Archive for Divorce Planning

Hitting the re-start button

 

 

beach in Key West

Certain places are the end of the world. San Francisco was like that when I lived out there, and Key West (from which I just returned) appears to be another. These are places that have more than their share of burned-out cases, but also a high number of people that decided to chuck it all and start their life again.

Key West is delightful in its acceptance of eccentricity, but also in the variety of ages of those who have decided to re-start their lives in some radically new way. The first morning our waitress was in her 70s, with a sequined beret, fingerless gloves, and a few other items of clothing people 20 years younger might hesitate to wear. On the way down, the plane seat right in front of us was occupied by another femme d’un certain âge who was head to toe in red velvet, and who I later saw in the airport kissing the much younger husband she had mentioned. Gives one hope, non?

But the point of this tale is to address all the guilt and regrets I hear this time of year, along with the resolutions to do better. Sure, I’ve got a few regrets myself. Okay, maybe a hundred. What I saw while in Key West was what I think most of us who are baby boomers (or younger) have experienced—you may have to restart your life several times. There are a few people among my clients and acquaintances that knew they wanted to be lawyers at 20 and will retire from that same profession at 66. But far more common is the person who started out as an attorney and is now a shaman, the investment banker who re-trained in Chinese medicine, the corporate executive who retired early to paint, and the divorcée who started an entrepreneurial venture. Technology and the demand for skills has moved so swiftly in the past 30 years that few of us could have known what training we needed “back then”. Few of us planned to get a divorce when we said, “I do”, and all of us believed when pregnant that our children would sail brilliantly from pre-school through the Ivy League to a high paying job, a devoted partner, and a long and healthy life. If only.

Then there are the regrets about not having saved enough, made poor investment choices, and bankrolled a relative or child that turned out to be a black hole. Our brilliant children sprout terrible problems, our competent and ambitious spouse develops a chronic illness, our boss is unreasonable, our co-workers insane, our company gives us the shaft.

What can you do about that history? Truly, nothing. None of us can re-write the past, control another’s behavior, or singlehandedly manage our employer or our clients. Didn’t lose the weight you planned, didn’t meet your savings goal? Um, me too.

On several mornings in Key West, I found myself waking up depressed. I, too, wanted to chuck it all and re-start in some tropical paradise where stress was low, seafood was plentiful, and I didn’t need a winter coat ever again. Or move to Paris. Or sell the house and keep only what fit in a back pack. Or…or…

Once I had my coffee and was able to shake off the effects of the previous night’s tropical drinks, I was able to think this through.

Just about every decision we make seems right at the time. Most of us try to make good decisions based on what we know at that point, or make bad decisions because we’re just too stressed out over something else to focus down. And, every time you make a decision, you close down other possibilities. This is why so many people have great ideas for a novel, but so few of us actually write one. Artistic types in particular may get stuck on the dime because even finished works are never as good as they were in the imagination.

A trip to Key West gave me plenty of examples of the possibilities of alternatives and creating a life different from the past, and people who courageously face what it takes to make that change. We can’t change the past, but we can re-boot and aim toward a different future. As long as you’re alive, it’s possible.

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Getting divorced? Everything you’re worrying about is wrong.

Especially if you’re a woman, I can almost guarantee that you’re worrying about child support and whether you can keep the house. But in the scheme of things, child support is relatively temporary and you should do some heavy number crunching before you keep the house. (See my blog post here on that topic). So what will really have an impact on your future?

  •          Select a lawyer who knows how to negotiate. A lot of people want a bare fanged tiger who will annihilate the other side. If only. What an angry and overly aggressive attorney usually achieves is big legal bills, which doesn’t exactly result in direct benefit to you. While you certainly want someone who will work for your interests, I’d suggest a cool head in an inevitably hot situation is more productive of actually getting a fair divorce in a reasonable time. And my personal observation is that judges hate someone who loses their temper and prolongs the case.
  •          A lot of women (and some men) throw up their hands when asked to provide data for the financial affidavit. They’ve never kept precise track of expenses, they don’t know how to use a program like Quicken or Mint, and therefore they have no real idea of what it will actually cost them to live post-divorce. You don’t want to settle, THEN find out that your real, justifiable expenses are far, far higher than what you represented to the court. You can’t just make this up or guesstimate. So dig out credit card statements, bank statements (including how many ATM visits you make), receipts emailed to you by Amazon, Land’s End, Net-a-Porter or wherever else you shop, and try to reconstruct what you really and truly spend. Get help (from a financial planner like me) if it’s all too overwhelming or you’ve never done it before or the best you can do is fill up a shopping bag with receipts. Don’t be modest and don’t be ashamed about this—it can be hard to face but it’s a critically important step for your current divorce case and your future. If you want to worry, here’s the place to put your energies. This gives most people a great big headache. The rest become financial planners or CPAs.
  •          Plan what you’re going to do post-divorce. Given the times we live in, if you have any kind of education, you’re probably going to be expected to go back to work at some point if you’ve been a stay-at-home-parent. Divorce cases can drag on for years—time enough to get further professional education, join networking groups and associations, and update your skills. If your wardrobe consists of denim jumpers and clothes from Goodwill, you’ll need to upgrade your personal appearance. When was the last time you were at a dentist?
  •          If your share of assets might be large enough that you don’t have to go back to work, you still have a job—managing those assets. Sure, financial advisors (like me) can offer you valuable assistance and manage it for you, but you’ll feel a lot more secure and be less likely to be fleeced by some sharpie if you have some understanding of what’s going on, and why the advisor is recommending the specific actions and investments. Boring? Confusing? Really, just read 15 minutes a day—financial magazines (Kiplingers), websites (Vanguard has great free education materials, also NAPFA.org), gosh, even Susie Orman if you must (post on her here). Don’t believe everything, and don’t believe people who scream at you (Jim Cramer, ugh). You’ll be proud of yourself, honest.
  •          Don’t spend the next 10 years arguing about the kids. Unless your spouse has horns and a forked tail and shows up that way in court, visitation is going to happen. The less conflict your kids have to listen to, the better they’re likely to come out of this. Put a lid on it and get on with it. By the time they get to college, they’ll have plenty of notes to compare with all the other kids who have a)divorced parents (50% of us) and b)insane parents (all the rest according to the kids). Nobody looks at their kids and says, I hope to make your life as miserable as possible. Not even your soon-to-be-ex-spouse. So don’t.
  •          Divorce isn’t really about evening things up, punishing anyone, or even really about what’s right. It’s about money. See a psychologist, see a financial planner, find friends who will listen. They’re all cheaper per hour than your attorney. Let your attorney do what he or she does best—work the law and negotiate for your best achievable deal. Nobody comes out of a divorce whole. You want to come out of a divorce with the ability to restart your life.

Hate your spouse? Give him the house!

 

The Governor's Mansion in Virginia, 1905

Judges in divorce court must go cross-eyed over the number of times they listen to people wrangling over who keeps the house. It’s usually the woman, who wants to stay put so the kids don’t have to change neighborhoods, school, and friends (or maybe, so she doesn’t have to face cleaning out their bedrooms).

When there was a ton of equity in the home (remember the good old days), the husband might have put up a fight, but my guess is that now, he’s more willing to turn it over. The woman breathes a sigh of relief, feels as if she’s protected her kids, and off the husband goes with all the liquid investments.

Yeah, I know those paragraphs are filled with stereotypes, but let’s just go with this for a minute. I’m going to direct my little fable to women, because that’s who talks to me the most about keeping the house, but if you’re a guy in the middle of a divorce, just change all the pronouns—most of the advice will be just as applicable to you.

So, let’s say you really hate your soon-to-be-ex and want to be as mean as possible (no, I’m not advocating that, just sayin’): Give HIM the house. Why?

  1.     He’ll be stuck with an iceberg that has an appreciation potential of, what? Nowadays? Let’s be generous and say 2%. And people talk about the poor return of bonds!
  2.    It’s an asset with no cash flow (except out the door, see below). So no matter what it might be worth on paper, he’s not going to see any dividends or year-end capital gains going into his money market account.
  3.    Money is definitely going to be moving, but as I say—out the door. Figure on at least 1% of the house’s value in maintenance and repairs. Probably a lot more the first couple of years—warring couples generally put off a lot of maintenance because they’re too busy with their other problems. Also, there’s a real impulse to change everything, obliterate all signs of the former spouse, and get the place finally looking the way you’ve always wanted it to, if only you hadn’t had to argue about it. All those new decorating touches are going to cost him a bundle.
  4.    It’s a mess. The one that moves out takes what he needs, and the owner is left with all the junk that’s accumulated over the years.
  5.    There may be very little equity, but still a mortgage to pay.
  6.    As soon as the kids grow up, it’s going to be way too big for him, but he’ll still be paying utilities for the whole heap.
  7.    Unlike sales prices, property taxes keep going up. Even if he manages to pay off the mortgage, the property taxes are an inescapable expense.
  8.    He’ll be chained to one place. Accept a better job in another city? Not until he sells that one. Like to go traveling in Europe for a few months? Time to pay a house sitter.
  9.    He gets to shovel the snow, mow the lawn, clean the toilets, or pay someone else to do it.
  10. The kids will have an easier time moving back home. Without a job. On his grocery bill, utilities, gas, insurance, etc.

Meanwhile, you can move into that apartment, condo, townhouse or pied à terre in Paris, where you call the supervisor to fix everything and don’t mow the lawn. I dream about it every time I shovel snow. And yes, I kept the house.

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