to remove it from her net worth, this is how it affects the time she arrives at FI:

Her FI time jumped from one year to 2.5 years. Of course, this is assuming she still has this lucrative job.

If she is fired tomorrow and has to buy her ex, she will be half as good as FI. If she can only last for another 2.5 years, then she will become FI without worrying about being fired again.

Therefore, from a financial standpoint, MO3 is in poor condition. She is currently 81% of her FI number and will be there next year because her savings will be valued when the mortgage is paid off next month. Keeping the house and having to buy her ex part would make her back, but she would still reach FI in 2.5 years.

If she is fired, one option that comes to mind is to buy her ex part at appraisal value and then sell it in more ways (below she says it might be worth $800,000). I don’t know how realistic it is because of the ever-changing real estate market and the lifestyle decisions she might use the house as a school district/friend etc for her kids as they go through this difficult transition period. But, if it is yes The possible house is actually worth so much, she will be able to sell for $800,000 – $40,000 (Real Estate Commission) – $250,000 = $510,000 = $510,000 and pay her ex. She can then invest the money and use its yield to pay the rent. She can also stop paying property taxes and insurance and redirect the money to rent. If the rent in her area is lower than the proceeds + her current property tax + insurance, that may allow her to get FI faster. But again, there are a lot of stars and asterisks in this situation, so I’m not sure if it’s realistic, but I think I might use it as a “free prison” card in case of unforeseen layoffs.

What do you think? Do you have any suggestions for MO3? Let’s hear it in the comments below!

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