Are Mortgage Rates and High Rents the Catalyst to “Quiet Quitting?”
We have been reading recently about a new life phenomenon called “quiet quitting.” Essentially the concept is that one or both spouses are done with the relationship but neither has the energy or the resources to move on through a separation and divorce. The response that instantly comes to a lawyer’s mind is: this is dangerous because life moves on. If you live with a roomie you don’t have legal responsibilities if they become ill, disabled or lose a job. When your roomie is your spouse the law is quite different. Long ago we were involved in a short term marriage where the parties had separated but their case was moving at a glacial pace. Both parties had substantial earnings. The fight was over their decision early in the marriage to make all their premarital assets joint. One spouse had contributed about 3x what the other had to that pool and essentially wanted all those assets back.
Then, unexpectedly, Spouse #2 had a stroke. She was a medical professional and her path to recovery was not by any means certain. This changed the entire constellation of the divorce because strokes can be life changing disabilities. We have also had plenty of cases where the spouse with the high paying job comes back from a business trip to London to find a pink slip on his office chair. So, there are reasons to avoid the “quiet quit” besides the fact that when you do that you are still creating marital assets as you make retirement contributions or pay down the mortgage.
But then there’s today’s housing market. The two of you don’t like each other much but you share 2,500 square feet with 3 bedrooms, a patio and the hot tub which was once “hot” but became “not.” You financed at 3.75% and your principal and interest is about $1,500 a month. Today that same loan costs closer to $2,200 a month if you go back into the market to buy with 20% down. Then there’s rent. 1,000 square feet of “nothing fancy” is also $2,200-2,500 in the outer reaches of suburban Philadelphia. And that’s with no deductions for interest and taxes and no reduction in any debt as you have with a mortgage.
Now it becomes clear how “quiet quitting” got its start in the matrimonial world. But as we noted, the quiet can get noisy quickly in a world where your spouse loses his job and moves in with his grandmother while suing you for support because he now makes less than you do. And of course, he expects you’ll cover the mortgage since you now have the house to yourself, right?
The choices are not pleasant ones but living in a home with someone you know longer care for comes with both emotional and financial risk. What does become clear as we noted in an earlier blog and different context is the “value” of that lovely low interest mortgage from 2014. The party keeping that will save $170,000 over what the departing party will spend to pay the same mortgage if taken today assuming there is 20 years left on that mortgage. That’s a raw number that doesn’t take in the deduction of interest or the time value of money. But it’s still a big number that is an asset to the mortgagors even if it isn’t available to the rest of the world.
Lessons for the day.
- The quiet quit comes with risk that can be substantial.
- The mortgage you took between 2009 and 2021 may be an asset on the table in the context of the divorce you are contemplating.
