Bachelor dad: Keeping it together
Dave King got primary custody of his four kids. Now he has to figure out how to juggle his career and family and cover those endless bills.
(Money Magazine) -- As a younger man, David King enjoyed running marathons once in a while: There were two in New York, one in Austin, another in San Diego. Now he runs one every day, starting and finishing at his home in tiny Decatur, Texas. "I don't do any formal exercise anymore," says King, 45. "But I feel like I do the same amount of running around."
He's exaggerating, of course - probably. As a single father with primary custody of four kids, King is often off and sprinting by 5:30 a.m. on weekdays to deliver 14-year-old Ethan to a 6 a.m. football practice (an hour later in the off-season). Then he's back home, nudging Emily, 12, out of bed and shaking nine-year-old Samuel to life. (Jesse, 17, adheres to his own teen time zone.)
Within the hour, King deposits them at school. Then, with his laptop jawed open in the passenger seat of his Honda Accord and his BlackBerry nestled in his palm, he begins his hour-long commute to Dallas, where he works as senior vice president of business technology for a mortgage bank.
From behind the wheel King is making calls, trading e-mails and fussing with file attachments - oh, and glimpsing at the road now and then. He can't afford to be stopped; besides the fine, he can't squeeze another meeting into his day.
After work he drives the boys to their evening activities, shuttles Emily to cheerleading practice and, during football season, assists with coaching the middle and high school teams. King's only unscheduled weeknight is Wednesday. But as president of the middle school PTA, he's likely to be busy recruiting chaperones for an upcoming dance. "I'm real plugged into the moms' network," says King.
He has worked hard to get to this place. King and his ex-wife divorced in 1998, and she was awarded primary custody. But King continued to seek custody and finally, last year, his ex-wife consented in a mediated agreement. By July all four kids were living with Dad. "My life rose to a new level of chaos," says King.
His finances were already there. Over the 10 years since the divorce, King has spent $500,000 on legal fees and child-support payments. He swallowed a pay cut of $45,000 a year to take a job that offered more flexibility but "significantly stifled my career."
Meanwhile, since the kids came to live with him, King's everyday expenses have soared, shoving aside long-term financial needs. (He has kept 10% of his salary flowing into his 401(k), mostly because his contributions are deducted automatically.) Funds for college? He has only a fraction of the costs set aside for his older children and nothing for the younger two.
And if something happened to him, there's no telling where his assets would go since he doesn't have a will. "I haven't been able to educate myself on everything," he says wearily. "I'm only one person."
A new kind of single parent
Dave King is a member of a once rare but now fast-growing demographic: single dads. Between 1990 and 2006, the number of U.S. households headed by single fathers more than doubled, rising to 2.5 million from 1.1 million, according to the Census Bureau; in fact, fathers now head one out of five of the country's nearly 13 million single-parent families.
In divorce cases it is no longer assumed that custody of the children should automatically be awarded to the mother as it used to be. "Society is allowing men and women more flexibility in their roles," says University of Maryland professor Geoffrey Greif, author of The Daddy Track and the Single Father. "And the laws governing divorce have given fathers a better chance of winning custody."
Single fathers often face different financial challenges than single moms. For women the big issue usually is figuring out how to make ends meet; the typical woman's standard of living drops about 30% after a divorce, reports the Social Science Research Council.
For men, however, solo parenthood more often wreaks havoc on their careers. Eyes will roll in the office as you explain to the boss, once again, why you're the one who has to skip out early to attend the school play or stay home to nurse a sick child. And there's no status in turning down a promotion because your kids need you at home - in fact, as a single father you may no longer be offered the chance to say no.
In his pre-custody career, King was constantly on the go, earning $200,000 a year and racking up nearly 2 million frequent-flier points as a banking industry consultant. He believes that he was on track to make partner and that he would be raking in $500,000 a year by now.
Instead, once he gained custody of the children, he made the agonizing decision to leave that orbit so he'd have the time to care for them properly; today he earns $156,000. "I love my kids deeply, so I'm happy to make whatever trade-offs I need to make," says King. "But I have to fight my own anger and frustration when I think about the opportunities I had that were lost."
Roots of a split
In 1988, newly married and armed with an M.B.A. from Texas Tech University, King joined Arthur Andersen (and later its Accenture spin-off), where he rose to become an associate consultant in financial services, working with three of the nation's biggest banks.
He spent so much time away from home that in 1996, his wife and their three children uprooted themselves from Decatur, where the couple had first met in high school, to move to Charlotte, N.C., closer to King's top clients. They built a house three miles from Bank of America's headquarters; First Union and Wachovia weren't far away.
But his marriage, it turned out, didn't survive the move. In July 1997, while he and his wife were visiting Decatur during the annual Old Settlers' Reunion celebration, King says that the two talked seriously about splitting up. A little over a year later, their divorce became official. "My world fell apart," he says. "I lost my wife and my children - and my money."
After they first separated, King began paying $3,000 a month in child support, which dropped to $2,200 when the divorce was finalized in 1998. Legal fees also took a toll, ultimately costing him around $250,000. Far worse for King than the financial hit: After the split, his ex-wife moved back to Decatur with the kids, so he saw them only every other weekend and for 30 days during the summer. "I went into a six-year depression," he says.
Heading back home
But he never stopped petitioning the court for custody. Finally, King and his ex-wife reached an agreement through mediation that extended to all four children: He could have primary custody as long as he agreed to move back to Decatur from the Dallas suburb where he was then living. King soon felt he had "a lot of catching up to do" - financially and otherwise. "I had lost so much ground in terms of just being with them," he says.
Once the kids moved in, he lost a lot of freedom too. His evenings filled up with recitals and emergency trips to the dollar store for school supplies. He had to cook (or pick up) dinner and handle such unfamiliar chores as helping Emily dye her hair black (she just wanted to try it).
His father Gene pitches in too, as needed. "There's always somebody to pick up or drop off," the elder King says. The house is strewn with dirty clothes and stuffed backpacks. "They just drop everything everywhere," King says. Then there are the endless loads of laundry to do. "Boys do not reuse towels," he says dryly.
A rising stack of bills
The expenses seem endless too. Once all four kids were under his roof, King's grocery bill more than doubled, to $1,500 a month; he's watched the kids chew through 48 waffles in a week. Moving back to Decatur meant that his commute time to work increased from seven minutes to more than an hour each way, causing his gas costs to triple to $600 a month. Last summer, in one trip to the sporting-goods store to get equipment for the kids, he dropped more than $1,000. Their cell phones run him another $200 a month.
His housing expenses have gotten bigger as well. Last year King took out a $300,000 mortgage to build a house large enough to hold his clan: a 3,400-square-foot structure with five bedrooms and three baths on a plot he'd bought for $28,000 in 2000. (Until the house was finished, the five of them squeezed into a 1,800-foot rental home.) To keep down costs during construction, King served as his own cleanup crew, picking up discarded shingles and loading broken bricks into a tractor-trailer to be carted away from the site. Savings: $6,000.
The habit stuck. He now refuses to pay anyone to help keep the house clean - and it shows. "When I walk into his house, I'm tempted to sweep the floor," says neighbor Charlsie Webb. "But I don't want to offend him." Because Decatur (pop. 5,200) is a town where everybody minds everybody else's business, not every awkward situation King confronts is resolved so simply - or at all. He doesn't join the church where he attends morning Bible-study classes because a deacon served on his former wife's legal team. "It just wouldn't feel comfortable," he says.
He has trouble accepting a few other aspects of his situation too - mainly brooding about "what I could have been." Still, he doesn't yearn to go back to consulting after the kids are grown. "It's out of my system," says King. "Besides, I know I'll want to spend time with my grandkids." Clearly he's thinking ahead.
That hasn't always been the case, as his finances reveal. Saving for college "just hasn't been a priority," he admits. He has barely contributed anything to the custodial accounts he has for his two older kids since he opened them a dozen years ago - they're now worth about $18,000 apiece. And he never opened accounts for the younger two.
He doesn't have a will, and as it now stands, a friend is the beneficiary of his 401(k) and life insurance policy. "That's risky, I guess," he says, adding that he wasn't sure how else to proceed. But now that seeking custody no longer consumes so much of his energy, he's ready to take a more active role in planning the financial future. "I'd love a pro to help me figure out where to go from here," he says.
Money Magazine asked Eric Vincent, a local financial adviser, to provide that perspective. "As a single parent, you have vulnerabilities you need to take care of right away," Vincent told King. His recommendations:
Protect the kids. King's children count on him for all their financial needs, and he should make sure that support continues even if he's no longer around, says Vincent, a principal at LPL Financial in Decatur. If King were to die without making legal provisions for handling his assets, his ex-wife not only would assume physical custody of the kids, she'd also likely gain control of any money they inherit as long as they are minors.
To avoid that outcome, King should have an estate-planning attorney set up a trust within a will, known as a testamentary trust, that will be triggered upon his death. He can direct any assets he wants the kids to inherit to flow to the trust (this would include naming the trust as beneficiary of his 401(k) and life insurance policy) and appoint a trustee to manage those assets until the kids become adults. The trust will also allow King to attach conditions to the inheritance - say, requiring that a portion of the money be used for college.
Save aggressively for college. Under the terms of his divorce agreement, King's ex-wife is not obligated to help pay for college; chances are he'll have to pick up the whole tab. The $36,000 he has set aside for this purpose won't go very far toward covering tuition, room and board times four, and with a salary above $150,000, he can't count on much, if any, financial aid.
To fully fund the children's education at state schools, Vincent estimates, King would have to save more than $30,000 a year - impossible given his other expenses. So instead, the planner says, he should just save as much as possible and count on making up the shortfall with current income and loans.
To make college saving a habit, Vincent urges King to open 529 accounts for the younger kids and enroll in the plan's automatic investing program. A smart pick: the low-fee Utah 529 plan. Half of the money King has already saved is earmarked for Jesse, who is little more than a year away from college; it should be enough to pay for the teen's first year at a state college. For subsequent years, if needed, King could sell some investments in his taxable accounts.
Buy more life insurance. Through his employer, King has a policy that pays out $675,000, or nearly $170,000 a kid. That's not enough, says Vincent, to cover the ordinary expenses of growing up plus college, car payments and other bills as the children transition to young adulthood. Vincent advises King to supplement his employee coverage with a $100,000 to $200,000 20-year term policy. Estimated cost: $25 to $45 a month.
Shore up Plan B. Since he works in the mortgage industry, King can't afford to be naive about the stability of his job, Vincent says bluntly. Fortunately, King keeps about $76,000 in a money-market account, which is enough to cover the family's expenses for nine months if he is downsized. But the planner suggests King also start networking and attending conferences to stay abreast of trends in the business. That way he'll be in a good position to find a job quickly if he needs to.
After meeting with Vincent, King takes the first step right away: He gets the name of a lawyer who specializes in estate plans for people who are divorced. Looking over his budget, he figures he ought to be able to sock away at least $12,000 a year for college, although he has yet to start shopping for a 529 plan - or for extra life insurance. Just give him time.
"I'm going to get everything in order," vows King. "The past 10 years have been financially devastating for me. But that's over now."
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