Posted on
Amazon box manOne of the reasons that divorce is such a challenging life transition is its public nature. A couple might keep their problems private as they try to work through them. But if a rift opens that can’t be mended, the couple will have to share some very difficult news with friends and family as they separate from one another. Few of us will have to reveal emotional personal issues to as wide an audience as Jeff and MacKenzie Bezos recently did. The statement that Jeff released on Twitter suggests that he and MacKenzie are trying to make their split as amicable as possible by usin three insightful ideas that could help anyone struggling through a divorce.
  1. Be open and honest with those closest to you.
“We want to make people aware of a development in our lives. As our family and close friends know, after a long period of loving exploration and trial separation, we have decided to divorce and continue our shared lives as friends.” Couples need privacy as they deal with strains on their marriage. But once a decision is made, clear communication with your family, friends, and each other will be very important. That goes double if any young children are in the picture. The more open a couple is about what’s happening, the easier it will be for you to find the outside support that will help you through this transition. Good dialogue might also help you and your former spouse to focus on the essential tasks at hand, like dividing your assets and updating your essential estate planning documents.
  1. Be grateful.
“We feel incredibly lucky to have found each other and deeply grateful for every one of the years we have been married to each other. If we had known we would separate after 25 years, we would do it all again.” Shame, embarrassment, and guilt are common feelings associated with divorce. Playing the blame game or trying to “win” the divorce can quickly turn all those amicable best intentions into bitter personal and legal issues. Instead, the Bezos statement is a reminder that the end of a marriage – especially a long one – doesn’t erase all of the positive things that came before it. If an amicable divorce is possible in your particular situation, then don’t be ashamed or embarrassed. Cherish those precious shared experiences, like the birth of children, happy vacation memories, the difficult times you helped each other through. Embracing these feelings of gratitude will help ease both you and your partner through this process.
  1. Focus on the positives ahead.
“We’ve had such a great life together as a married couple, and we also see wonderful futures ahead, as parents, friends, partners and ventures and projects, and as individuals pursuing ventures and adventures.” When we work through the $Lifeline exercise, we emphasis that important transitions like retirement, children graduating, weddings, and yes, divorces, are ends in one respect, but also new beginnings. They’re the start of new chapters in your life. That might be difficult to see when the pain of a divorce is still raw. But it’s important to open yourself up to new opportunities when they present themselves. You’re about to start your single life all over again. And yes, it’s scary. It may not be what you wanted. And you may be bitter. But over time, you may be able to see what awaits you on the other end. It could be traveling that you’ve longed for. Maybe you’ll relocate, start a new career, begin new hobbies, and meet new people. You might have more financial resources at your disposal to explore solo than you did when you were younger and unmarried. And you might approach these experiences with a more mature and grateful perspective, enjoying every minute just a little bit more fully. We want to help you through all of life’s major transitions, the positives as well as the challenges. If there’s change on the horizon, make an appointment to come in and review the $Lifeline exercise with us. We can help you plan ahead so that the next chapter of your life is the most fulfilling yet.
Posted on
architecture-family-house-front-yard-106399It goes without saying, but I’ll say it anyway…divorces are complicated! There are many questions that an experienced mortgage professional can help answer before you finalize your divorce. For example: Can one of us afford the family home or do we need to sell it? Will I have enough income to qualify for a mortgage after the divorce? Is my credit score good enough to qualify? Will I have enough assets to refinance or purchase a new home? Do I have the right job and/or job history for mortgage qualification? What’s my home worth? Will the family home appraise high enough to pull out equity to cover the cash I owe my spouse, or do I need to pull funds from another source? What’s the consequence if my Ex-spouse keeps the home but can’t refinance it into their name after the divorce? What’s the best loan for me post-divorce? Attorneys are not mortgage experts and there are many nuances in the mortgage world that can totally derail the perfect divorce settlement. Rainbow Mortgage Inc. takes a very proactive role in assisting our attorney friends and their clients in making sure their post decree housing goals are met. We help you to (1) make realistic decisions about what is possible, (2) understand your loan options, and (3) structure a mortgage loan focusing on your post-divorce goals. We are happy to help you by participating in client-attorney meetings to discuss potential initial options, provide revised options (if necessary) prior to the final signing of the decree, provide an estimate of what your home is worth using our AVM tool (which is the same tool used by lenders to evaluate whether a value on an appraisal is reasonable) and at no cost to you or your attorney, review the decree prior to it being sent to the judge. Here are a few examples of items in a divorce decree that have caused client issues in the past: (1) The length of time that a person is to receive support payments does not meet lender guidelines to qualify for a mortgage loan. Different loans have different guidelines however, standard guidelines require that a borrower prove that they will receive the income for a minimum of three years following the funding of the mortgage loan. The dates listed in the decree must be carefully monitored and possibly adjusted if the divorce process goes on for an extended period before it’s finalized. (2) Child care expenses are being shared and the decree lists a payment that is to be made monthly to a specified bank account- underwriters will sometimes consider this child support which can throw off a person’s monthly budget causing them to no longer qualify for a loan. Divorces are complicated but the mortgage doesn’t have to be with the right professionals in your corner. We can offer you the help you need and why wouldn’t you take it? Contact us for a FREE consultation and decree review. We only get paid when you are happy with our service and your loan closes. It’s a Win-Win for you!
Posted on
Friends for lifeYour divorce is over. It’s time to start sorting through all the things you need to do, to get your financial life in order.  Here are just a few tips to help you thrive financially, as you move into this phase of your life.  Pay Off Credit Card Debt One of the most important steps to achieve your financial goals is eliminating credit card debt. Start by paying off the balance of one credit card at a time, by either:
  • Paying off the highest interest rate credit card first, or
  • Paying off the smallest balance first, then applying that payment amount to the next smallest balance
And, always pay more than the minimum. Build an Emergency Fund Life has a way of throwing financial curve balls. To pay for these unexpected expenses, it’s important to have an emergency fund. A good rule of thumb is to set aside at least 3 to 6 months of expenses in a savings account earmarked for emergencies. This will keep the money “out of site, out of mind” and help reduce your stress level when financial emergencies pop up. Know Your Credit Score Despite its importance, many people don’t know their credit score. Credit scores assist lenders in determining the interest rate you’ll be charged, so you’ll want to know yours and work on improving it. To get your free credit report, visit www.annualcreditreport.com. Reviewing your credit report may also help you catch signs of identity theft early. Start Saving for Retirement We’ve all heard it before, but it truly is essential to start saving for retirement as early as possible. This is because you want to take advantage of compounding – generating growth not only on the original investment, but also on the return you’ve already earned on the investment over time. Compounding allows the potential for your initial investment to grow exponentially. Also, make sure you contribute at least enough to your company retirement plan to get our employer’s match. Don’t pass up free money! Create a Budget Although it’s not always fun, following a budget ensures you will have enough money for the things most important to you. A budget helps you find money to fuel your dreams. Refer to the attached Create Cash Flow* to help you put your budget together. One of the most important things to remember is to pay yourself first! Always set aside money for your emergency fund and retirement before any discretionary expenses. * a chapter from my book Ultimate Women’s Financial Guide to Thrive after Divorce   All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.
Posted on
In parts 1 and 2, we defined vortex as: 1) a whirling mass of water or air that sucks everything near it towards its center; 2) a place or situation regarded as drawing into its center all that it surrounds, and hence, being inescapable or destructible. As discussed in previous months, the “divortex” can be avoided by choosing the Collaborative Process.  Prior articles describe what Collaboration is – it is a process that avoids court and may use a team of experts to help clients create the best settlement option possible.labyrinth-1738044_1920 The professionals on a team are, generally speaking, the two attorneys, a neutral financial professional, a neutral child specialist, and a neutral divorce coach.  Although the inclusion of financial and mental health professionals in the divorce process is nothing new, the manner in which they are used in the Collaborative process is unique.  The attorneys’ roles are different in Collaboration, as well.  While each spouse retains his or her own attorney, the attorneys work together to help the clients achieve an outcome that works for the entire family.  The attorneys give legal advice to their individual clients, but more importantly, they help their clients realize what their interests and goals are.  The objective of Collaboration is to get to a place where everyone is OK (a win-win) rather than a win-lose.  The attorneys are trained in the Collaborative model and interest-based negotiation. A financial neutral helps the divorcing couple with property division and cash flow. Financial neutrals are financial experts and are CPAs, CDFAs, and CFSs who are trained in the Collaborative process and who understand the legal process. A child specialist is a neutral who helps the couple with creating a comprehensive and viable parenting plan. The child specialist is a therapist who is also trained in the Collaborative process.  The child specialist is the voice of the children and not only helps the children during the divorce process, but helps parents help their children during this transition. A divorce coach is also a therapist and a neutral in this process.  The coach’s role is to the help the couple communicate better.  It is important for each spouse to have a voice in this process and the coach can help with that.  In high conflict cases, a coach helps the process move along more smoothly. Although it seems like there are a lot of professionals involved in Collaboration, every professional has a specific role.  In a non-collaborative case, the attorneys are acting as financial advisor, child specialist, and coach.  And while attorneys can help with those pieces of the case, attorneys are not experts in those areas.  In the Collaborative process, you get the best advice from the various professionals who are trained to help you reach a settlement.  Consequently, a Collaborative team CAN help you avoid the divortex!
Posted on
piggy-bank-1429582_1920Sometimes your teenage children think they know everything. Do they know that if they saved the $6 they spend each day on a super antioxidant smoothie (or caramel macchiato), in 8 years they could buy a 4-door sedan in soul red or titanium flash (1)? Below are 3 lessons you should teach them about the long-term financial impact of decisions that they will soon be making for themselves. Lesson #1: Over time, compound interest can make a little bit of savings grow to a very big amount One of the regrets many of us has, is that we did not start saving soon enough. The idea of compound interest is something that your kids will understand by the time they are in middle school. There are numerous online calculators you can use to show them how deciding to save their money and forego that daily splurge can turn into better investments (like a new car). Lesson #2: College is a very expensive but financially important decision As your high schooler starts to contemplate where they want to go to college, don’t leave them out of the financing discussion. Even parents who expect to cover the entire cost of college need to make their child understand that it is a significant investment in their future, and not a nonstop party. Let them know that by completing college, they will likely earn $1 – $3 million more over their lifetime than their classmates who didn’t (2). Lesson #3: Credit cards are a tool and not a new source of money Credit card debt is rampant among people of all ages, but studies have shown that outstanding balances ramp up quickly after college. Before, during and after college, make sure your child understands that credit cards are not free money. Talk to them about using credit cards only to the extent that the balance can be paid off each month. Revisit Lesson #1 and show them how fast the balance on a 20% credit card can grow out of control. The best way to drive these lessons home is to set a good example. Demonstrate good use of credit by paying off your credit cards monthly. Develop a budget and then communicate how sticking to it serves larger financial goals. It’s very likely that you have made some big financial mistakes in your life. Wouldn’t it make sense to share what you have learned so they don’t make them too? (1) Assuming $6/day, saved for 8 years, earning 6% after fees, the total is $22,403. This exceeds the base MSRP of a 185 horsepower 2016 Mazda 6 4-door sedan with 6-speed manual transmission in Titanium Flash Mica ($21,330). The same model in Soul Red Metallic is $21,630. (2) The Economic Value of College Majors 2015, Georgetown University Center on Education and the Workforce.
Posted on
lemonade-standWhat are you teaching your children that will best prepare them for a successful adulthood? To be polite and say thank you? To believe in themselves? How about that if they save 15% of every check they ever earn, they will retire a millionaire (1). Preparing your child to handle the financial matters that they will face as adults doesn’t require a finance degree from Harvard. Below are some money lessons they can start at an early age. Lesson #1: Life isn’t one big shopping spree I think we have all experienced the grocery store tantrum when that 3-year-old just has to have the cereal with the cartoon character on the box. You can work with your preschoolers to understand that you go to the store for very specific items. Every trip to the store is not an opportunity for them to get a present. It is a lesson all ages could work on. Lesson #2: If you really want something, it is worth waiting for Teach your child about setting purchasing goals and saving for those goals. Have you given them a piggy bank yet? Every time they earn money or receive it as a gift, have them save at least 10% towards their goal. Lesson #3: It is important to spend wisely No one has an infinite amount of money so spending involves making choices. By the time your child is in elementary school, have them start to think about spending money on things they will still value in a couple of days. Here are a couple ways that you can help your child to develop money skills. #1 Give your child an allowance. You could use their age to determine their allowance amount. For example, my 7-year-old receives $7 a week. Make them understand that you take care of their needs and they use the allowance for their wants. An example of this would be when we went school shopping. I paid for my son’s school supplies that were on the teacher’s list. He really wanted a cool pencil box not on the list so he had to use his own money for this. It made him think about how badly he really wanted it. #2 Give them a birthday budget. Determine what you can afford for your child’s birthday present and party, then let your child determine how they want to spend it. Would they like to have the entire amount spent on a gift for themselves and forgo a party or would they like some combination of the two? Having a little skin in the game, really gets them thinking about spending wisely. During these early years, the overriding idea to teach your kids is that there is a difference between the things we want and the things we need. Giving them a little bit of responsibility at an early age will help them to understand this and set them up for a lifetime of healthy money habits. (1) Assuming that they work full-time for 40 years earning an after-tax salary of least $42,000 per year, and that their savings earn an average annual return of 6% after fees.
Posted on
market volatilityThere’s no question that periods of increased market volatility, like we have seen recently, can be unsettling. However, deciding to move to the sidelines versus staying the course can have long-lasting implications. In fact, making emotionally-based decisions in regard to short-term market events is one of the fastest ways to derail your long-term investment strategy. This is because it’s impossible to accurately time the financial markets. Studies have shown that investors reacting to market events tend to opt out at the worst time – when markets have fallen considerably. They then buy back in when they are certain the markets are back on track, but that ends up being a higher price than when they sold. On the other hand, staying the course and remaining invested and focused on long-term investment goals has proven helpful in creating long-term growth. This is achieved by buying at lower prices when the markets are down and selling only to rebalance your portfolio or fund financial goals. A time-tested approach to managing investments through periods of uncertainty is to focus on asset allocation. An asset allocation that is aligned with your financial goals and tolerance for risk allows you to concentrate on your long-term objectives instead of getting sidetracked by short-term market fluctuations. While asset allocation cannot guarantee a profit or protect from a loss, the proper asset allocation can help eliminate the potential for emotional decision-making that could have an adverse impact on your long-term investment strategy. Following a divorce, consider checking in with your financial advisor to make sure your portfolio’s asset allocation is well balanced and appropriate for your risk tolerance and time horizon.