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98680904Cash flow refers to how your money moves in your household, from the time it is received to when it is spent. When your cash flow is “positive,” it means you have more money coming in than going out; you are spending less than you take in each month. You want positive cash flow in order to pay for expenses and also save and invest money for goals. After a divorce, however, you may find your cash flow is tight or even negative. That is, you are spending your cash almost to zero each month or spending even more than you take into the household. To improve your cash flow, here are several steps to take: 1. List all your sources of income. Your income could include any of the following:
  • Spousal maintenance/alimony
  • Child support
  • Part-time and full-time wages, bonuses and commissions
  • Self-employed income
  • Rental income
  • Royalties
  • Investment income
  • Pensions or draws from retirement accounts
Different sources of income are taxed differently, so you need to know your true after-tax income. Consult a CPA or financial advisor to learn more about this. You’ll also need to know how often you receive each source of income and if it’s fixed/guaranteed (paychecks) or variable (self-employment income). 2. Determine your historical monthly spending. Look back 6-12 months to get an accurate picture of expenses. This could include everything from car or home maintenance to vacations, kids’ sports activities or insurance premiums. Look up spending summaries on your Quicken account or request statements from your bank or credit card companies. Don’t make yourself crazy trying to document every expense to the penny. Just come up with a monthly average per expenditure (e.g. $1,000 on holiday gifts averages out to about $83 a month). Reviewing your spending habits can be a valuable exercise. You’ll likely see areas where you could realistically cut spending in order to improve your cash flow. 3. Decide if positive cash flow requires more income or less spending – or both! There are only two ways to improve cash flow: increase your income or reduce spending. You can increase income by finding a job, increasing the hours you work or finding a different job with a better salary. You could also consider returning to school to train for a better-paying job. Temporary jobs, such as retail during the holiday season, can also provide a cash cushion to meet immediate or pressing needs. If you are already working as much as you can, then look for ways to cut spending. Divide your expenses into fixed expenses (like rent or mortgage), escrow expenses (such as insurance or taxes), and living expenses (groceries, haircuts, school expenses). It is often in the living expenses category that you can find areas to cut — at least short term — in order to create a more workable budget and money habits. Keep going back to this list and making cuts until your budget is less than your income. If you are in the habit of using credit cards as your cash overflow account and aren’t paying off the balance each month, this is another sign that you may not have positive cash flow. Stop using credit for any living expenses and give yourself a cash allowance instead. You will quickly assess needs and wants by looking at the remaining cash in your wallet as the weeks go by. Be gentle with yourself. A new cash flow system takes 30 to 90 days to start showing positive results. Staying in a budget takes practice, but can become fun as you have more money to save for vacation or that retirement dream.
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sb10065918f-001Recently Daisy Camp received a letter from a 2007 Daisy Camp graduate, Karen. We appreciate hearing divorce success stories and thought Karen’s is a great one to share as proof that, “everything happens for a reason.” Even in your darkest days of divorce, always remember there are brighter days ahead. Her letter is reprinted below with her permission. Jennifer, I wanted to let you know what you do is important. I was at the lowest point in my life in 2007, after a 22 year marriage to my high school sweetheart and two kids, he left me for a women 15 years younger than me. I was devastated and had no idea what to do. That’s when I came across Daisy Camp. I attended the Saturday all day session and the most important thing I took away from it was the fact that I wasn’t alone and other women were going thru something similar. I received a lot of information that day and received some great advice that helped me navigate the legal process as well as give me the strength to get up every morning and “fight back for my life.” Well, here I am 7 years later, my children are now young adults and living on their own. Following the divorce, I went thru counseling and joined a separation and divorce support group through my church. Through a Catholic dating website I met a wonderful guy who went through the same experience as me. In fact, we were both married and divorced the same year, both have two boys, our oldest sons have the same name and our birthdays are just 6 days apart. We bought a beautiful house in the country and I have a new life. I have made a lot of new friends and have a job that is challenging yet fun. Thank you for having the courage to start a resource like Daisy Camp to help other women!! On a side note, my Ex and his girlfriend just had a baby in December. I laugh when I hear that he is doing feeding and diaper changes at the age of 51 while I’m enjoying a glass of wine and sitting next to a fire reading a book and realizing that everything happens for a reason! Karen, A 2007 Daisy Camp Graduate
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175440139In Part I of Getting Unmarried, Money and Divorce, I talked about the two financial pillars of any divorce. The first being the balance sheet that lists every single asset and liability. The second being forward looking cash flow and support needs for children, if any, and both spouses. In this post, I will briefly cover some other financial issues common in many divorces.  These include some discussion of marital and non-marital property, analyzing tax implications of various scenarios for child support and/or spousal maintenance; analyzing property and business interests, debt pay off scenarios, and comparing pros and cons of using one asset over another. A financial neutral assists with identifying what is marital and what is non-marital property. Marital property of course is that property acquired during the marriage.  Generally, non-marital property is property owned prior to the marriage and brought into the marriage, inherited property, and or property received as a gift. Sometimes this can include a home where the down payment made with non-marital money, a retirement plan when the participant contributed to the plan prior to and during the marriage, or more simply a family heirloom passed down through the generations. Non- marital property generally remains with the receiver of the property and not considered in the allocation of marital property. When there is both marital and non-marital interest in an asset, a financial neutral can help determine the values of both the marital and non-marital interests. The tax implications for child support and spousal maintenance are different. Child support is not taxable income to the payee and is not deductible by the payer. Spousal maintenance on the other hand is taxable income to the payee and is deductible by the payer in most situations. A qualified financial neutral is able to help a couple determine an optimal combination of child support and spousal maintenance in order to provide the greatest amount of after tax income to the family. When a couple or one of the spouses owns a business, it is often helpful to determine the business value. If needed a specially trained neutral business valuation expert is engaged to provide this service. These trained experts employ a variety of valuation methodologies to provide an opinion as to the value of a particular business. Depending upon the complexities of the business the time and cost to complete a business valuation can vary. Debts are another financial area where clients can benefit from the insight of a qualified financial neutral. Facilitating how to allocate debt between two spouses is an important function of the financial neutral. The neutral may suggest the clients consider a number of options available including the potential of reducing or paying off debt with other assets. This can help a couple breathe a little easier when freeing up needed cash flow for living expenses by not continuing to carry current levels of debt. A well-trained neutral financial specialist helps divorcing clients see the big picture pros and cons of making a number of financial moves during settlement discussions. Clients are then able to make informed educated decisions concerning their financial future. The financial neutral is family centered in the collaborative process and makes every effort to assist divorcing clients reach agreements they both can live with. Only in the collaborative divorce process are clients able to achieve this level of client introspection and decision-making. Collaborative divorce is not for everyone. Is a collaborative divorce process right for you or someone you know? Click on this link to learn more and decide for yourself.  www.collaborativelaw.org
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My daughter Sarah with her grandmothers
My daughter Sarah with her grandmothers
Perhaps the most important advice I can give someone going through a divorce is to keep the long view in mind. Although it is easy to be swamped by the immediate emotions, the years after the divorce are where you see the impact of your decisions on your entire family. And nothing brings it to the forefront like a milestone event for your child, which I am currently experiencing. My daughter Sarah graduated from high school and will soon be heading off to Wellesley College. This summer has been marked by a graduation weekend with extended family, and soon I will join my fiancé and Sarah’s dad to move Sarah into her dorm. Bringing together the extended family for graduation post-divorce could have been painful and awkward. But it was a wonderful, celebratory weekend filled with love for Sarah and our love and respect for all members of the family. Sarah was in grade school when her dad, John, and I divorced. Divorce is always painful, but we were blessed with a team of collaborative professionals to assist us in the process. I have known for years that a collaborative divorce launched our excellent co-parenting relationship. What really resonated on graduation weekend was the impact on the extended family. My mom flew in from Arizona and John’s mom flew in from New York. These grandmothers had not seen each other since Sarah’s baptism. John’s brother came from Pennsylvania, and he had not seen my mom since our wedding 24 years ago. Also in the mix was my fiancé, Josh, his daughter Lily and his parents. I admit I was a bit nervous about seeing my former mother-in-law and brother-in-law, but it was incredible. We all worked together setting up for Sarah’s graduation party, had multiple meals together, carpooled to the ceremony and sat together cheering for Sarah as she collected her diploma. The love was abundant in all these events, which was priceless. Here’s what collaborative practice allowed for our family: we began to forgive each other and start healing. If we had litigated, the resentments would have become entrenched. By forgiving each other for our failures in the marriage, we could open up to respect and even love towards each other as parents of our amazing daughter. Our tone set the tone for our families – no one needs to choose sides or hold resentments. We can celebrate with full hearts. When we wave goodbye to Sarah at Wellesley this month, she can feel secure knowing her crazy, blended family is behind her, laughing, hugging and linking arms. I am looking forward to the next milestone, when we can all gather again. I know that wouldn’t be possible if we had litigated our divorce. I hope every parent going through a divorce strives for more than just being civil to each other. My hope is that you can celebrate the gifts each parent and family member brings to the life of your child. It starts with your divorce process – collaborative practice allows you to transform your relationship.
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I received a text message the other day from a friend asking if I heard that mutual friends of ours had filed for divorce. I was not surprised to receive this news as it was a long time coming, however, I was surprised that the driving point of the text was how “ugly” the divorce was going to get. With three little girls between the ages of 6 and 12, ugly is the last thing they need. The exchange made me recall an email that we received at Daisy Camp a few months ago. The women had used one of the best divorce attorneys in the Twin Cities and had been out for blood. It look her five years post-divorce to realize that she wanted to “get better, not bitter,” and that the payback that she was seeking in her divorce would never take away the broken heart or help her to heal. 5 years later she realized that no divorce concessions would have justified as payback, but what she was actually seeking was healing. It is easy to get caught up in the heat of the divorce and not realize that the amount of money, division of property, child support, spousal maintenance (alimony), or the amount of child custody time that is “won” won’t mean a thing if it come at the cost of the relationship if your children. Which is why more and more couples are seeking to divorce collaboratively these days. No one wins in divorce, but you have a lot to lose when a divorce gets ugly.
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170954936Not all divorces are related to alcohol abuse, but the percentage is fairly high.  I don’t have any scientific study, but my own experience of observing thousands of divorces over three decades, I have found that nearly half of all divorces involve, at minimum, allegations of some type of alcohol abuse.  From observing the interactions in these cases, as well as working with professionals in these areas, here are the most important observations I have made: If you think there is a problem, you are probably right. If one party truly believes there is alcohol abuse in the marriage, there is a very high probability that they are right. Yes, it is true that divorce can lead to many false allegations, particularly if you are in an adversarial divorce.  However, while divorcing couples often exaggerate most flaws of the other spouse, I have found that, largely because of co-dependency dynamics, many spouses actually under report alcohol abuse. If your spouse thinks you have a problem, you certainly have a problem. How can I be certain?  Easy.  First, as indicated above, if your spouse truly thinks you have a problem, there is a high probably they are right.  Moreover, even if they are wrong, their belief that you have a problem is, by itself, a major problem.  In either case, the solution often points to undergoing a thorough and honest alcohol assessment. If you can get at the truth, everyone wins. A spouse stopping or cutting back alcohol use during the divorce proves little.  Often the spouse believed to have an alcohol problem will either stop using alcohol or cut back on alcohol use as the threat of divorce draws near.  While this may (or may not) be a welcome reprieve for the family, it generally means very little in terms of determining the existence of a problem.  Indeed, most chemical dependency counselors see frequent failed attempts to stop or cut back as being one of the indicators of alcoholism.  Moreover, for most alcoholics, stopping drinking does not necessarily end the alcoholic behavior. Sometimes alcohol use during divorce can be “situational”. Divorce usually does not come up suddenly, but rather creeps into homes over months or years.  As it creeps closer, the sadness or fear can sometimes cause non-alcoholics to temporarily abuse alcohol during this difficult time. While temporary abuse of alcohol still has serious consequences the long-term impact can be quite different than addressing alcoholism. If alcohol is an issue, you need a process in which honesty can be rewarded.  Divorce processes differ.  Traditional divorces that operate in the shadow of the courthouse can sometimes seem to punish honesty in the sense that the person suspected of alcohol abuse feels compelled to either deny or minimize the allegations for fear of losing time with their children.  On the other hand, processes such as Collaborative Law or mediation, by operating outside of court, can provide a safe place where alcohol use can be addressed as a health issue and not as a piece of evidence.  To learn more about these options go to www.Collaborativelaw.org or www.divorcechoice.com.
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158812369Divorce is a family event that impacts children of all ages.There has been an uptick of divorces for middle-aged and older couples whose children may have already launched their adult lives.Just because children are not living under the same roof with a parent or parents does not mean their lives won’t be deeply affected by family changes that will occur following a divorce.

At Daisy Camp, I have heard many sad stories of communication breakdowns between parents and their adult children during and after a divorce.Adult children experience unique emotional distress and practical challenges. Regardless of age, children can feel caught in the middle if parents remain in conflict.In fact, adult children can experience a heightened sense of betrayal and confusion about what has happened to their family of origin

Here are three considerations for divorcing parents of adult children:

1.  It is helpful for adult children if parents are able to inform them about the divorce with a thoughtfully prepared joint We Statement.This allows parents to be more in charge of the message and the tone, and may gently discourage adult children from feeling as though they are expected to take sides or determine who is to blame.A Neutral Child Specialist can assist parents in the creation of a We Statement.

 2.  Adult children will continue to have personal and family-centered milestones to celebrate, including graduations, engagements, marriages and births of grandchildren.   Advance planning and clear communication with adult children about parents’ readiness and willingness to jointly participate can reduce anxiety for adult children.If parents are not ready and willing to jointly participate, being able to constructively problem solve with children so the events can proceed without undue drama is also helpful to them.A worst-case scenario for adult children is feeling helplessly caught in a power struggle between parents for every family event.

 3.  Adult children may ask difficult questions, and parents need to be prepared to answer honestly but without making their children feel the necessity of taking sides.Keeping children at the center and out of the middle can be especially challenging if there has been an infidelity or other breach of trust in the marriage.Under these circumstances, it can be especially valuable for divorcing parents to get the support and guidance of a neutral mental health professional.

 Collaborative Team Practice provides access to skilled mental health expertise from a Neutral Child Specialist or Neutral Coach to guide parents to support their adult children through a difficult transition that will impact the rest of their lives.It is a privilege to help parents create a legacy of healing and respect for their adult children and grandchildren.

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173298779When you are ready to start a divorce, nothing creates more frustration than the reluctant spouse.  How are you supposed to move forward with your life when your husband or wife doesn’t want a divorce?  Here is my advice for dealing with the spouse who is dragging their feet. 1.  Keep your long-term goals in the forefront, rather than taking short-term aggressive action. A friend of mine from another state called me recently to tell me about her meeting with a divorce lawyer. My friend wants a divorce; her husband doesn’t. The lawyer said she ought to serve and file divorce papers on her husband and tell her three children about the divorce by herself so she controlled the story to the kids. This kind of advice is what gives lawyers a bad name. Like most people with kids, my friend wants to protect them from conflict and have a good co-parenting relationship after the divorce. That means she has to work with her husband, not set up a firestorm of conflict by launching an aggressive attack.  2. Get the right support to help your spouse. A spouse who is not emotionally ready to handle a divorce can make the process difficult. It’s much more effective to connect with resources to help your spouse accept the divorce. If you have been in marriage counseling, you could enlist the counselor to facilitate conversations about your desire for a divorce and options for proceeding. Discernment counseling, which is a limited scope form of therapy, is another approach. Or you could work with a collaborative divorce coach, who is skilled at working with couples who are have a gap in their respective readiness to proceed with divorce.  3.  Use the time to gather necessary financial documents.  While you are letting your spouse play “catch up” emotionally, it helps to feel like you are taking steps to move forward. One task that has to happen is gathering financial information. You can contact a collaborative financial neutral to find out about their services and the information that will be needed. You can gather records, such as tax returns, mortgage documents, bank statements, and credit card statements. You can look into insurance costs as an individual and look into housing options. Gathering all the financial information usually takes some time, and there is no reason why you can’t get a start on that important step. It will make things go more quickly once you are ready to start the process. It is rare for both spouses to be in the same place emotionally when deciding to end a marriage. If you can give your spouse some time and support to accept that the marriage is over, you gain a less frustrating divorce process and a foundation for a good working relationship as co-parents.
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184951937If you changed your last name when you married, you may want to change your name in the divorce. If you choose to change your name after your divorce, it is often easiest to include the name change in the paperwork filed with the court. You would ask the court to include a finding in your divorce papers stating that you will be returning to your former last name. Some women choose to go back to their maiden names after a divorce. Or, you can take this opportunity to create a new last name. Whichever new name you choose, you would submit a request to the judge handling your divorce proceedings to note in the judgment that you are requesting a name change. Then the judge will issue an order that you can use to change your name on your driver’s license, social security card, bank accounts and other financial documents. If you do not have a name change as part of your divorce order, you must file a separate document, called a petition, for name change with the court. However you obtain the order from the Court, you will need to request several copies to keep with you in order to change your name on your accounts and drivers license. Be sure to change your name with the Internal Revenue Service and your state and local tax authorities so that your tax issues are not affected. You should change your name on your social security card and with the Secretary of State so you can vote. If you have a passport, that will need to be changed as well. Finally, you should be sure to update your name in your will, Powers or Attorney, healthcare directives or any trusts you have in place. Let your insurance companies and medical/dental providers know of your new name as well. Your employer should also know of your new name. Know that it takes time to plan name changes so you should give yourself lots of time to figure out the specifics of your name change.
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175383921In my last post “Getting Unmarried: Gray Divorces” I wrote about the increasing number of divorces for those over the age of fifty. Also of note was how Gray Divorces have many of the same foundational issues as any divorce although there are some distinct differences. Regardless of the issues, a trained financial neutral plays a critical role in the collaborative process. Money matters can be a bed rock of tension in divorce cases. Financial issues are often cited as a major reason for marriage breakups. A financial neutral assists couples in navigating their finances. They help with the two major financial components in divorce. One is the balance sheet (list of all assets and liabilities), and two the cash flow and support. So what does a financial neutral actually do you ask.  First and foremost a financial neutral is just that – an impartial expert on financial issues. They remain unattached to any particular outcome. A good financial neutral can be worth their weight in gold when it comes to helping couples navigate money issues in divorce. Financial neutrals help a couple gather and identify the financial information needed. I often hear from spouses the detail involved in gathering the financial information is something they have never experienced. The reason for this is all assets and liabilities, each and every one, is separately noted in the final decree so as to leave no doubt who gets what and who is responsible for what. Independent third party written documentation is needed to support each asset and liability. This information gathering is a part of the process that can’t be short circuited. Having said this, when information gathering is completed by a financial neutral it can save spouses a considerable sum. Think about it. You are paying one professional, the financial neutral, to complete this process vs. each spouse providing the same information to each of their attorneys who in a non-collaborative divorce will have to review and assimilate  all the information provided, ask questions of their clients, and then likely have to converse with the other spouse’s attorney. Financial neutrals can assimilate and organize this information in a streamlined manner with the couple’s cooperation. Usually financial neutral hourly rates are less and sometimes significantly less than attorney rates. Once all financial information is collected and organized the financial neutral creates a marital balance sheet listing each and every asset and liability. The marital balance sheet forms the basis for discussion as to how each asset and liability is allocated between spouses. In the collaborative divorce process, couples make their own decisions about asset and liability allocations to each spouse.  Couples must ultimately reach agreements on the balance sheet. The financial neutral along with each spouse’s attorney helps facilitate these discussions. The alternative in more traditional litigated divorce cases is someone else, a judge, makes decisions for the couple since they are not able to agree on their own. Financial neutrals help spouse’s asses their ability to meet their reasonable living expenses (cash flow). This part of the process includes analyzing income sources and estimating future living expenses. Generally spouses are asked to complete some sort of budget template. In my experience both as a financial neutral and a financial planner, I find most people do not care for the term budget. I do a fair amount of public speaking and when I ask people what they think of when they hear the word budget it usually has a negative impression like restrictive or confining. I have attempted to remove the word budget from my vocabulary as a result and replaced it with cash flow or spending guide.  Budgets tend to be backward looking while the words cash flow and spending guide are future oriented. Assessing income and expenses (cash flow) provides each spouse with a realistic look at their financial security moving forward. Financial security is the number one goal I hear that each spouse wants to achieve. No one has ever told me they want financial insecurity. A realistic look at cash flow for each spouse is critical to providing the financial security they seek. Here is a phrase I have used when having cash flow discussions. If your outgo is greater than your income, then your upkeep may be your downfall. Think about that for a moment. Better yet remember it, as it will serve you well no matter your financial stage in life. Yes the balance sheet with its listing of all assets and liabilities and the cash flow and support pieces form the two financial pillars of every divorce. Sometimes the financial issues can become very emotionally charged. A well-trained experienced collaborative financial professional along with the help of other collaborative team members can help keep spouses on track. I encourage couples to the extent possible to look at these decisions as business decisions. It’s easier said than done but in the end it usually is a business decision. I am a firm believer that each spouse and their family are far more important than any numbers on a balance sheet or cash flow report. In my book and in my work people always come first before numbers. There are other important financial issues a financial neutral can assist with. Watch for part II of “Getting Unmarried: Money and Divorce”. There I will talk about marital and non-marital property, analyzing tax implications of various scenarios for child support and/or spousal maintenance; analyzing property and business interests, debt pay off scenarios, and comparing pros and cons of using one asset over another. Is a collaborative divorce process right for you? If you or someone you know may be looking for a divorce alternative without court click on this link to learn more:  www.collaborativelaw.org.