Pay Dirt is Slate’s money advice column. Have a question? Send it to Athena, Kristin, and Ilyce here. (It’s anonymous!)
Dear Pay Dirt,
I’m preparing to ask my husband for a divorce in the next few months, and I’m wondering if you can weigh in on what is a…fair division of our assets. Here’s the situation: We’ve been married for six years, and during that entire time we have owned a business in the seasonal travel industry together. The actual work happens from May to October, and we do divide the labor during the season 50/50, but he acts more like a contract laborer and I am the planner and client-facing person as well as laborer. It’s my year-round job to do admin, accounting, marketing, and customer service. In the “off-season,” he essentially does nothing. The occasional gig, but that money usually gets whisked away into his hobbies. For a long time, this was honestly fine. Our business was so successful, that as long as I put in 10-15 hours a week in the off-season, there was really no need for him to work. That has all changed in the last two years. The market has changed significantly and I have found myself working 50-60 hours a week every single week of the year, juggling running my business, doing the work of my business, and taking on gig work like childcare and substitute teaching to make ends meet. We’ve accrued some credit card and tax debt due to our severe drop in revenue.
He has not adjusted to this new reality. We have fought many, many times about the fact that we are barely scraping by and that times are just tough now. He hasn’t made an effort to find freelance work or side hustles. I asked him to take some marketing things off my plate, and asked that we start keeping time sheets—he regularly logs 15-20 hours of vague “website work” compared to my 50 hours of balancing a full-time job and two part-time jobs. He just got a gig that pays $400 and immediately spent $400 on his hobby. I’ve come to accept that there is nothing I can do to change this man. I want to ask him to move out and close the business. I’m sure that I can do just fine freelancing on my own if I get a roommate.
So as for our assets—after paying off debt, we will only have about $15,000 in our business checking, and no personal savings. We each own a vehicle, and have $150,000 in equity in our house (owing about $350,000). If we split our remaining cash and the cars, what do you think should happen to the house? I really want to stay here—I love the house and our community, our interest rate is 2.5 percent, the area is getting more and more desirable, and we have two pets that would not be suited to apartment life. If I asked him to move out and got a roommate to pay rent, what would I owe my soon-to-be ex? Nothing until we sell later on? Do we capture a snapshot of the equity at separation and then everything that grows belongs to me? Is there a way I need to be cashing him out at separation? My name is on the loan, but the house is marital property. If we take a divorce to court, so be it but I would love help with a starting point that acknowledges the fact that our financial partnership has been pretty lopsided for a long time.
—Feeling Stuck
Dear Feeling Stuck:
It sounds like you know what you want to do, but are stuck on how to tap your home equity to pay your husband his share. A growing number of Americans are caught in the same trap: They need cash for one reason or another (divorce, debt payoff, job loss, etc.) but don’t want to refinance out of their amazing sub-4 percent mortgage interest rate.
Lucky for you, there’s a new way/old way to tap into your home’s equity: home equity agreements. There are a handful of companies (Hometap and Unlock Technologies are two of the biggest) that will give you up to 20 percent of your home’s value in cash if you give them a percentage ownership of your home. You pay nothing against this arrangement until you sell the home, so there are no monthly payments. If you owe your husband half of the $150,000 in equity today, he’d get $75,000, which is a good deal for him since he’d get less if you had to sell and pay the costs associated with that transaction (broker’s commission, transfer taxes, and anything extra spent to fix up or market the property). But your equity in the home will continue to grow and you’ll keep your low interest rate. When you sell, you’ll share a percentage of the proceeds with the company. Or, you’ll have the option to pay off the amount if you refinance in the future.
The problem I see is that your husband has a great life and may not go quietly. To your telling, he does less than half the work…
Read More: My husband mooched off my hard work for years. I’ve had enough.