# math problem for you



## Lon (Jun 6, 2011)

I'm in the process of adding up our assets and debts for the sake of dividing our property and I can't get my head wrapped around this weird accounting issue... 

So say we have a joint line of credit account with a ($5000) balance, during the process of separating spouse A wanted to withdraw an additional $1000 for rent but spouse B refuses to support that, however they come to an agreement that the $1k will come out of the final settlement (since spouse A expected to receive a large payout). So spouse A takes $1k and the balance of the joint account is now ($6k).

Now spouse B opens a personal line of credit, assumes the ($6k) balance and closes off the joint account.

Where does this $1k get added back into the equation? Does the total $6k debt come off the top before dividing the net worth in half, or only $5k off the top?

It seems to me that the $1k will just be deducted from the final transfer payment of inequity of net worth, I just can't figure out if it has to be first subtracted out of the combined net worth calculation or not.

Make sense?? No matter how many times I try to do this by hand or even in a spread sheet I just can't understand where this money comes from and goes to...


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## COGypsy (Aug 12, 2010)

Debt is debt and it detracts from your total net worth regardless of who's going to pay it back how and when to whom later down the line.

So the way I see it is that you deduct the new total debt, $6k from your total net worth for the calculation of assets and liabilities.

Then when you're making the final division, she either gets $1k more of debt than you or $1k less of assets (depending on whether the final tally is black or red). 

Make sense?


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## Lon (Jun 6, 2011)

In this case the final tally is in the black and for simplicity say spouse B is currently holding all the assets and all the debts, so will end up making a transfer payment to spouse A. So basically include the $1k debt in the combined net worth, split the total equally, then simply take $500 out of the final transfer payment?

This seems to make sense, because when that $1k amount of debt is divided each spouse's individual net worth has been reduced by $500, so reducing the payout by that $500 amount evens it out for spouse B and puts it all on spouse A where it is intended.

Yep I think it makes sense! Thanks!


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## HurtinginTN (Feb 22, 2011)

OK, I originally posted a response before your last one. I see where your problem is now. Do you take off $500 or $1,000 from what you are paying out at the end? I was thinking $1,000, but your statement makes sense.


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