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Loss of alimony may force mom to re-evaluate girls' expenses
By Betty Lin-Fisher
Beacon Journal business writer
Published on Sunday, Aug 31, 2008
Like all mothers, Laurel Kunkel wants the best for her two daughters, Celeste and Claire.
The girls, 13 and 10, are involved in their school band and the Canton Ballet. Those activities can cost a lot — especially ballet with $182 a month in membership fees and about $50 a month on related items, such as shoes.
Kunkel also spends $220 a month on education so that her girls can attend a Catholic elementary school.
Next year, however, she faces stressful financial decisions.
The oldest girl, Celeste, will begin high school in a year.
Kunkel wants to send both girls to St. Thomas Aquinas High School in Louisville, where full tuition is about 21/2 times as expensive for one girl as what she pays for two girls now.
The divorced mother also realizes that the income side of the equation is about to change.
Kunkel's $500-a-month alimony payments from her ex-husband end in one year, although she will continue to get $500 a month for child support.
When the Akron Beacon Journal, as part of its Reclaim the Dream series, sought volunteers this summer to undergo budget analysis and money makeovers, Kunkel, 48, was quick to respond. She's looking at everything, including groceries, clothing, haircuts, the mortgage, the use of credit cards and even retirement.
''I would be really proud if I could show my girls how to handle money the proper way,'' she said. ''I want to set a good example. They hear me stressing about money.''
Kunkel has chosen to sacrifice so that her children can attend Catholic schools, knowing that the Canton city school system also is good — after all, she's a secretary in the district.
But Kunkel won't go into debt to pay for high school.
''I've got to live within my budget and I've got to make it work,'' she said.
The girls also have taken an active role in money discussions.
''My girls mentioned, 'We don't have to buy new tennies for school this year' and things like that. As a parent, it's hard,'' said Kunkel, who has been trying to find a good balance, including the girls in the discussion without overwhelming them.
''This may be something that I look back on my own life and what happened to my family growing up . . . my dad getting laid off . . . [it] made me think about those things,'' Kunkel said. ''Right now, it may be a little bit of a negative, but maybe in their life down the road, it'll be a positive. Because I look back on my parents and say, 'They made it. We can make it.' ''
Examining activities
Kunkel and the girls have discussed getting involved at a new school — which could replace their ballet activity — and the benefits of going to the Early College Program through the Canton schools, which allows high school students to graduate with an associate degree.
They're also looking into opportunities for scholarships and grants to allow them to continue in ballet and private school.
Kunkel knows there are some bad habits that need to be fixed.
She didn't have a budget nor did she track expenses before going to the money coach. She is doing both now.
''I really need to start keeping a log. That's a biggie for me,'' Kunkel told money coach Cheryl Hall, a counselor with the Consumer Credit Counseling Service's Alliance office. ''I feel I've got a handle on things, but I don't have a budget.''
A budget will tell Kunkel and the girls how much they have to spend when they go shopping.
''We'll be shopping and I'll say, 'That's what child support is for,' so I shouldn't deny them. . . . I don't have a budget and that's my problem,'' she said.
Purchases need to be made with the knowledge that the money is there, she said.
''I think money wouldn't be such a black cloud. It could be, 'OK, sorry, we don't have the money,' or, 'We've already spent our clothing allowance,' or, 'Oh yeah, we haven't spent our clothing allowance.' ''
Doing the numbers
Hall, using estimates of income and expenditures from Kunkel, worked up some scenarios to show how she could either balance the budget or find herself in financial trouble.
Kunkel has a cushion of $350 a month based on her current spending. The budget without the $500 in alimony payments puts her short $194 each month, and figuring about a $6,000 annual tuition bill puts her under $661 a month, or $411 if she gets some aid.
Tracking expenses, Kunkel is learning quickly there are surprises. In Hall's estimates, they didn't include gifts for birthdays, weddings and other events.
Low debt
Kunkel's debt is relatively low — she owes $58,000 on her home, which is worth about $100,000.
But Kunkel said it burns her up when she thinks about the payments before the divorce: $600 a month with a 4.25 percent interest rate. There were only 10 years remaining on a 15-year loan. After the divorce, she had to refinance to remove her ex-husband's name. Now paying $500 a month, she has a rate of 6.25 percent and the mortgage for 30 years.
Some family members have suggested she move to a smaller home in another school district, but Kunkel doubts that she can find a home with a cheaper mortgage, nor could she sell her current home.
More importantly, as a single mother, her neighborhood is her ''village'' and ''support system.''
She's tried getting a second job that would coincide with the time the girls are with their father, but has been unsuccessful.
Kunkel has no car payment, having paid for a new car a year ago with cash from a mutual fund.
Her credit-card debt also is relatively low. When she visited Hall in July, the Visa balance was about $2,500, and she said she paid more than the minimum due each month. She'd like to pay that off and not carry a balance.
''I'm very fortunate. I'm not huge in debt. It's just trying to keep up your standard of living and the way you enjoy life,'' she said.
Kunkel asked whether she should pay off a $655 bill for one daughter's flute purchase instead of charging about $28 a month to her credit card, which was subject to finance charges. If she used her IRS rebate check, she could take advantage of a $400 lump-sum payoff.
Hall told her to pay that off and get it off her credit card.
Kunkel still has a lot of decisions and research to do.
In a little more than two years, she will have 30 years in the Canton school system and will be 50 years old. She could retire, begin receiving benefits and find another job.
Or, she could work another 14 years to qualify for full retirement.
She also has universal life insurance policies on both herself and her ex-husband. She wondered whether they were the best use of her finances. (The Beacon Journal arranged for a meeting between Kunkel and a financial planner to discuss these long-range questions. More will be reported on that subject later.)
Kunkel knows she has a lot of tough decisions ahead.
''I'm going to do everything I can for them. I know you have to be a parent, don't get me wrong. . . . I didn't have them to say, 'Go fend for yourself.' I want to do the right thing by them. And so I'm going to do everything I have to. I know it's hard to make a decision.
''Whatever decision we'll make will be the best at the time.''
Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@thebeaconjournal.com.
Like all mothers, Laurel Kunkel wants the best for her two daughters, Celeste and Claire.
Get the full article here.
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