A Divorced Dad Faces Fiscal Reality
As shared custody grows more common, more and more men feel the financial pain of single parenthood
By Stephen Gandel

(MONEY Magazine) – On a recent Sunday evening, Tom Flynn buckles his two daughters into his SUV and heads to the home of the woman he still calls his wife. It's a short drive through South Riding, Va., the D.C. suburb where Tom, 34, and his soon-to-be ex, Stephanie, live about two miles apart. The weekend has been the sort that divorced dads dream of. His youngest, Reagan, turned four, and Tom threw the party at his place. He bought too much cake and candy. Stephanie even showed up. And, for a moment, with Reagan poised to blow out her candles, in a home across from where they all used to live, Tom almost forgot the turmoil of the past year--the fights, the pulmonary embolism and, oh yeah, the divorce, which is just weeks from being finalized. Under the settlement, Tom and Stephanie share equal custody of their daughters, but the girls are due at their mother's at seven. "It's excruciating," Tom says. "I didn't want this to happen."

Divorce is never easy, especially when kids are involved. On top of the emotional challenges are financial ones: legal fees, extra child care and the need to run two households on an income that used to cover one. Historically, divorced women have suffered more economically than divorced men, largely because children have usually resided with their mothers. But evolving cultural attitudes, including the widespread yearning of divorced dads to spend more time with their kids, are leading judges and mediators to distribute custody more evenly. That's been an emotional windfall for many men, but also a financial hit, as they face greater child-care and household costs. Tom says that more than a third of his take-home pay now goes to alimony, child support and day care. "All my bills have doubled," he says. "For the first time, I'm now looking at my financial situation and going, 'What do I do next?'"

At Tom's wife's townhouse, Reagan and Kyra, 6, race out of the car and up the stairs to greet Mommy with hugs on the couch. Were they this excited to see him a few days ago? He retreats down the stairs but is stopped at the bottom by Kyra, who gives him a full-body hug before disappearing into the house again. "We'll see you a little later," he yells after her. But there's no response. Kyra is gone again--at least until Wednesday, when Tom will pick them up again.

Scenes from a Marriage

Tom and Stephanie met at George Mason University outside Washington, D.C. They quickly became inseparable, and married two years after graduation. Both got jobs in the burgeoning local technology business, she in marketing, he as a salesman. When Kyra was born in 1998, Stephanie quit her job to be a full-time mom. As the family grew, so did its fortunes. Tom was pulling in more than $100,000 a year. They bought a four-bedroom house in 1999. Reagan arrived in 2001. In April 2004, they traded up to a 5,700-square-foot colonial with a three-car garage.

Soon after buying the new house, however, Stephanie told Tom she wasn't happy. The Flynns' marriage had been through rough patches before, but they'd attended couples classes together and, Tom thought, worked through the problems. Looking back, Tom says he should have listened more closely. Stephanie once left a poem cut from a newspaper on his dresser and asked him to read it. When he finally did, weeks later, he found that it was about a lonely housewife. Last November they sold the house and split up.

Tom's health problems began soon after. Playing pickup basketball to blow off steam, he ruptured his Achilles' tendon. Complications from reconstructive surgery led to pneumonia and a pulmonary embolism. Tom had been holding out hope for a reconciliation, but when Stephanie didn't visit him in the hospital (she says she had the flu), he knew his marriage was over for good. "Your wife shouldn't be your best friend," Tom says now. "Because one day she might say, 'People change,' and that's what happens when you put all your eggs in one basket."

Dollars and Divorce

Tom's physical health soon improved, but his finances were in decline. Under the settlement, $3,350 of Tom's $9,200 in after-tax monthly pay goes to Stephanie as alimony and child support for the next five years. Much of what remains goes into his home. Tom bought a modest townhouse after the divorce, but it felt too small for him and the girls (who stay with him on Wednesdays and Thursdays and every other weekend) and reminded him of the first home he and Stephanie lived in together. "I've sacrificed a lot," Tom explains, "and then to have to start over at square one...it was too much." So he took out a so-called option-payment mortgage on a $700,000 four-bedroom with a screening room. The minimum payment is $3,000 a month, which does not cover the full interest on the loan, so the size of his debt grows each month.

Then there are the splurges, like a $650 portable DVD player he bought for his daughters last month and the trip to St. Thomas he took them on in May. Stephanie got the family SUV in the split, so Tom spent $20,500 to get his own. (He kept his Nissan Maxima as well.) A big car and a big house increase his expenses, of course. Last month he spent $700 on gas and utilities. And sessions with his psychologist, who's helping him work through the divorce, cost $345 a month in co-pays.

All told, Tom would be spending far more than he makes if he hadn't begun taking on part-time consulting work, which he does on the nights his daughters are with their mother. He has $40,000 in savings from the sale of the houses he and Stephanie shared but could owe as much as $22,000 in tax on gains from the town-house. He still contributes to his 401(k), which now holds just over $50,000. But he's cut back on adding to the girls' college funds, which contain about $50,000 for Kyra and $35,000 for Reagan, and also stopped donating to his church.

The Advice

The planners MONEY contacted agree that Tom's finances are out of control.

ACCEPT FINANCIAL REALITY Holding down two jobs while caring for his kids half the time is not a long-term solution. "Clearly he's overextended," says New York City adviser Gary Ambrose. And because Tom had to go with an adjustable-rate mortgage to buy his house, his situation will get worse if rates go up or home prices fall. Ambrose suggests that Tom consider downsizing to a smaller house and selling one of his cars. But whatever the particulars, Tom has to adjust to his new financial reality.

DROP THE DISNEYLAND-DAD ACT Jamie Lapin, a Rockville, Md. planner who specializes in divorce, says divorced fathers often assuage their guilt by spoiling their kids (and themselves) in the first years after a split. Tom looks like a textbook case. Once he understands he's overcompensating, he'll do better. More modest vacations would be a start. And a $200 DVD player certainly would have sufficed. He can still spend on his kids--as long as he budgets for it in advance.

SAVE IN YOUR OWN NAME Both Ambrose and Lapin think Tom should stop contributing to the girls' already sizable college funds for now and direct any savings he can muster to his retirement funds, which were halved in the divorce. A Roth IRA would be ideal, but his freelance work boosted his income over the limit. And he's already maxing out his 401(k). So his best bet is to open a brokerage account. In the long run, Tom will be able to do better by his girls if he puts his own fiscal house in order.

The Before and After

Divorce did a number on Tom Flynn's finances. Between alimony, child support, his mortgage and some splurges, he's had to take on freelance work--and he's still in the red.