Here is a link to our most recent Divorce Financial Planning newsletter.
You Can Be Hurt By Your Own Words
Social networking sites are so popular, all of your friends have some kind of presence. We get on to kid our friends and tell about what is going on in our office and at home without apparent regard for the watching eyes that we know nothing about.
What we do not think about, as we become part of these social networking sites is that we are setting up a record of our activities, thoughts and feelings that are displayed to the world. The comments that we make or the pictures that we put up on these sites are done with complete innocence but we forget that in a divorce situation innocence can be taken advantage of in court. (more…)
A New Way Of More Rapid Healing Has Arrived…
I
n a divorce situation typically everything is upside down and mixed up. If you are the petitioner, you are probably on your way toward something new—not always but in many cases something has triggered the initiation of the divorce. Your mind is usually full of new things and new experiences that you are after.
For the respondent, there is usually turmoil, uncertainty, fear and sometimes anger. To get through this, time is the major factor but it can be helped along by some new and rather interesting inventions in the form of social networking on the web. I am writing about Facebook (FB). (more…)
Things That You May Not Think About…
A couple of considerations for a divorce situation are things that most people would not think about are business succession and disability of a child. Both present issues that are challenging to the negotiators of the dissolution.
First the business succession – let’s take a scenario where the husband and wife are in their early 40s and have a 16 year old boy who has grown up inside a family owned business. Likely the father has shown his son the business and told him that someday this business would be his or at least part his when his father retires. Now the complication comes into play if the parents decide to divorce. (more…)
Why do I need a divorce financial planner – I know all about how finances work!
Sometimes this question comes up and frankly, I love it when it does. I do not care how sophisticated you are about money, you are not prepared for a divorce. From the standpoint of someone in the beginning, middle or end of a divorce situation, you will or have forgotten something important. The act of divorce is just too emotional for you to think properly. Much like the person who wants to defend himself in a murder trial, you are not prepared to look at the situation without emotion and come up with an all-encompassing plan of action regarding your own legal action. Yes, I said legal action; once the papers have been signed and proverbial gavel has banged on desk, you are in a legal action that is fixed. It can be changed but usually with a lot of time and patience and usually a sum of money.
Five Step Cash Flow Model
In our consultation, I refer to the Five-Step Cash Flow Priority Model. It was designed as a very conservative common sense formula to manage cash flow priorities. It is a simple but very effective model to achieve financial freedom.
Financial Freedom comes from either good planning, plus conscientious saving and investing OR you win the lottery. It is not haphazard and it does require discipline. Our formula is not new and not revolutionary but it works for our clients.
Step One: CASH (Create a Cushion)
Create a cash cushion. This means money on-hand and readily accessible for life’s little un-budgeted emergencies. We aren’t talking huge money here. For a family of four, earning $80,000 per year, $10,000 to $15,000 should cover it. If you are self-employed or on commissions the number should be higher to account for an irregular monthly income. The purpose is to allow you to handle emergencies with cash and not fall into the habit of always using credit for these unforeseen circumstances. The rule of thumb is 3 months income in your cash cushion.
Note: The biggest point I want to get across is that personal finance is almost totally about habits and not about numbers and rates. If a person has good financial habits and they consistently exercise those habits over a long period of time, things will most likely work out for them when it comes to finances. When you consider that approximately half of all marriages end in divorce and most indicate money as a key factor in their divorce, we can easily see how this kind of advice can impact us. (more…)
Divorce and Recovery
I was recently shown a book that I have found fascinating. It is 101 true stories about divorce that give real life and personal accounts of divorce situations. If you are going through a divorce, or a family or co-worker of someone going through a divorce, I heartily recommend Chicken Soup for the Soul – Divorce and Recovery by Jack Canfield, Mark Victor Hansen and Patty Hansen.
The book takes you through a series of short stories and real accounts of divorce situations. I plan to use it my my divorce planning practice with all of my clients. I learned a lot about what is like to experience this process.
If you have any questions about divorce planning in California, sent me an email at david@YourDivorcePlanner.com or call me at 925-484-4030 ext. 26
DW
How Your Kids Learn About Money
I was listening to a conference call recently with Gibran Nicholas of CMPS and Rick Kahler, a financial planner and author. They were talking about learning and the question came up about how your kids learn about finances. We all know that there is little that the kids learn in school today about finances, so where do they learn? They learn from you with or without your knowledge.
Kids are like sponges. They learn from every source imaginable – sometimes the messages are not so positive. The kids can hear from you about your money management and that will carry over as a lesson to their future of how to manage their own money. If you are constantly running out of money before the end of the month and you talk about that around your kids, they learn through your action that is the way a life is to be led. If you are a good saver and they know that you put 10 to 15% of each check into savings, the kids will mimic your actions when they become adults. If you constantly use credit cards (and you may have good reason to do so) your kids will use credit cards in their lives. This alone without the message that you pay off those cards each month can lead the child to believe that they should use, and use and use.
If you want your kids to have a healthy understanding of money, something that comes with no instructions, be aware of the image you are portraying to your kids about money. You may need to live with them someday and you want to make sure they are fiscally literate. You can learn about Rick Kahler at www.kahlerfinancial.com/ and Gibran Nicholas at www.CMPSInstitute.com
If you have any questions about divorce planning in California, sent me an email at david@YourDivorcePlanner.com or call me at 925-484-4030 ext. 26
DW
Why Divorce Planning?
Over the years in my mortgage planning business, I would find that many of my potential clients were stymied at the outset of the process because of poor credit. This did not necessarily come from something that they had done wrong but because of a divorce. The story might run something like this – “About 3 years ago Jim and I got a divorce. We decided to forgo the use of a professional and just divided up the assets and debts ourselves and promised to pay – he took the Visa and I took the MasterCard. Somewhere about 6 months after the divorce was completed, Jim got mad at me about something and, I guess emotion got the better of him and he decided to punish me by not paying the Visa bill when it came it. This was the start of our problem.”
This story is not uncommon. Divorce is a very emotional time and even initial amicable divorces can turn bad from something as simple as seeing your ex-mate with another person. Even after time, this hurts and that hurt can turn into anger and the amicable divorce now takes another direction.
This scenario played itself out many times over the years and I become curious as to how I could help clients get a better start in their divorce – I know that sound weird but even the worst of situations can be made better by proper planning. My theory is plan for the best but prepare for the worst.
As I did some investigating I found that there were very few practitioners of divorce planning and those who were, did not understand how to protect the credit, how to make sure that the paper trail of spousal and child support was sufficient to allow a mortgage underwriter to use the income for qualification and to properly work with the client to budget their future.
In the future my blog will be an education for some and a tool for others to get through this turmoil called a divorce.
If you have any questions about divorce planning in California, sent me an email at david@YourDivorcePlanner.com or call me at 925-484-4030 ext. 26
DW
