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In this episode, I want to discuss an important term called co-mingling. That is the process in which you can inadvertently make separate property, marital property. Co-mingling is a very important term when it comes to divorce, and I'm going to use an example of an inheritance because it's a very common example.
Let's just say you receive an inheritance from your mom, I'm just going to make it up, and let's just say you received $100,000 from your mom because unfortunately, she passed away. Well, if you receive that money, the perfect circumstance or the ideal circumstance is you deposit that money into a separate bank account and you never move it to your joint bank account and you only track and... In a perfect world, you don't even spend that money. You save it for a rainy day. But let's just say you have to use some of it for a down payment on a house, and so you use that money for a down payment on a house. You and your spouse now have both of your names on the house, but that down payment came from that inheritance. That's a common example that I hear almost every week. Or even you needed the funds for daily living expenses and you started mixing those funds in and you move that money to a joint account. Well, when it comes to the time of divorce, you have to say, "Well, hey, is that money, is it separate property or is it marital property?" And it starts to get really complicated because it depends.
Now, if you got that money first, and let's just say you used it for life expenses, and you used that money and you put it in a joint account from that inheritance money into a joint account. Well, those funds may have become marital assets, inadvertently, because of that. Or if you used those funds for a down payment on a jointly owned house, does it immediately become marital property? Now it gets a little bit more complicated. This subject is very complicated and it depends on your individual circumstances, but I want to give you the highlights as to what you're going to be thinking about if this is an issue in your divorce.
Conversely, you could be on the other side of this situation too, where your spouse got an inheritance, and sometimes it's a pretty substantial amount, and you're trying to figure out, "Well, hey, we used some of that inheritance for these one, two and three things. Does he or she get credit for that money? Does that money come back? Is that joint property? What's the deal? What do we get to do with that?" So that is where this process becomes very important to understand from both sides of the spectrum.
So the first part, and the term that I'm going to introduce to start, is called tracing. So the first word is co-mingling, and that's the process of making a separate property, marital, broadly speaking. Now, tracing is a very important term, and that is figuring out where the money came from. Simple as that. So if you had, let's just say, a gift from a parent, and let's just say that gift came or that inheritance came eight years ago, and then five years ago you used that money to buy a house. And then now fast forward five years, you're facing a divorce situation. Well, you want to keep that inheritance separate, is my guess, and you don't want to split the funds that your parent gave you. So how do you figure out and prove, basically, that that inheritance is separate property? And conversely, if you're the one who's contesting this situation, you're going to have to make your spouse illustrate where all of that money came from and have the records for it.
So that's where tracing comes into play. Very simply, it's just figuring out where the money came from and going through that process of, "Hey, eight years ago, those funds were deposited into this account. And then five years ago, it was wired to this company for the down payment on the house." And you need to go through that process and have all the steps involved, and it's not an easy one oftentimes. So here's where one of the most important things you'll hear me always talk about is having good documentation. That's the problem and that's really the biggest challenge with co-mingling is having the documentation.
If you've been married for a long time, and I speak to people who've been married 20, 30, 40 years oftentimes, and you may not have clean records for where every dollar went. It's something that's very important to think about because state rules can vary on the subject in terms of what you should do in those situations. And one of the things you're going to really need to focus on is gathering documentation. Because sometimes in a state, the burden is, and really you need to talk to your attorney about this point because there are a lot of nuances on the burden, but some states will say, "Hey, unless it can be proved it's separate property, it's automatically marital property." Other states have a little less restrictive or a little bit more flexible burden on that very point.
So you really need to understand what's happening, but the clean way to figure things out is to have records. So to get records, you can... The first thing is that even if an account is old, you might not be able to log into your Bank of America account or Chase account and see records more than two or three years old. But if you walk into your local Chase branch, or you set up an appointment, you may be able to get records from the time you've had the account. I've been in banks with clients before where you go and you figure out, "All right, well, here's the time that we had the account" and they'll go back and they can go to the bank and get 10 years of records. It might take a couple of hours, but it is a very doable thing to do when you go into the bank.
Now, it can be tough and you still may not have all of the records, but also look for old correspondence. If you've had the same email account, or if you have any mail, or if you keep a safe or a file cabinet with important documentation. Or sometimes if it's related to an inheritance, you may have or you may need to contact the old attorney who handled the paperwork if an attorney handled it. Or your sibling, sometimes maybe you don't have it, but if you have a brother or sister or something, you might be able to contact them and figure out what kind of shreds of evidence sometimes it is, particularly, we're talking about something 10 years or eight years in the past, you may have to keep things clean. Now, sometimes it's not a big issue when it comes to documentation and you have everything there. But if you don't, those are some tips I would suggest for you.
Now, let's just say not all things are clean and smooth, and let's just say this is going to become a big issue between you and your spouse as part of the divorce process. What do you do? That is you're going to have to bring in some experts. There are forensic accountants and CPAs who do this work and can help figure out, "All right, what part is separate? What part is marital?" And sometimes they may even come up with estimates. But if you get a good accountant, they will look at what of information that you have or that your spouse has, and they will say, "Okay, well, I can see 70% of the picture" and they'll say, "Okay, well, from my best judgment, I think this amount of money is separate property and this amount of money is marital property." They can sometimes estimate or even trace with imperfect information where funds came and went.
So if you have a lot of money at stake, and sometimes it is, if you're dealing with hundreds of thousands, if not millions of dollars that you're trying to figure out, "Hey, what is separate property? Hey, what is marital property?" Then you should strongly consider getting an accountant or a forensic accountant to help you.
Now in a perfect world, and I always say this about hiring experts who do valuation or forensic accounting, et cetera, is in a perfect world, and we're talking about divorce so almost nothing is perfect, you would get a neutral person to look at all of the available documentation that you and your spouse agree upon. And will have that person analyze everything, prepare a report, and those are the numbers that you use to determine separate or marital property. Now, that's not always the case. Certainly, I see all the time where one person is hired by you, one person is hired by your spouse, and they come up with very different valuations of what is separate property and what is marital property from the co-mingling and the tracing that they do. And you have to basically fight it out, unfortunately, or come up with a middle ground.
So something to think about, but as I said in the previous episode is really to the extent that you can keep things separate and avoid making things separate, or making separate property marital, you should. Now, not all the time are you walking around your life and thinking that I'm going to get divorced tomorrow and therefore I need to have done these things eight years in advance. I understand that life doesn't work that way and so you shouldn't necessarily feel bad because you've made the wrong decision, but you do need to... Or you didn't have the records, or you didn't keep things as cleanly as you would like. But even despite that is you need to get on top of and start collecting and getting the information on all the records that you don't have and start planning for the future and putting yourself... I always say this is even in an imperfect situation and imperfect world, you need to start putting yourself in a very good or the best situation you can for the future to ensure, or at least to help ensure, that things are going the way that they should through the divorce process.
And if you gather up as much documentation as you can, you gather up some of the records, you might not be able to get 100% of the money back or prove 100% is one way or the other, but hey, if you get 80% of the way there or 70% of the way there, you are still in a much better position than before.
So the important term for this episode is co-mingling. And if you are thinking about your individual circumstance, this is a really complicated term, both legally and involving individual circumstances, and involving your state's laws, but I would type in co-mingling in your state and I would look at some attorney websites. I would contact your attorney and figure out, "Hey, what do I need to be thinking about both good or bad when it comes to co-mingling in my situation?" Because it can mean the difference in many thousands, hundreds of thousands, or in some cases, millions of dollars that go from one person to another.
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It's been a little while since I have done an episode and it's been a very busy couple of months, so apologies about that. But I want to discuss a topic that's been coming up quite a bit in the coaching calls.
And that is how you handle inheritances and gifts during a divorce. It's a tricky question. And it's an important question because oftentimes your parents, or someone, will leave you a substantial sum and you want to protect that during the divorce process. Sometimes that inheritance money comes at a poorly time to time where you can't control it. Someone passes away, unfortunately, and you receive some money maybe right before a divorce or during the divorce process. And you're trying to figure out, well, what should you do?
I just spoke with someone the other day who had filed for divorce and then, unfortunately, a parent passed away, eight months into the divorce process And they were wondering, "Well, how do we handle this new inheritance that arose, and what to do about that?" And so in this episode, I want to give you some tips when it comes to handling gifts or inheritances and how to protect that property. And really, the main thing is how do you prevent it from becoming a community property, which is the property that is subject to, or that you're going to end up having to split as part of the divorce process.
So let's go through a few quick tips.
The first thing is if you receive an inheritance, or you receive a gift from someone, keep that stuff in your name only. Meaning, if you get some money, let's just say a hundred thousand dollars, because I'm going to use that as an easy example. If the parent passes away and gives you a hundred thousand dollars, don't deposit that into a joint bank account. Set up a separate bank account that's in your name only. And we're going to call it your inherited funds account. And so put the money in that bank account separately so that it doesn't get commingled with the other assets. And that could get complicated because not always is an inheritance a gift. Sometimes it may be a home or a car or any other type of property. Whatever it is, make sure to title it in your name only.
The second thing is don't let your spouse make any contributions to that gift or that inheritance. And the house is the easiest way to illustrate that. If you inherit a house and let's just say it's been run down for a little and it needs some repairs to get it up to speed. Well, one of the things that you should do is don't let your spouse contribute financially to those repairs because the value increase of that house, or even the whole house itself, depending upon where you are, could now come into question as part of the divorce process. And sometimes this may be a house that you maybe just made renovations or adjustments on a few years ago, and now the divorce process is happening. And now you're wondering, "Well, is any part of that house marital property, because my spouse helped renovate the master bathroom and bedroom in there?" And so if that's your situation, be very careful and think through what you're going to do with that inherited property. And if you can keep your spouse from making contributions to it, financial or labor even, then you should do so.
The third thing is to consider transferring that inheritance or gift to a trust. Now, oftentimes a parent who was savvy in estate planning, or at least inheritance is most commonly from parents, which is why I use that example, are very savvy in their estate planning. And so oftentimes as part of their estate is they will give you that property, be it cash or the home or whatever, jewelry or whatever it may be, and they might require it to be put in a trust as part of the process. But if that wasn't the case for you, I would consider setting up a trust.
Now there are lots of complications and nuances to having a trust set up for you. But what I would do is if you have an inheritance coming, or you recently got one, or you're thinking about it, I would go and look for an attorney called an estate planning attorney or a trust attorney. And they're kind of one and the same and they can illustrate options for you to set up a trust. Now, usually, there are some fees involved, of course, we're talking about legal work, but it can be worth a little bit of trust set up in the short term to protect you in the long-term.
And then the last thing I would strongly suggest is to keep really good records about where the inheritance came from, how much money was in there, where the funds went, et cetera, et cetera. One of the most common things that I deal with and see people make a mistake with is not keeping track of the money and keeping track of the details of an inheritance. And so what can happen is, let's just say you got an inheritance seven years ago and you knew it was approximately $123,000 but you don't remember the exact math that was there. Well, one of the things that you can do, error the exact amount that was in there because seven years have passed and you want to know. Well, if you don't know what that amount was and your spouse is going to contest it in terms of how much was actually in that inheritance, you could be setting yourself up for a world of potential hurt in that you may end up losing part of your inheritance in the divorce process since you didn't keep accurate records.
And so, one of the things that is most important to do is make sure that you keep track of the paperwork. Keep track of any emails. Keep track of any bank statements. Keep track of any lawyer's correspondence or documentation to ensure that the information that you have from the inheritance is kept and kept track of over time and kept cleanly. Because one of the things that can happen is, let's just say, hypothetically, you've received an inheritance of that $123,000, and the next year you purchased the house with your spouse and use those funds as a down payment. That's something that's very common. And then three or four or five years or 10 years, whatever the amount is, goes by and now you're facing divorce. And you're like, "Well, I contributed $123,000 to that down payment of the house from this inherited gift."
Well, the good news is that even though you may not have followed my initial steps or initial tips, my tips one, two, and three, that you still may be able to get credit for that money as part of the divorce process and consider it still separate property if you have accurate records. But you need to make sure that you have very accurate records of where every dollar came from and where that inheritance money went. On the other hand, if you didn't keep accurate records, you may lose those funds and it may become a costly issue. And it's something that you want to be very careful about. So it's one of those things where you need to make sure that you find every piece of documentation that you have related to that.
Now I've been talking mostly in the context of inheritances because that's the most common, but oftentimes I also see a parent give a gift to you and or your spouse. And what can happen is some money flows in, it's usually pretty informal, gifts around $14,000 or so are not taxed. But sometimes they're bigger gifts. And you forget, because of the size of the gift, to go through all of the steps and document everything. You may have just had a phone call with your mom or dad and your mom or dad just said, "Oh, I'm writing you a check for, here's a $10,000 check for some spending money." And if you're fortunate enough to have parents who are in that position and then you're like, "Oh great. This is a good check." And you use it for something important, but you want those funds back as part of the divorce process because you feel it's appropriate given the situation.
Well, one of the things you should make sure that you do is you need to have a list of documentation from your parents. Your parents, your mom or dad should say, "Hey, I wrote you this check for $10,000." You should have some emails from the time of the check. You should have other correspondence from that time. And you should indicate that all of that stuff happened and happened smoothly because that way you can prove where those funds came from. But just because it's casual or just because you may not be thinking about it at the time and divorce may not have even been on your radar at the time of the gift, which is okay, but you need to make sure that whenever money is coming in from a source, particularly a family member, that those transactions are documented and you gather that documentation.
So the four most important tips for protecting your inheritance or gifts in divorce. And I'll just go through them quickly. One is to keep inheritances or gifts in your name only. The second is don't let your spouse make any contributions to that account or that property to ensure that it stays separate. The third is to consider contacting an estate planner and transferring that inheritance or that gift to a trust. And fourth is to keep really good records as to where that inheritance or gift came from.
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One of the most common questions I get, and one of the biggest anxiety producing questions I get, is how much is divorce going to cost? How much should I expect to spend on the divorce process? And if you're going to ask your attorney how much divorce is going to cost, they're going to say it depends. And I've never known an attorney to give a straight answer when it comes to the cost of divorce.
And so in this particular episode, I want to go through some considerations in terms of how much the divorce may end up costing you in terms of the financial check that you might have to write. So I'm going to just give some ranges and some considerations and things to think about as it comes to the divorce process.
Now everyone's situation is different. Divorce can cost more whether you live in a city, versus a suburb, versus a small town. Divorce can cost a lot depending upon what assets you have, what needs to be done. There's a lot of variations, but I'm just going to give you a range. And so on the low end, from what I see per person, I see the minimum, minimum, minimum, most people are going to spend on their divorce is about $5,000. And that's for one person. And so it'd be $10,000 as a couple. And that's assuming that everything goes smoothly in divorce, and yes, there are ways to make divorce go smoothly, but that's your best-case scenario.
Now, the normal range I see for people is usually in the 20 to I'd say 35 or $40,000 range per person. Sometimes it's closer to 15. Sometimes it's closer to 50, but that unfortunately is not uncommon when it comes to the divorce process. And sometimes if there's just a lot of fighting, a lot of complication, the process is going to drag on for several years, the bills can get into the hundreds of thousands of dollars, and I've seen that too.
And so what I want to go through is first to be aware of the cost of the divorce, and if you're going to be going down this path. I mean, that's why you're listening to this episode. There is a big expense, and you have to really think about what's worth it, and what's not when it comes to investing in the divorce process. And I want to go through a few ways in terms of explaining both how you could control the cost of divorce, and also how to figure out just a few quick methods on how to pay for it.
When it comes to minimizing or controlling the cost of divorce, really the biggest expense when it comes to divorce cost is how much you and your spouse disagree on certain items. To put it a different way, is if you and your spouse can come up with solutions on your own, and come up with as much of an agreement as you can between the two of you and not involve attorneys, the cheaper the divorce will be, the less expensive it will be.
And so if everything is a fight, and I use an extreme example all the time, is I grew up with a middle-class family. They did well for themselves, saved, and they had several hundred thousand dollars of savings, and a house and the normal stuff. And they spent 100% of their money and then some fighting over everything, from not just the big items like houses and retirement accounts, but all the way to who gets the dining room set. And unfortunately, they ended up in the divorce process, they spent hundreds of thousands of dollars on legal fees, and that was all the money that they had.
On other examples, I know billionaires who've gotten divorced for less than $20,000, and that's because they came up with an agreement ahead of time with their spouse. And yeah, maybe the check they're writing to their spouse is going to be pretty substantial, but they knew what they were going to do. They were smart about legal fees, and they did a very good job with it. And so really it just depends on how much fighting there is.
And just some other costs to think about is if you go the full litigation process, where you get an attorney, your spouse has an attorney, and you're going to discuss and fight about every detail. That's going to start at a minimum of $10,000 a person. Every time you have to hire an expert, be it someone to do an appraisal for a business, do an appraisal for a house, do a forensic accountant. Each time one of those experts get brought in, expect that to be another 10 to $25,000 each, in addition to legal costs on top of that from analyzing the reports and discussing it. And if you were to take that to trial, that check just keeps getting larger and larger.
Divorce attorneys are very expensive. I mean, on the low end, I think a good attorney can be 250, $300 an hour. And on the high end, I know attorneys who are 900 to $1,000 per hour of their time. Imagine that. So a 15-minute conversation can cost you $150 sometimes, with your attorney, or sometimes just sending a one-off email. And so you need to be very smart about how you interact with your attorney, and how you use that attorney.
I already mentioned other professionals, but there are also court fees. You have to think about an attorney's full team, paralegals, assistants, et cetera. There's a lot that can go into a divorce and divorce fees. And so one of the questions that you should be thinking about, and one of the most important things we talk about in the divorce process, or I talk about on coaching calls, is how are you going to pay for this? That's one of the most important questions that I get from people all the time.
And I'm going to go through just a couple of quick items to think about. If you have money in a joint account, generally speaking, you're entitled to half of those funds. Generally speaking. So if you need to withdraw half those funds to start putting your little war chest together for attorney's fees, then you should do so.
Now by doing so, you're also going to definitely be tipping your hand in the divorce process, but that's something that may be necessary, particularly if you didn't originally have funds to go through the divorce process. If you have savings, then you can consider using your savings. If you have savings in your own name, if you need to borrow funds from a friend or a family member to make the initial retainer for an attorney, then borrow funds from an attorney.
And then there's also retirement accounts and home equity lines, and other things like that you should be thinking about. But when you walk into an attorney's office and say, "Hey, I want to hire you for my case", you should be expecting to write a check for anywhere between five and $25,000. The day you hire that attorney and anywhere within that is very much normal range.
And so I just want you to be really cognizant of the cost of divorce, and the things that you can be thinking of. The biggest factor as I said is acrimony. And so if you can come to, and I work with a lot of people in this situation, where you and your spouse, let's just say, there's 10 issues that you're discussing and have to fight over, if you can get to an agreement on eight of them, and then you only have to work out two issues, then that can save you a lot of money in your divorce because there are only two things that need to be discussed versus starting from scratch with all 10.
And so things like that can help you save money in divorce, and maybe it can be a small thing like, hey, if you can start a negotiation when possible with your spouse, it's not always possible to negotiate with them. But if you're in a situation where you can say, "Well, I think we're going to both keep our cars." Well, you've already started an agreement on that.
And that's one less thing you can check off the list, and just getting the cars agreement set in stone before having attorneys have to negotiate over it could end up saving you a few thousand dollars. So sometimes even a smaller items that you can come up with a can help you, but if you continue to drag out the process and every attorney wants to beef up there, I won't say every attorney, but it doesn't hurt the attorneys when you have more to fight about. It's something to be aware of as you go through the divorce process.
So just as a quick recap, on the low end, divorce can be five or $10,000 a person to get things done. If you have an attorney involved, and on the high end, it can go, I'd say the average is usually around the 25 to $50,000 range. But if you are fighting about everything and this goes to trial and you have money to take it all the way to trial, legal fees can get to $100,000 or more. So be very wary and very well prepared when it comes to figuring out what's the right investment that you need to make for your case.
And sometimes I'll tell people like, "Hey, I don't know if you want to spend an extra $10,000 on this issue, because it may not be worth it for you," but other times I'll say, "Yeah, you know what? You should spend $25,000 on this issue because if you get $300,000 in return, that's a useful return on investment to invest in legal fees."
Every situation is different and there are always lots of complications depending upon what's going on, but be prepared for the cost of divorce if you're going in that direction, and go in with eyes wide open. Regardless, it's going to be an expensive check that you're going to write, and it's up to you to be prepared for it, and determine what really is appropriate given my circumstances that you're willing to put into this process to secure your future and get through it in one piece.
Shawn Leamon: All right. Today we have Nicole Noonan. She is the CEO of New Chapter Capital, which is a firm that deals with a topic we haven't covered in a while, but a very important one, which is divorce funding. Nicole, welcome to the show.
Nicole Noonan: Thanks so much. Happy to be here. Yeah.
Shawn Leamon: Why don't you tell us what New Chapter Capital does? What is divorce funding? What does that mean?
Nicole Noonan: So New Chapter Capital and divorce funding provides liquidity for individuals going through a divorce, that would not otherwise have access to it. So we provide an advance against the potential settlement. And the advance can be used for legal fees, expert costs, and for living expenses.
Nicole Noonan: And this is something that I saw, in my own practice, a real need for, where one spouse had more money than the other. And they cut up their credit cards, and try to back them into taking a settlement less than what they're entitled to.
Shawn Leamon: And so, to simplify, I mean, liquidity is money. So you're giving them the funds to get through the divorce process.
Nicole Noonan: Exactly. Yeah.
Shawn Leamon: And the objective then is to level the playing field, it sounds like.
Nicole Noonan: Right, right. So they can go out and hire the right attorneys, the right experts. We don't want someone to have, I'm going to use a generalization, their husbands go out. They're the money, the bread earners. They're going to go hire top counsel for the divorce.
Nicole Noonan: And the wife is going to have to go borrow money from friends or family and go hire someone who's fresh out of law school. And this is their first divorce case. We don't want that. We want them to have equal representation. And that's what they're entitled to.
Shawn Leamon: Yeah. So I think a lot of people, I mean, anyone who's not the primary breadwinner in the house, if there is one, probably is at a pretty significant disadvantage, at least from my experience, in terms of having the available money to go and start paying legal fees.
Shawn Leamon: I was just talking to someone yesterday. And they had some money in savings, but basically drained all of it within the first month or so of the process. How does someone know that they'll be a good candidate? How do you figure out whether they should contact you? Kind of gives me the overview, as someone should evaluate kind of this divorce funding, versus using credit cards, or borrowing from family and friends, as you mentioned. How does someone think about that?
Nicole Noonan: Yeah, no. So, we always say, people save for their wedding. You plan for the wedding, the dress, the cake, the caterers, the band. So when it comes time to divorce, no one's sitting there planning for a rainy day divorce. So if you don't have access to your own money, you're going to have to go to friends or family, potentially, or you're going to have to take out credit cards.
Nicole Noonan: Now, that being said, not everyone needs to have an attorney. Not everyone needs full-blown litigation. I always say, it's best to sit down with your spouse, if you can, open up a bottle of wine, have dinner. And say, "Hey, these are my 10 non-negotiables. What are your 10?" And hash it out as much as possible. Because you'd rather send your child to college than send your attorney's child's at college.
Nicole Noonan: But that's not always a possibility. That being said, if you're fighting over ... There's case law, very interesting things. I get it for animals. People want to fight over animals. But fighting over your baseball card collection, or your Nintendo set. Or fighting over something with no value, it's really not worth putting a fight on something like that.
Nicole Noonan: So what we say is, if there's an asset, usually it's a house, and how it's going to be divided. And if you can't work it out, or if there's a custody dispute, and you can't work it out, then you're probably going to need to retain some sort of expert, whether it's an attorney or a mediator. And at that point, it's going to be divided. The money's going to be divided.
Nicole Noonan: And that's when we come in. That's where we can say, "Hey, okay, let's figure out what you're going to be entitled to, and what we can potentially advance you." So you can go in and, unfortunately, sometimes have that fight with the attorneys, and the accountants and whatnot.
Shawn Leamon: So what stage then are people normally coming to you, or do you normally help people? Are these people who are at the beginning stages of the divorce? So still literally may be at the kitchen table, and haven't really started the process yet, in some cases. Or are they generally kind of early or midway through the process? How does someone know the timing, in terms of when to contact you?
Nicole Noonan: Yeah. Shawn, I've been doing this for 15 years, between my own practice, mediation, and for divorce funding. So I get people from all over the country at all stages of the divorce, whether they're looking to say, "Hey, I'm looking to hire an attorney in California. Who would you recommend?" Now, I don't give them one. I give them a list of people.
Nicole Noonan: And then they may come back to us and say, "Hey, you know what? I want to hire Joe something such, and I want your funding. Let's start an application." There are also the people that are on the eve of trial. And I get a call from an attorney saying, "Hey, we thought this was going to be a $10,000 case. Looks like going to cost another $30,000 to take it to trial, because no one's settling at the courthouse steps." That's when we come in. So, really, it depends on the case.
Shawn Leamon: And does someone need to have an attorney as part of this? Or if I'm going through the process representing myself, or more or less by myself, am I a candidate for funding?
Nicole Noonan: Yeah, no. You have to have an attorney. We don't represent any people that are representing themselves. Yeah.
Shawn Leamon: Okay. No, no. Fair enough. So let's say I figure out that there may be an option for me to get some funding. How does the process work?
Nicole Noonan: Try to make it as simple as possible. Because, honestly, money is stressful. Divorce is stressful. So talking about money and divorce is super stressful. So we send an application to the firm, to work with the client and the firm, of what they're looking for in terms of funding, and what the marital asset pool is. And the reason we send it to the firm is it's not their first rodeo, but it's potentially the client's first rodeo.
Nicole Noonan: Documents are sent to us. It goes to our underwriters. We try to make a decision as quickly as possible, again, because it's a stressful time. So usually within three business days, unless we're asking for more documentation. And, of course, the more complex the divorce, the longer it may take. But, traditionally, it's three business days.
Nicole Noonan: Once the client's approved, documents are sent to the client. We do ask the client to review it with an independent counsel. So it does not need to be a matrimonial attorney, cannot be the matrimonial attorney you're using, but it can be any attorney that's practicing within your state. Documents are then sent back to us. And the whole process can be done in as little as two weeks.
Nicole Noonan: Usually, the longest portion of it takes place when we're trying to find counsel to review the documents with you and get them in, especially in light of the time we're living in right now.
Shawn Leamon: And I'm going to make up a very low number, but just for the sake of example, if you were to lend me $100 ... The divorce process could be another month, or it could be another for three years. When do I have to pay that money back?
Nicole Noonan: When you settle. So we get it. Unlike a credit card, we have to worry about monthly payments. We understand. I mean, I've been doing this for a very long time. And the people I work with have been doing this for a very long time. It may take two years to sell a house right now. So you may decide, "I'm going to get 50% of the house. You're going to get 50% of the house." And we'll have to wait until you get the house sold.
Nicole Noonan: Unlike a law firm, where they're not really willing to wait. And if they are, it's also not great. And as an attorney who's done this before, where we would say, "Okay, well, we'll carry this case. And hopefully, at trial, at settlement, we'll get repaid." And it takes another two years, three years, especially during the housing crisis, for us to get repaid. So it's not great business for law firms.
Nicole Noonan: But let them do what they do best, let them represent you. And let us fund you, so you take the pressure off them and the pressure off yourself.
Shawn Leamon: And then is there an interest rate? Or is it a fee? Or how do you kind of charge someone? How do you make money, basically, is what I'm asking? How's this all work?
Nicole Noonan: No, I'd love to do this as a charity. And honestly, that's my next chapter, and my new chapter is hopefully being able to give back. Because I just think that there's such a need for this, for people who don't have a lot of assets, but that really need funding to get them to their new chapter and move on.
Nicole Noonan: But we do. We have a monthly fee. But nothing is due until you get to settlement. So they don't have to stress about that. No.
Shawn Leamon: Got it. And so when do you finally get to a settlement, or there's an order or something, the papers are signed, and as the assets are getting moved from one place to another, is when your repayment?
Nicole Noonan: Exactly.
Shawn Leamon: Got it. How does someone know if they're ... One of the common issues that comes up with a lot of my clients, is people have different levels of their credit, let's just say. Some people have done a great job, over time, maintaining that credit. Others are in between. How do you manage or navigate that process, if I'm kind of looking at my options?
Nicole Noonan: Yeah. So we do do a credit check. That being said, we get it. I mean, we get that not everyone has built up their own credit history, because their spouse was the one who did all the banking, was the main breadwinner, and was the main signee on their credit cards.
Nicole Noonan: We do have other people that have been experiencing job losses or unemployment right now, and they just can't maintain that level of credit. Again, we get it. So it's not something that is our main decision-making standard, for divorce funding.
Shawn Leamon: And you mentioned something important, is oftentimes if you need funding for your legal fees, you may also need funding just to sustain life. Does your funding include or allow for use for fees that are outside of your attorney?
Nicole Noonan: Yeah. No, absolutely. So we understand. First and foremost, we want to make sure you're able to get this divorce done. So we want to make sure that your attorney and your experts are paid. So whether that's a forensic accountant, anyone that you're going to need, an appraiser, someone who you're going to need to get your divorce settled.
Nicole Noonan: But we also fund for living expenses for clients. So we want to make sure that, based on what our assessment is, you're going to need X amount. And if there's anything left over, we'll say, "Okay, if you would like to draw down, we will fund for living expenses as well." Because some people just need to move out. And they need to get a new apartment. Or they need to have money to go back to school, so they can start their new chapter.
Nicole Noonan: Sometimes the most rewarding fundings that we do is people come back to me and say, "Hey, I went back to school. I got a degree. And I'm starting a new job. And I'm on my own two feet. And I'm never again going to let someone maintain a bank account, and know nothing about my finances." So those are really sometimes my favorite fundings that we do.
Shawn Leamon: You're based in New York. Right?
Nicole Noonan: Correct.
Shawn Leamon: Yep. I'm in Texas myself, as many of the listeners know. But we have people from all over the country. Where do you work? Can any state apply, or almost any state?
Nicole Noonan: Yep. We're all over the US. So we're both East Coast, West Coast, Midwest. We're there. And my biggest hurdle is for people to know that we're there,
Shawn Leamon: And what's the best way for someone to contact you?
Nicole Noonan: So we have a website. It's New, N-E-W, Chapter, C-H-A-P-T-E-R, Capital, C-A-P-I-T-A-L, dot com. You can also find us on LinkedIn. We also have an Instagram, @divorcefunding. We're all over. But yes, New Chapter Capital is probably the best. Or they can call us, at 212-404-7807.
Shawn Leamon: Well, Nicole, thank you very much for coming on. I think it's a great option. It's one of the biggest and most common topics that I speak with people about, is trying to figure out what options they may have, in terms of getting money to fund the legal fees. Particularly, if they have a spouse that has been manipulative or controlling, or just kind of limiting access, as you started the conversation with. So I think it's a great product and service that you offer. And thank you very much for coming onto the show.
Nicole Noonan: Thank you so much. Really had a great time.
One of the challenges of picking a divorce attorney is finding the right type of attorney or type of personality of an attorney to work with you and for you during the divorce process. There can be a lot of different styles of attorney. Sometimes you want an attorney that is more there towards working towards a resolution and won't run up your bill, but you also want an attorney who is going to advocate for you and fight for you.
One of the things I want to cover in this particular episode is why you want to avoid hiring the most aggressive divorce attorney. You'll see a lot of attorneys out there who claim to be the dog, the bulldog, the fighter. They're going to go all-in and advocate for you and fight for you on every issue and make sure that you're there to win. In fact, if you think about the way that divorce attorneys are represented in movies, oftentimes the attorney's going to be that pit bull aggressive, sports car driving, fancy suit, 35th floor in a downtown office. An attorney that is there to be aggressive and fight.
But I want to give some considerations when it comes to choosing an attorney as to why that might not be the ideal in terms of picking the most aggressive person. And there are four big topics I want to cover in terms of an aggressive attorney. The first is that going to court is expensive. Second is aggressive does not equal respect in the legal community. The third is aggressive doesn't mean effective. And finally, fourth is that an aggressive attorney can be emotionally draining.
So, I'm going to go through these four points. And just keep in mind when you're thinking about your attorney selection, you're thinking about the divorce process, you're thinking about how these processes go, is ultimately you're going to need to get to a resolution. Most people listening want to get to some form of a settlement, and it requires some negotiating ability.
Now, everything being lopsided, it doesn't mean you cave in and give in to the other side, but you want someone who is there to advocate for you, but help you get to a resolution, not just fight for fighting sake. And so, the first point in this is going to court is expensive. If you get an aggressive attorney, you will constantly be fighting absolutely every issue, there'll be a motion for every issue, you'll have lots and lots of legal work that's done. And anything that your spouse or soon to be ex-spouse brings up, whether it's valid or not, is going to be challenged, even when it's not justified to be challenged. And sometimes it is going to ultimately hurt you, not harm you.
And so, when you have overly aggressive attorneys, oftentimes you don't get to a point where there's a resolution and you end up going to trial or having many, many court dates. And the process takes twice as long and is five times more expensive because you're fighting every issue.
The second point is aggressive attorneys aren't always respected both by judges and the legal community. And remember, when I use the word aggressive, I do mean the person who fights for fighting sake. If you know that someone's always going to fight every particular issue, whether it's big or tiny and irrelevant in the overall process of things, that person starts to lose their credibility.
I mean, imagine, and I use an example that's actually a true example, but let's just say you have $300 worth of dishes at home. You know, you have your plates and your bowls and your cups and whatever else, but seven motions later and 14 hours of legal work later, you have now spent $5,000 or more on trying to get those cups and plates going to your house and not your ex-spouse. And that's kind of the thing, where you would have been better off just letting this issue be rather than fighting over every detail attached to it.
And so, when you're fighting over every little issue, there comes a point where people don't value what you say, because everything is an emergency, everything is a big deal. And then the issues that really are big deals get lost in the overall shuffle because you don't have that credibility to say when there are actual emergencies, there are actual issues because everything is.
The third point is that aggressive doesn't necessarily mean assertive or effective. Now, you want, and one of the most common things that almost everyone wants, and I hear all the time, is you want your attorney to fight for you. That is a fair point and a fair statement. You want to feel like your attorney is on your side, advocating on your behalf, standing up for you through the legal system to make sure that what's going on in this divorce process is right and just. And if there's something incorrect that's going on, that that person is going to advocate and make sure that you walk out with a good settlement or the best that's possible given the circumstances.
Now that said, there are ways to do that without causing unnecessary fights on every issue. And the way I make that distinction is there's a difference between being aggressive and being assertive. And so, there are some people who... Many attorneys I like, some of the ones that I recommend to people when appropriate is they are very assertive, they're always in your corner, and they will always advocate on your behalf, but they aren't overly aggressive on how they do it. They treat themselves as being right.
And so, because they know the law well, they know how to negotiate skillfully, they don't have to yell or cause an unnecessary burden. They can speak in a tone like this, they can write factual statements, they can use the law to their advantage in order to help you versus making every issue an explosion or a blow-up.
And then the last point is that an aggressive attorney is just emotionally draining. I've been on the receiving end of and also seen clients who are on the receiving end of overly aggressive attorneys. And what they say and what they receive and what they communicate is just always something. Whether you said something the right way, or you incorrectly typed something, or whatever the case may be, that the receiving end that they're going to say, they make every issue a five-alarm fire when it may just not even be smoke coming out of the kitchen. They pretend like the whole house is burnt down and we got to rebuild it. And it just becomes overly complicated when it doesn't need to be.
In a perfect world, and there isn't a perfect world in divorce oftentimes, this is divorce that we're talking about, but if there were a perfect world in divorce, you would have two reasonable people, two reasonable attorneys, that say, "Hey, our sole objective is to get to a fair settlement so that everyone can move on with their lives at a reasonable cost and in a reasonable timeframe. That's the goal." And when you have someone who's fighting every issue, either on your behalf or if unfortunately, your spouse picks that aggressive attorney, everything just is a constant fight and it's a battle and it's draining and it isn't productive.
And so, you want to make sure that the attorney that you pick, when you're looking for an attorney, knows how to pick his or her battles on your behalf. So some things are worth fighting, other things are not, and a wise attorney will guide you in the right direction.
And so, in the overall big picture, one of my favorite phrases that I've said on the podcast before is you can't see the forest for the trees. Meaning you look at every individual tree but you can't realize that you're in this big forest and you don't necessarily know what the big picture looks like. Well, that's what it is like working with an overly aggressive attorney as you're fighting and looking at every individual tree, but sometimes you just miss the whole big picture as to why you're here, what your objectives are, and what's the best way to get out of this, all things considered. Picking an overly aggressive attorney can really harm you in that regard.
That's it for this episode. I'm going to continue the series on attorneys because it's one of the most important things that you can do as part of the divorce process.
In this episode and the next several episodes, I want to discuss divorce attorneys, and family law attorneys, and the details and choices amongst them. And how you can figure out whether or not you have a good attorney, how to find a good attorney to make sure your attorney is fighting for and advocating for you and the complexities of the attorney selection and just relationship management process. I'm a huge fan of divorce attorneys and having them help represent you, but like in all industries, there are people who are really good at their job and some people who, let's just say, politely, may need some improvement. And attorneys are no different. There are some excellent family law attorneys out there who will do a good job for you at a reasonable price. And there are some attorneys out there who will cause a mess of things, and you end up spending tens of thousands of dollars or more. And on top of that, not getting anything done. And I want you to avoid that scenario.
But in this particular episode, I want to focus on, do you need an attorney? And what situations that might exist where you don't need an attorney to help you. And let's just start with the basics. Do you need one? Well, your attorney is going to have, if you work with one, is probably going to have one of the biggest impacts in terms of how this divorce process goes for you. And same is the selection of the attorney of your spouse. A good attorney or good set of attorneys, will keep things moving forward at a reasonable clip people will, of course, have disagreements, this is divorce, but they'll do them civilly and you won't end up spending more money and time and energy than you have to. And if you get a bad attorney, this process is going to be an additional nightmare on top of nightmares. Not only will you lose a lot in your divorce, and when I say lose a lot, I mean, money, time, energy, but the outcome will likely be pretty poor as well.
And so, you need to be very careful about who you choose as an attorney. And so, it's one of the most important things that you can do when it comes to the divorce process. But some people ask me, I get this question all the time is, "Do I need an attorney or can I do it myself?" And I know a lot of people are hesitant to fork over thousands or tens of thousands of dollars to an attorney to help with their issues. And sometimes, I get people who'll say, "Well, my issues are pretty simple. I think I can handle most of this." And a lot of times I'll talk to you and say, "Yeah, you have a pretty good handle on things, but you should still consult an attorney or at least consider it." And there are other times where people don't really need that much legal help because they and their spouse agree on most of the issues.
And so, can they do it themselves? A few things I tell people when it comes to whether or not they need an attorney. The first thing, of course, is that divorce is complicated. There are a lot of details in order to come up with a divorce settlement, a divorce agreement, or ultimately if you are one of the handful of people who has to go to trial. I mean, there's a lot of details involved even in the simplest of situations. And you need to be prepared to have a handle on that and understand all of those complexities. The second thing is, it's very, very easy to make mistakes in the divorce process. The mistakes that people think of, which are, are they getting the right financial deal for them? Did they structure a custody agreement the right way? Are they doing what's within the bounds of the law when they come up with an agreement? Those are common things.
But there are also issues where did you fill out that divorce paperwork the right way? And is the clerk going to reject it? And you have to reject it after 60 days of it sitting there in the office and say, Oh, you didn't fill this out correctly, and therefore you got to redo it and resubmit everything. And there's a lot of just little details that add up when it comes to the divorce process. The third thing is almost obvious, but it can be really hard to see the big picture when you are going through divorce. You're in it. You are in the middle of this situation. This is happening to you, your life, your family, and everything that related to it. And sometimes it's very hard to de-personalize and just make smart decisions. It's very, very tough to make the best decisions for yourself oftentimes in an emotional process when you're going through the middle of it.
And so, having someone like an attorney can provide you guidance from the outside to help you and keep you on the right path and make the right decisions. And then the last point I'm going to bring up is, regret is powerful. I'm going to bring up two more points. One is, regret is powerful. So this is point number four. What you don't want to happen, and one of the most challenging things after this process is over, is looking back and saying, I wish I did X, Y, or Z. And it's something that's very, very common. Because life is complicated. Divorce is complicated. We all get that. And you want to make sure that you're covering your basis for everything that could happen later down the line and just during the process. So you don't have these regrets six months later, a year later, five years later, when you're looking back as to how you handled certain things in this process.
And one of the things, I'm shifting gears slightly as I make this next comment, but one of the things I talk about in my document review appointments all the time is, making sure the what-ifs are covered. And when I think of some of the best attorneys that I know, I mean, there's a lot of factors that make great attorneys, but one of the defining characteristics is they're really, really good at understanding the what-ifs. So, what if you can't sell a house in the agreed timeframe? What if someone doesn't agree or doesn't follow through on this child support agreement? What if the custody schedule needs changing? What if someone gets sick, or a child gets sick, how is that handled? What if there's an issue with the split of the retirement account? And really good attorneys can anticipate, and plan for, and write in documentation, and help you negotiate, what if, scenarios that are very favorable for you and make the longterm process of this divorce smoother.
And then the last point I'm going to bring up, is that you need to protect yourself. There's just a lot of details, as I've said before, in terms of divorce process, and you don't always know where you might be going wrong, where you could get a better deal, or where it's okay to give up a little bit, this is a negotiation. And you want to make sure that the agreement you are coming to is a fair agreement for all parties. It's not about "screwing your spouse." That's not the goal here. The goal is to come up with a solution that both of you can live with for the rest of your lives. It's not going to be fun. It's not necessarily going to be perfect. But the goal is to get to that point and get to that point sooner over later at a reasonable cost. And a good divorce attorney can help you do that.
So, that was all-pro attorney, of course. And I'm going to be getting into lots of different details to think about when it comes to an attorney. But what situations might you not need an attorney, or need very little legal help? And I have just three scenarios. And even in all three scenarios, if I were writing this down, I'd put a little asterisk next to it, to say, yes, but still, you might want to contact an attorney. But three things to consider, the first is that, if both of you have a very clear picture, both of you as spouses understand your assets and your debts. You have a clear understanding of where the money goes, what's there, you agree upon all the values of things, and there's not going to be a lot of disputes about it, but if you know it, that's a good checkmark that you might not need as much legal help.
The second thing is that you and your spouse don't have complex custody issues. If you have any kind of custody issue or it's going to be a discussion or a potential conflict later, get an attorney to work it out for you. Because there are just so many details. I mean, I'm a financial specialist, by no means am I a custody specialist, but from working with enough attorneys and reading enough agreements, I can tell you there are so many details that attorneys know and have worked through over decades, in terms of getting the right custody schedules, and handling all the complexities of raising kids and co-parenting, that they already have planned that oftentimes someone who's just trying to do it themselves doesn't know. But if you don't have custody issues or the kids have grown, maybe you don't need as much legal help.
And then the last point is, if you and your spouse can work out a reasonable settlement, then, by all means, save the money. I said, for all of those points is there's an asterisk. I'm going to get into some options in future episodes as to different ways you can use attorneys without going all in and necessarily writing a 10, 25,000, $50,000 check for each of you to get the appropriate legal help that you need. But one of the things is, is the more that you can agree upon yourself, between you and your spouse, and the less fighting there is, the less help you'll need from an attorney. And so, that's something to think about as you choose. Now, the nature of this podcast and the nature of what I do, unfortunately, I don't get to work with too many people who are in ideal scenarios.
It happens every week, but the vast majority of people are in very complex financial circumstances and are not in full agreement with their spouse, which is why they're listening to this podcast or you contact me and we do a coaching call. But when you can, particularly for the people who are early in the process or haven't filed yet, I always say like, "Look, if you can work out a lot of this stuff in advance, you can minimize the need for attorneys down the line and the cost you're going to have to pay as it goes through this divorce process." So, a lot of things to consider in just a short amount of time. I also have a great section, not to over-promote my book, but in my book, Divorce and Your Money: How to Avoid Costly Divorce Mistakes, there is a ton of information on how to choose an attorney in there, because it's one of the most important things that you can do during your divorce process. And I will be talking about a lot more in future episodes.
EP 0219: How to Conserve Cash & Save Money During The Pandemic
In this episode, I want to discuss preparing your finances during a recession and how to conserve as much cash and capital you can during this time period. It's not purely a divorce topic, but it has some general financial discussions in here. And there's some things I want you to think about. As I'm recording this, there's something like almost 30 million American adults out of work. The unemployment rate is high. A lot of states have been locked down, and some are slowly starting to reopen, but the economy has fundamentally changed. And just a few months ago, at the beginning of 2020, there was a great economy, and then that changed in the span of about a week or two. And a lot of people have lost jobs or are on unemployment or some combination of those.
And when you're on a budget, regardless of your lifestyle and your income, oftentimes a big decrease like what has happened recently can completely change your lifestyle, your budgeting, your plans, and it can be hard at a certain point if you've exhausted your savings or are getting close to it to figure out ways to conserve some additional money and give yourself added financial flexibility as you try and keep up with the relevant payments that you may have.
And so I want to go through a few different strategies, five specific strategies to consider when it comes to this environment and some ways to improve your financial picture, particularly if your income is down, but your expenses have remained the same or your expenses have even increased given everything that's going on. And so I'm going to go through five things and I'm just going to start them now.
The first is to check and understand your spending. You should have a very good handle on your expenses. If you haven't completed a financial affidavit or statement of net worth, oftentimes they ask you for your monthly expenses. One of the things you should be doing is really understanding what those expenses are, how they look, what can be cut from your expenses. I look at every transaction every month and I go through and I say, "Hey, do all these transactions look good? Where do I spend too much? Could I cut something here or there to make sure that I'm not spending too much?"
And when your budget is tight, you have to realize that even small things add up. I'll use a very simple example, is if you pay $10 a month for Netflix ... I don't know the exact Netflix price at the moment, but let's just say you pay $10 a month for Netflix, and that's $120 a year over five years, that is $600 of spending on Netflix. I always look at those small subscriptions as a five year commitment, and you can realize that $10 a month can add up pretty quickly, much less if you have an expense that's $50 a month or $120 a month or more. And so you need to really think about those expenses and what you may be able to cut.
The second thing is if you have debt of any kind, be it a credit card, student loan, personal loan, mortgage, whatever, you can negotiate with your lenders. Under normal economic environment times, people were not as willing to defer or adjust your payment schedule, but now given the millions of people in very tough situations, and you may be one of them, there are ways to lower your payments in the short-term so that you have some flexibility and in the long-term, you're going to make up for it. But doing and cutting what you can in the short-term can be helpful.
When it comes to a student loan or a credit card or personal loan, you can pay ... Sometimes they'll let you just pay the interest. Maybe you can't pay the principal balance, so if you have ... I'm just going to make up a student loan, for example. Well, let's say you pay $1,000 a month on a student loan. Well, 500 of the $1,000 might be going to interest, and 500 of that $1,000 may be going to the principal balance of that loan. And if you don't have the same amount of income coming in, you can say, "Hey, can I maybe just pay interest only for the next six months, the next 12 months until I can get back on my feet?"
And most lenders are very willing to do that for you because I mean, they want a payment and they don't want you to stop. And it's better for them if you pay some over paying nothing and it's okay ... They'll be happy if you carry a balance for six months, so long as month seven or even month 12, whatever it is, you start paying that as normal again, but if you just stop payments altogether, that actually hurts them quite a bit as well. So people are willing to negotiate and adjust the payment schedules today, so whatever kind of debt you may have all the way to a mortgage or a credit card or anything in between, call the institutions, tell them the situation, and most aren't even requiring a whole ton of proof in the short-term just because the mass volume of people who are affected right now.
Now, a caveat to that is don't just stop paying. You should contact the lenders and tell them what's going on, but if you stop paying, it can hurt you. Now, the only plus side ... I would stop paying is a last resort. The only upside is if you stop paying, it does take a few months before those missed payments show up on your credit report, but it's not suggested. Much better to modify and find a lender or find someone who's willing to work with you than just stop paying because you don't have the capital available.
The third tip is to pause retirement contributions. If you are still working and you have a job, or I know plenty of people who still have jobs, but I have lots of friends and people I know who got salary cuts to keep their job. Some took 30%, 25% salary cuts. I know other people who are on unemployment at the moment, but whatever it is, consider pausing those retirement contributions. If you're contributing 3% or 5% of your salary to retirement, whatever the number is, well, I would lower that to nothing and conserve as much capital as you can in the short-term so you can get through this difficult period.
And conversely is point number four is pause college savings. If you're saving for your kids' colleges, you might want to pause that and keep that cash as well. And when you're in a better financial position, you can start making those contributions again. I imagine just as a general note is particularly for kids who aren't going to college in the next few years, there's going to be some adjustments given the whole virus situation and some hard questions in terms of the cost of college, the value of college and what you're paying for. And so if you're planning to spend 200 or $300,000 on a kid's education, you might need to save or hold off. These are short-term bumps in the road, or at least try and think of them as that, and you can catch back up when you are on your feet, but you shouldn't overstretch in the short-term.
And then finally is consider negotiating or consolidating debt. One of the things I do all the time whenever looking at someone's debt is I like to rank debt by interest rate. Let's say your mortgage is somewhere between 3 and 5%. Well, that's not a very high interest rate, but you could have a credit card that's charging you 21%, or if you're behind, it could be 27% and you can have everything in between. And what you should do is be very organized or very careful about how much you're paying and know how much you're paying an interest for pieces of debt and figure out if there's ways to lower that.
I was just having a conversation with someone the other day and I got an offer in the mail, said, "You are preapproved by Discover," because I use Discover for some of my daily expenses and they said, "You're preapproved for a personal loan at 6.99% and we can get you up to" ... It was a really high amount. And they were like, "We can get you up to $36,000 if you apply within 24 hours." And I was like, "Wow, that's a lot of money." Thankfully, I don't need it to pay anything off, but there are situations where something like that could be helpful.
If you have a credit card and your credit card payment is charging you 18, 19, 20%, and let's say you have $10,000 in credit card debt, you could be paying $2,000 in interest a year. But if you refinance with a personal loan at 7%, well, you would be saving yourself 1,300 bucks in interest on that $10,000. I keep a document actually that I update for myself every month that has each credit card, how much the interest rates are and just making sure I pay off my balances, but if there was a situation where I had a bunch of debt, I would know, "Okay, well, this is the most expensive debt, so I need to pay that off first. This is the cheapest debt, so like a mortgage and I'm only paying 4% and there's some tax benefits, so I'm going to leave that one outstanding and not try and pay that one off." And so organizing your debt and negotiating, figuring out if you should consolidate certain debt, you can quote unquote "refinance debt" by getting a lower interest loan to pay off some high interest debt. These are all considerations, particularly during difficult times.
The five tips to help you conserve some capital are to first just check and understand your spending. That's one of the biggest tips I give everyone going through the divorce process in general, but with the economic situation changing on top of it, understanding your spending and cutting your spending for anything that's unnecessary is the top tip.
The second is negotiate with lenders. Be it a credit card, a student loan, a mortgage, whatever it is, if you can't make the payments or you need to reduce the payments in the short-term, people are willing to work with you. I guarantee it.
The third is pause your retirement contributions in the short-term, and the fourth is pause your college savings contributions if you're making them for a kid. And then finally, the last is consolidate your debt or renegotiate your debt and ... excuse me ... refinance your debt if you have to. And so if you have high interest debt like credit card debt and you get a personal loan at a lower interest rate, it can save you hundreds, if not thousands of dollars over the course of a year or several years just by refinancing certain pieces of debt. And that might be something for you to think about and work on.
This week, I want to cover a slightly different type of episode. How can you manage stress the instant you are experiencing it?
Oftentimes life can feel overwhelming, and finding ways to manage all of those feelings without shutting down is essential to our well-being.
Here’s a technique that I find helpful and in fact, use frequently to manage stress – it’s very simple.
It’s a deep breathing technique where you count to 10. What do I mean by that? Listen to this latest podcast for more on this guaranteed technique to help you ease stress the minute you feel it.
In this episode, I want to do a more timely addition of the Divorce and Your Money episode. As you know, clearly if you're listening to this that there is a big virus going around and businesses are closed. Courts are closed to most extent. And a lot has changed in the span of just a few weeks. And depending upon where you are, the severity has changed quite a bit. But, many life-altering changes, and I wanted to discuss its impact on the divorce process and some things that you may want to consider during the coronavirus epidemic, or pandemic I should say. There are some helpful tips in here and just a hodgepodge of ideas I wanted to go through and some frequently asked questions and thoughts as you consider everything that's going on.
There's a few big things that have happened all at the same time. First, of course, is the virus. The second is the employment situation has changed. As I record this, over 3 million people have reported that they have filed for unemployment, and that number will go up, I'm sure, over the coming weeks. Also, the stock market is down quite a bit, and a lot of people are in much tougher situations than they found themselves just a month ago when ... Well, you still have the divorce part, but at least the economy was good, market was up, and everything else. So I want to give you some things to consider and things that you can do.
The first thing is that across the country and just about every attorney I've talked to in every state I've talked to, court's closed. Now, they're not closed, closed for absolutely everything because the legal system is very important. But for anything that's not essential, the court is likely closed. So what does that mean for you? Well, it means for many things you cannot go get them resolved. So if you have a session in front of a judge that's not immediately urgent or an emergency, it will likely be delayed for several months. And unfortunately, because there are hundreds, if not thousands, of delays happening at the same time, things are going to take a lot longer once we start to reestablish some form of normalcy.
Now, if you have an emergency order for some reason, and you will have to have an attorney to help you with this, at least I recommend one, emergency orders, almost universally, are still going through in courts across the country. But it has to be a true emergency for a court to want to hear it and for you to get a resolution on that particular issue that may be occurring, so there's something to that point.
Now, if you want to resolve your situation, your divorce case, and court is not available at the moment, what are your options? Well, if you are in a position to mediate or negotiate a settlement, every attorney I know is still working. These are all small businesses for the most part. Most family law firms are small businesses. They still are working the same way they would. Now, of course everyone is remote. I've always been remote. So for better, for worse, this hasn't changed a drop of my day-to-day life. But attorneys are working remote, and so you can still work towards negotiating a settlement as if nothing mattered. Now, will you be able to file the final paperwork? Probably not. Or at least it may get delayed until you get the final sign-off, but everything is still possible to make progress in terms of a divorce case or issues you are facing.
Now, if you have to have a court date for something and that would be essential to your process, that's not going to happen anytime soon. But at least in terms of making progress, if you're willing to do that, and your spouse is willing to do that, and the attorneys are willing to do that, you can still resolve. I still have plenty of people that I know that I'm working with who are making progress like they would normally, even though the court itself is closed, and that is an option available to you.
Another thing that's available to you is that if you wanted to do mediation. Now, the traditional mediation when you are in a courtroom is ... Or sorry, a conference room I should say, is not happening, where you get you, your attorney, your spouse, your spouse's attorney, and a neutral mediator in a courtroom is not happening. However, believe it or not, just a few weeks ago, I had done some episodes on virtual mediation services. So it was actually one of the most recent episodes that came out and with Susan Guthrie. She's a virtual mediator. And there are lots of virtual mediation options that are popping up over the last few weeks given the change in circumstances and situations. So if you're in the mediation process, well, a lot of times that's happening via video conference now where it would've happened in person before. So long as everyone agrees to it and agrees to move forward that way, that is possible.
Now, where are people having a lot of extra complications in this process? Well, something that's just obvious is a lot of people are now stuck at home all day with their spouses. That may be you. And that can present a host of issues. It was one thing when you might see your spouse for an hour in the evening and you could get along relatively civilly for that hour in the evening, but now you are together 24/7, 365, or at least that's what it feels like. And whatever was going on is being accelerated, good and bad. But whatever was happening could be worse.
So just my tip during that is, I know everyone's situation is different, but to the extent that you can be civil, or have your own space, or be flexible, please try and do that. Not accelerate things. I've heard an increasing number ... And I don't have data on this point, but I've heard an increasing number of domestic violence issues, of child abuse issues, of lots of additional stressors just given everything going on, and I don't want that to happen to you. So if you have any hope of compassion left to deal with your spouse even though you're in the process of divorce, try and make that work, particularly when you are forced under the same roof.
Another consideration is that custody is a very complicated issue at the moment. A lot of you may be living under different roofs from your spouse and they're going through this process and you've been figuring out different custody arrangements and parenting schedules. Well, if you had a temporary schedule in place or you'd been working on something in an informal basis, I would say try and be a little bit more flexible with what's going on.
Now, there's some weird issues coming up as it comes to custody and parenting time. School is out, or school is being done virtually, or some hybrid of that that may be causing some issues depending upon who is the parent, what resources they have, what set up they have, and that may be causing some issues. So you need to be documenting these issues. I would say first, figure out if you can work them out between the two of you somewhat civilly before getting attorneys involved because it may not happen in the pace that you want it to happen.
The other thing that is happening is sometimes one parent is being more diligent about health mandates than the other parent. So I've heard stories already of where one parent is bringing a bunch of people over to the house with the kid present when they're supposed to be staying at home or avoiding gatherings, etc. And because of that, you might be worried about your kid's health and safety and increasing their increasing probability of catching the virus, or having complications from it, or just being around people who might be spreading the transmission of the virus. Well, that's something that you should not only document, but that is a good time to contact an attorney immediately to see what potential options are.
The smart attorneys that I know that I work closely with, they are already thinking about potential options for this scenario and helping clients. I know some attorneys haven't thought about it one drop. But if you get a good attorney, and I'll be doing some episodes on attorneys in the near future, a good attorney will certainly be able to help you navigate and come up with some creative options during this time when it comes to custody, handoffs, parenting time, etc, given that we are in an unprecedented scenario at the moment.
Another area I want to cover is support, child support, spousal support. Things could be changing for you. Just a month ago when I recorded this or when we were recording episodes, and if you're just thinking about life a month ago at the end of February, we had the lowest unemployment rate ever. And a month later passes and we now have the highest unemployment number, at least people out of a job, ever recorded by a big magnitude all in the span of about 30 or 45 days. What that means is that you or your spouse could very well be in a scenario where income-based support, it could be child support, could be spousal support, could be temporary, could be whatever, all of a sudden that is no longer financially feasible for you.
Now, there's a lot of things going on government-wise, economy-wise, just a lot of different moving parts. And so the question is, what happens with those orders that may no longer be based on financial realities? Well, there's a lot of things to think of. Also, some people were negotiating. I've talked to several people in the last week or two who were in the process of negotiating settlements and those settlements, all of a sudden, we had to change the strategy due to what was on the table and all of a sudden potentials for job losses or people who were out of the workforce, etc. That all of a sudden changed our strategy from a financial perspective in terms of what the best options were.
Here's the point, is that if you have an existing order, you should continue the status quo of that order. So if you're receiving payments, you should hopefully continue receiving that same amount that has been agreed to. If you're the one making payments, you should continue to make those payments that have been agreed to for the foreseeable future, assuming that they agreed to by the court in some form or fashion. If your job is the same, too ... I know some people who haven't been affected yet by the job issue. If your job's the same, your salary's the same, definitely don't do anything. But if you are in a position where someone's lost a job or on reduced hours, at least for the short term that plan should be to keep going under the current amount.
Now, there are things that you can do, particularly if you're the payer of support, is you can file to have that support reduced, especially given a job loss or unemployment for reduction in hours. And that has to go through the court process so it may take a few months, in which case the default recommendation is to keep things going for a few months. Then when that process works itself out, then you would pay the reduced amount. And if you're the person receiving support, I would also assume that the person who's the payer, be it spousal or child support, is going to be asking or looking for reduction in the near future and so you need to plan accordingly.
But I would say this, I would be very cautious. Now, I know some people are in a situation where they have to conserve every dollar that they can, otherwise they're not going to be able to make the mortgage payment, or the rent payment, or eat over the coming months. And if that's what you have to do, that's what you have to do. But to the extent that you can continue to make some form of spousal support or child support payment, particularly in the short term, you should do that, especially if it is ordered. But, everyone needs to be aware that things will likely be changing and people will have less in terms of money in the near future.
The other thing to remember is this is an unprecedented situation. It just is. I was talking to someone who was getting ... Well, everyone I talked to just about is going through the divorce process, and we were talking about what should you really be focused on during this process. And I said, "Hey, look, there's a lot that's going to be happening over the coming weeks and months. We don't know how it's going to play out. The economy's down. A lot of things are down. But remember this, is basically all of finances, even in a new reality, are you need to have your income be more than your expenses. Simple as that. Your income more your expenses, and then you need to have money saved for a rainy day." Well, now is definitely a rainy day.
I talk to lots of people in the past. And if you've listened to this podcast, I always say try and hold on to your cash. I'm very much biased, even in the best of times, that you need to hold onto your cash and stay as liquid as you can whenever you have that option because you never know when a rainy day is coming. And unfortunately right now is that rainy day.
So what you need to be thinking about is your lifestyle. You might need to be making adjustments in terms of what's relevant, what's not, and conserve every dollar you can. I would avoid paying down debt at the moment. I would hold on to your cash. You can refinance debt, but hold on to as much cash as you can in the immediate term because we don't know how bad things are going to get.
It depends on where you are in the country. I travel a lot so I get to ... so I know people all over and I'm checking in. All over the world as well. I mean, I have friends in over 80 countries, and it's a different issue depending upon where you are in the country and in the world. And if you're in the East Coast, or West Coast, or middle of the country, it doesn't really matter. Things are happening at different rates and different paces. The point is you need to be prepared for everything that is happening and even if you have to start making some immediate cuts. You should be doing those and thinking about what is going on in the near future.
But, there's a lot of things that are happening. I'll keep you updated as I have new information and I hear information from attorneys. I know some good attorneys who are putting out some information, particularly in regards to custody because that's the biggest thing that's happening right now. But, we don't know what the extent of things is going to be. We do know the world is moving online very rapidly and trying to keep up with as much as we can given the changing circumstances, but prepare for this to go on for several months.
And things are going to be delayed. It's going to take a long time to catch back up when the time comes, and so you need to be making those financial moves and preparations now so that you're not caught flat-footed later when some of these scenarios that we might have been thinking about hypothetically are actually here and are real and could cause some very substantial stress in your life.
In this episode, we have an interview with Susan Guthrie - Family Law Attorney, Mediator, and Host of Divorce & Beyond Podcast. Learn more about Susan here: https://divorceinabetterway.com/. Visit us at divorceandyourmoney.com for the #1 divorce resources in the USA and get personalized help.
In the beginning of the process, as you're doing your research, one of the most important things you can do is figure out what are your options and what are the best ways to proceed during the divorce process. And know that the traditional method of divorce litigation is not the only method that exists when it comes to the divorce process, and you may have options. There's mediation, there's collaborative divorce. But in this particular episode, I want to discuss mediation, and to do that, I'm bringing in a great guest.
Her name is Susan Guthrie. She is a family law attorney with over 30 years of experience. And she's going to give us an overview of some of the key things about mediation to think about. She'll describe the process really well in this episode. And the other thing that's interesting about mediation is that there's the possibility for online mediation. And so, there may be some advantages to that as well. So, I hope you enjoy the interview with Susan Guthrie and also be sure to check out her podcast. She has a really good podcast that's called Divorce and Beyond. So, without further ado, here's my interview with Susan.
Today on the show I have with me Susan Guthrie. Susan is a family law attorney, mediator, and a podcast host of her own. Susan, welcome to the show.
Thank you, Shawn. I'm so pleased to be here. Thank you for having me.
Susan, let's start with ... actually, I just want to start with the podcast so other people can listen to it. It's great. I recently did an interview on it. Why don't you tell us about your podcast?
Thank you. Yes, and by the way, your episode is doing very, very well. People are always interested in Divorce and Their Money, it's called, my podcast is, Divorce and Beyond. It's really focused on, I've been a divorce attorney and a mediator for 30 years, so I bring that insider knowledge to the divorce process, and bring experts on to help with that, such as yourself. But I also am very much focused on the beyond, because divorce is really a finite time in your life or I certainly hope that it is, and you have a future ahead. So, many of our episodes are focused on preparing for the beyond, preparing for your future.
Great, and I encourage everyone to listen to it. There's lots of great episodes on there and you bring a great collection of interview guests on there as well. That's really interesting.
Oh, thank you.
So, why don't you tell us a little bit about your background. I know you said you practiced for 30 years, but why don't you give us your credentials so to speak? So, we all understand who we're listening to.
I have practiced as a family law attorney and still do to some degree for 30 years. My original State of practice was Connecticut, and I was located there in Fairfield County for 25 years or so, with a pretty traditional law practice. Then, branched out on my own and started moving around the country. I moved to California first, so I'm also licensed to practice law there. But I also segued my practice over to mediation, and in fact, that's all from a divorce perspective that I do in the process of helping couples negotiate and settle their divorce issues. I now live in Chicago.
My practice is now entirely online, and I help people both through online divorce mediation services as well as legal coaching services around the world because I can do it online. I feel very lucky that I have been a divorce attorney and operating at a fairly high level. I dealt with a lot of high conflict and high net worth cases during my litigation practice. So, as you mentioned, I have access to a large number of really excellent experts because I've worked with them over the years in my practice, and I love bringing that wealth of knowledge and really that insider side of things to my listeners.
Yeah, I think that's great. You worked with a lot of high conflict people and now you do a lot of mediation work. Why did you make that shift?
Yeah. So, it was sort of two fold. But really what it boiled down to, and for anyone who's seen the movie that's out right now, Marriage Story, you will understand I think what I'm talking about. But I got involved in divorce litigation when I first got out of law school, because frankly 30 years ago, that's really all that was out there. The litigation process is very adversarial. It is set up on a party A versus party B platform like any other lawsuit. Unfortunately, when you're talking about restructuring families, that is not a very good model for success.
Unfortunately, that process actually drives people further apart, and then, when they find themselves post-divorce needing to co-parent or communicate, the animosity and the adversity that was brought up during the divorce and exacerbated during the litigation process really only makes it worse. It sets up an ongoing conflict cycle. So, mediation is an opportunity for parties to sit down, couples to sit down, and work together in a more cooperative fashion to communicate and restructure their family in a way that works best for all of them.
It's not based on that win lose model, and so now having worked in both formats, the reason I only do mediation at this point is because the results for clients are so much better.
Let's start by defining what is mediation versus litigation. Can you just give us an overview of what that means, what that process looks like, how it differs?
Sure, and actually that's a great place to start because there is a great deal of misunderstanding at times for people when it comes to mediation. I always hear it called the kinder, gentler way to divorce, or the kumbaya method of divorce. I will tell you, divorce mediation, like any process that you would go through to negotiate or resolve the issues of a divorce, it takes effort. It has its moments where it's not an easy process, but divorce mediation is based upon a principle of the two parties sitting down with a neutral professional, that could be an attorney like myself. It could be a financial professional.
I know a lot of professionals who are financial advisors, who also are mediators, or therapists, or other professionals, but they sit down with a trained professional who's there to help them identify the issues that they need to resolve in the divorce, to give them an understanding of the law, and context, and nuance around those issues. Then, really importantly, to support both of them in having the difficult conversations that need to be had on how those issues are going to be resolved, with an eye to identifying what works best for all of them. Again, we're always in mediation looking for the third solution.
We're not looking for the win for one side and a loss for the other. We're looking for that third solution that allows everyone to get as much of what they want on a needs base or interest based perspective, so that everyone walks away with a decision and with agreements that incorporate as much as possible what they've chosen that they can and cannot live with.
Let's give a concrete example of that, and I'm just thinking of, I want to just use a very simple case. Let's just say we have a house, a couple of retirement accounts, a couple of cars. How would I know when to use mediation and what would that look like for me versus going the traditional route and what would that mediation process look like start to finish?
The two processes, they look similar because any method that you're going to use to resolve your divorce is going to sort of go through the same stages. You're going to have the quantifying or the pulling together of information stage. In litigation, we call that discovery. In mediation, we call it information gathering phase, but then you're going to discuss the issues. Then, you're going to come to agreement on the issues in 95% of the cases. So, the difference with mediation is, in litigation everything is done on a compulsory manner and fashion. Motions are filed, requests for orders are made, requests for production are made.
Everything has time limits, and rules, and things are done because you are under court orders to do them. The difference is, in mediation, everything is done by agreement, including the fact that the parties are in mediation at all. Mediation is 100% voluntary as opposed to litigation, which people can be dragged kicking and screaming into, or if they ignore it, it's going to happen without them. So, the mediation process itself, just as a litigation case would start, does start with the information gathering. But it's not done in that fashion where you exchange compulsory requests for information.
We sit down with your mediator, with the two clients, and compile all of the necessary information by agreement that we're going to do that as a part of the transparency of the process. That has a lot of different effects. The biggest one being it takes much less time to pull together all the information because we are talking about what everyone needs to see, wants to see, and agreeing to pull it together. It's also much less expensive because the parties are not utilizing legal counsel, filing of motions, all of which that they pay their attorneys for.
It's usually much more successful, because nobody will drag their feet usually in the same fashion because, again, they've agreed that they're coming to the table to work through the process. So, in many ways, I've seen litigation cases where we have literally spent years, you mentioned a simple case where there's a house and some accounts, et cetera, that could take a relatively short period of time with that type of state to value things, because you have either written statements or you can get an appraisal. But when you get into some more complicated cases, or where there's a family owned business, or a cash business, or something of that nature, I've had cases drag out forever in the discovery process because it's so hard to get the information exchange, and that really just doesn't happen in the mediation setting.
You covered a lot of things that I have some kind of followup questions on. One of them that comes up, I hear every week or so is, oftentimes one party may not be as forthcoming as they should be during mediation. How does one handle that?
So, that happens. Definitely it happens in litigation as well. So, the first thing to remember is, because mediation is by agreement, both of the parties have a reason or reasons why they have agreed to come to the negotiation table in mediation. Mediation tends to move much more quickly than litigation, so maybe time is an issue for them. It's usually infinitely less expensive. Maybe money is an issue for them. Maybe they feel it's a better forum for working through the issues. Whatever their motivations are, that brought them to the table, are the motivations that will also compel people to be forthcoming with the information that is required.
Because what happens is if people do not come forth with requested information, the mediation process comes to a halt. Because if you are sitting at a table and one party does not feel they have the information that they need in order to make the decisions or the agreements that need to be made, the process can't move forward. You are putting people in the position, by making that choice not to be forthcoming, you're putting the other side in the position of having to take you into litigation.
Having to compel your discovery as we were talking about earlier with the motions, and the depositions, and all of that. So, usually, it takes the mediator reminding the parties why they're there, that this is a voluntary process. They agreed to be involved in it, and failure to comply with reasonable requests for information are just by necessity going to bring the process to a conclusion.
I think that makes sense. I want to ask some technical questions about mediation, or just some basic questions is, you're a mediator and you're also an attorney, do the parties also have their own attorneys? How does that work? Who's actually in these mediation sessions?
The majority of my mediation sessions are just the two people who are going through the process. That is not to say that they don't have outside consulting professionals, and I am very much a believer in the team approach to divorce. I think that everyone usually will need some sort of support as they go through the mediation or divorce process, whatever they're going through. That can include a consulting attorney, because as you point out, I am an attorney, but when I am operating as a mediator, I am not representing either of the parties.
That would be an ethical breach. You can't, as an attorney, represent both sides of an equation. There's a conflict of interest there. So, your mediator, even if they're an attorney, is there as a neutral professional to support both parties. But often, people will need some outside legal advice, and it can be very, very helpful to the mediation process for them to have a good professional that they can go to. Other professionals are people like you CDFAs. I highly recommend using a certified divorce financial analyst, or a financial support team, especially in those cases.
You mentioned that there are often one side of an equation in a divorce where they're not forthcoming with information. There's another paradigm that comes up all the time where we have one party who's pretty financially savvy and the other one who is not, and so, they feel very disempowered in making decisions. So, getting them some support by getting them a financial advisor or getting them a financial planner analyst, can be very helpful to the mediation process because it helps to support them and educate them as they go through. Another person that's often brought in is a therapist.
If we have parenting issues, and maybe we have an issue with special needs for a child or developmental issues around the child's upbringing. So, I very much believe in the team approach to divorce, the divorce process as a whole, and certainly in mediation.
If I'm thinking about the mediation process, sometimes people think, is it just one meeting in an afternoon, is it multiple meetings? How does that work?
Generally, it's a series of meetings. My mediations tend to be scheduled for two hours at a time, and that is because in two hours we usually can make some headway, start talking about real issues, and making proposals, and making agreements. But beyond two hours, it's an emotional context, right? You're talking about your kids, you're talking about your money, you're talking about separating all those things. So, the emotional content is very fatiguing. You are either in the same room, or if you are with me mediating, you're in the same Zoom meeting, and two hours tends to be where people sort of burn out.
And what I don't want is my clients making decisions out of fatigue, or just saying because they're just so tired and they want to move on saying, "Fine, I'll do that." Because what ends up happening is they then leave the mediation, that session, come back to the next one having thought about it and they will backtrack. And that's harmful to the process only because now we have trust issues, "Well, you said you would do it. I relied upon that and now you're backtracking." So, it's better to do it in bite sized chunks that you can process, take your time, and move through it.
Usually, it depends on the couple. It's usually a few three, two-hour sessions. It can be certainly more than that. I've had cases move faster. There are other types of mediations, so another type of mediation for family cases that people will be acquainted with is a case that's been in the litigation process all along. They're usually close to the courtroom door for trial, and they will, as what I call last ditch effort, resort, to sitting with a mediator for sometimes a full day session to try and resolve those last outstanding issues.
In those cases, usually the attorneys who have been representing the clients all along are involved, and those usually tend to be one marathon type, long day type session. But for people who start in mediation, their divorce process from the start is in mediation, usually two, maybe three-hour sessions and a few of those, but infinitely faster. I will tell you, most of my divorce mediations are completed before the sixth month. California has a six-month waiting period. Connecticut has a 90-day waiting period.
Those are my States of licensure, and we're definitely usually done by the sixth month mark in California, three months ... It just depends on the complications of the issues.
That's good to know, and if I'm sitting at home listening to this or wherever I may be listening to this, how do I know whether I can go down the mediation route? What kind of things should I be thinking about to say and maybe even conversations I might need to have with my spouse in terms of, "This is an approach that may work for us."
That's another great question, because that's one of my key things I want people to know, that your best approach to divorce is to try mediation in most cases from the beginning. Because if it doesn't work, you always have litigation to fall back on. That will always be there for you. But knowing that it's a possibility at the beginning and giving it a try for all of the reasons of all of the benefits that it has, is something that I love for people to know from the very beginning. So, some of the things to be thinking about are, do you have the ability to self advocate?
And if you don't feel that you do, can you find support to help you with that? There are a lot of amazing divorce coaches, legal coaches like myself. I work with a number of people going through mediation, helping them to strategize what they're looking for. I was just listening to one of your podcast episodes and you mentioned the question, what do you want? That's a huge question when you go into a mediation. You don't go into any process of divorce without knowing where you want to go, or the process is going to happen to you rather than you being an active participant in it.
But that's really the question, is do you have the wherewithal to sit down and do the work that needs to be done with the help of your mediator? And to bring your spouse to the table, people ask me all the time, "Well, I'd love to do mediation. It's less expensive, it's less stressful, it's less time consuming, it's less adversarial. All of those things, it's better. It helps us create communication pathways for our kids so that we can co-parent in the future." All of those are benefits and those are actually the things that help you to talk to your spouse about trying mediation.
Because the thing I always tell people is, the one thing that we do know after having been married to someone is usually what their interests are. And usually, there's one or more benefit of mediation that will appeal to them. Often, it's the cost savings. You and I both know the average divorce in the United States is in the 20s of thousands of dollars per person these days to litigate. Many people, even if they have that kind of money laying around, don't want to spend that kind of money on getting divorce. By the way, it can go much, much higher than that. Mediation is much less expensive.
It tends to be much less time consuming, less stressful. You have much more control over the process. So, knowing whatever you know about your spouse and what would appeal to them, that is usually the best way to approach them and ask them to consider the process.
That make sense, and can someone come to you for select issues in a divorce? So, let's just say there's 10 things to figure out and they agree upon seven of them, but there's three issues that they still haven't quite resolved yet. Would mediation work for that?
Oh, absolutely. In fact, I often work with couples who maybe have worked out the financial side, but they need help with the parenting plan or vice versa. They know what they want to do parenting wise, but there are certain issues on the side of the finances that they just can't quite resolve. So, you can bring limited issues to mediation. Any sort of any issue can be mediated. Many people who have gone through divorce but then after the divorce there's been a change of circumstances. Someone loses their job, someone gets a big raise, something with the kids comes up and you need to change your parenting plan because children aren't static.
I often mediate that post-dissolution type matter as well. The only thing I would caution, and I just don't want people, because attorneys and mediators are accused often of ramping up, making problems in a divorce that didn't need to be there. What happens sometimes, when a couple comes to a mediator or an attorney to work out issues and they think they've resolved a bunch of them, but they have a couple that still need to be resolved. The thing with a divorce settlement is it's a puzzle. It's not separate blocks of issues.
Everything works together, right? It's a family. So, the money, and the kids, and the house, and all of those things work together. So, sometimes the outstanding issues will have an impact on those issues that they feel they have resolved. So, some of those issues may need to be reworked or looked at again if they don't fit into the overall puzzle context. But, again, that's where mediation is great because you can sit down and talk about, in the broad picture, why maybe perhaps something that they thought they wanted to do isn't going to work in light of another aspect of their settlement that they also would like to accomplish.
Yeah, that's a good point, is that sometimes it's very hard to isolate particular issues in a divorce, because if you pull on one thing or adjust one thing, it can affect every other item.
It may work in certain cases, but you have to be open to shifting or changing other parts of the big picture when you do that.
Absolutely. I always tell my clients in mediation, I work off a written agenda. I find people like the visual of an agenda that outlines all of their issues, and then I take notes on it for them as we're going along. I always tell them, although an agenda is a linear thing and item one, item two, item three, and even if we're going to move through it in that order, it doesn't mean that we have to resolve issue one in order to move on to issue two. Often, it's, let's discuss issue one, come up with some possibilities, and then table issue one and work on the next issues because in the end, all of them need to work together.
As an example, someone often wants to keep the marital residence, and both sides may be open to that and may have reasons why they want that to happen. But until you get into the financial side, with support and asset distribution and debt distribution, you may not know if that person can actually afford to maintain the property. So, that's a very common question that will come up, where we have to sort of resolve the support issues and the financial issues in order to know if what they want to do with the house is actually going to work.
That's great. One last question, which is, at least as it pertains to the mediation, is you do online mediation work. I know you've done in person, of course, work as well. How do you find the difference between just the setting, be it a video call versus everyone's huddled in a conference room kind of atmosphere? Can you just kind of give us your pros, cons, thoughts about that?
Yeah. It's interesting because I do now have an entirely online practice, and I have to say, especially for divorce mediation, I've actually found that the parties having the ability to have a little bit of space, because they do not need to be in the same physical location in order to mediate online, that's actually been a benefit for most of my clients. That they feel more able to emotionally deal with the conversations that need to be had as opposed to sitting just a few feet away from each other in the same room.
I've had many people, when I had a brick and mortar practice, who would come and I would meet with a couple for a consult to just decide if they wanted to mediate. And in the end, it would come down to one of them saying, "I loved all the benefits, but I just emotionally don't feel like I can sit in the same room with my spouse and do this at this moment in time." Because as we know, divorce, yes it is a financial transaction, we're talking about money, et cetera. But in reality, it is an emotional transaction as well.
And so, the video context gives people a little more space, but still you have the ability to see the other person because 85% of our communication is visual, and most of that is our facial expressions and voice. What we say and how we say it, our voice inflections. So, much of that is still readily available in the online context. So, for me, in my experiences, it's actually been a benefit to the mediation process, and most clients are thrilled to be online. They don't have to sit in traffic. They don't have to get a babysitter. They don't have to leave work early.
I know you work online quite a bit and so you know some of those benefits. It has translated very well to the mediation practice. In fact, I train other mediators in how to conduct their mediations online, because this is such a quickly growing aspect of the mediation practice. My colleagues are fascinated by it.
Yeah, and I think that's one of the hardest things is when you are getting divorced, having to be three feet away from the person you're getting divorced from, staring right at them the whole time. It can make the emotional side of things amplify them quite a bit, just being in the same room. They're funny in retrospect even from the client's perspective, but a lot of times where someone yells, stomps out, runs out of the room, just can't stand being in person with that person they're getting divorced from.
It's divorce and it's not a pleasant process to begin with. This isn't a civil suit business dispute. So, I think there are a lot of advantages to the online perspective for people who might not have considered it as well, just from that.
Yeah, the ability to, in any way that we can, keep the emotional content a little at a lower level is beneficial to the process. Because the minute people start making decisions from that emotional place, from anger, from fear, from hurt, whatever, divorce unfortunately doesn't embody usually a lot of positive emotions. It's usually a lot of negative emotional content, and the higher that level, the harder it is for people to make rational reason decisions. As you know, these are decisions that are going to live with you, and your family, and your children for years to come.
So, you want to make them from the best emotional place possible, and I'm not saying that it's always easy. But another thing that I do is I incorporate mindfulness techniques into my mediation practice and encourage my clients to have a mindfulness practice if they're open to that, only because it does help. When the emotions start to rise up, to be able to take that step back and find some space. It's really important to be able to think clearly, and that's another reason, going back to where I said the sessions are usually only about two hours long.
I want people making decisions in a space where they feel that those decisions were good ones, or at least made from a reasonable place and that they can live with them.
That's excellent and thank you for coming on and explaining the basics and the essential parts of mediation. It's not a subject that I talk about too often on my podcast. Why don't you give us the best way to contact you and to learn more? Hopefully, have people potentially work with you in the future if mediation or other services are right for them.
Absolutely. Pretty much everything about me can be found on my website, which is divorceinabetterway.com. My email is email@example.com. I encourage anyone who's going through divorce to take a look at the website. I have a lot of curated resources, most of them free, or special discounts that guests on my podcast have offered. I have your book going up on my website shortly, so that people can find it who have listened to the podcast, or go there. But I like to bring as much information to people because that is so empowering in the divorce process.
Get your education, get your information. So, divorceinabetterway.com, and then also the podcast has its own website which can be found through Divorce in a Better Way, or at divorceandbeyondpod.com.
And outside of mediation you were telling me you do a few other services. Just so people can know, can you describe those?
Yeah, so one of my biggest areas of practice at the moment is legal coaching, which is a little bit different than divorce coaching, because what I'm doing is getting involved in cases. Usually, they're either high conflict cases, where someone is dealing with a high conflict ex that can be a narcissist, a borderline personality disordered person, or just someone who is very difficult to deal with, or high net worth cases. I'm helping the client to learn to manage those relationships, manage the communication so that they can have as much control over their lives as possible.
I help with strategizing, with negotiation strategies. I've been a divorce attorney for 30 years. I negotiate every day of my life. I have to stop myself from doing it in the grocery line because it's so second nature for me. But your average person, unless they have negotiation in their business life, that's not a normal, that's not something that many people are comfortable with. So, I work with just a lot of clients on how to identify what they want and then how to strategize and negotiate to get that in the divorce process. I work with people all around the world in that context. I have clients across this country, Australia, Europe, Canada, all over.
Well, Susan, thank you very much for coming on the show. I really enjoyed the conversation and I hope the listeners will, too.
Well, and thank you so much for having me, and thank you for coming on my show. Again, I loved that episode and so do my listeners. So, thank you.
Now, before you go, I want to make sure you get some really important information. I'm going to tell you about a few things that maybe of interest to you. First as a favor, is if you could leave a review, if you're on the iTunes store, leave a review on iTunes, or if you search Divorce and Your Money on a website called Trustpilot or on Google, you can leave a review there. It's quick, it's anonymous. It only takes a few seconds and I really, really appreciate your feedback. I have lots of reviews on iTunes and on Trustpilot, and I appreciate hearing your stories.
Also, on divorceandyourmoney.com, you can get lots of great information. Of course, you can book a 30-minute strategy session directly with me. There's two types of strategy calls you can book, just a normal strategy session, where we discuss the questions that are most pressing to you regardless of where you are in the divorce process, be at the beginning, towards the end, or in the middle. It doesn't really matter. There's lots of great information we can cover during that strategy call. Also, we have a document review call.
It's been one of the biggest things that we've done over the past year, which is you can send me your documents, be it your financial affidavit, a settlement agreement, or other documents that you would like for me to review. Then, I review those in advance of the call and then we get to discuss them in-depth as part of a strategy session and get specific answers to some of the specific documents and things that you are considering. Also, for those who need ongoing support, we do have a few options for ongoing support, but regardless, it all starts with a coaching call that you can book at divorceandyourmoney.com.
Don't forget to also get a copy of my new book. It's called Divorce and Your Money: How to Avoid Costly Divorce Mistakes. It's available on my website, or also on Amazon. You just look me up and make sure you get the new edition. It is filled with excellent information regarding the divorce process, and I know that you will find it helpful. Once you've read the book, be sure to leave a review. That really helps me. I appreciate your feedback and it also helps other people as they try and find this information. And finally, last but not least by any means is on the store at divorceandyourmoney.com, if you click on the store button, you can get access to the full archive of podcast episodes.
There's over 200 episodes, and what's great about the store link is that the episodes are organized in neat buckets, and they're organized by topic. So, it's very easy to follow along with the information, and it is easy to pick out the key topics that matter most to you. You can get all of those podcast episodes in the store. Thank you so much for listening. I'm your host, Shawn Leamon, MBA and Certified Divorce Financial Analyst. Take care.
In this episode, we're continuing the series on the top 10 divorce tips, and I want to go through tips number seven through 10. In the previous two episodes, I went through one through six, and now we're going to go through the last four.
Tip number seven is keep your spouse from spying on you. What do I mean by this? Well, one of the things that's really important, whether you're planning for divorce or going through divorce is, or even after divorce, is making sure that your private information remains private. And that means you don't necessarily want your spouse to have access to your emails or your computer or all the sensitive communications that are going on during the divorce process and afterwards.
And you want to start setting up your own independent online accounts so that you can keep that information private. And I don't just mean online accounts, I also mean physical accounts as well.
So specifically is, I'll start with some electronic things. So you're going to want a different phone number. It's not good when you see X, Y, Z Divorce Firm popping up on your phone and your phone bill. So if you can set up or even better yet, get a new phone just for divorce communications, that's a good idea.
And the nice thing is, is that a smartphone these days is pretty cheap on Amazon or if you go into the store. And so you can get a phone for $25, $30.00 a month, and that allows you a new phone number, new way to communicate and a very private line for all of the various private things that go on during the divorce process.
I encourage you to consider getting a new computer. It's worth it to get a new tablet or new computer. Also, not a very large investment these days, so you can surf, do all of the relative online things with privacy and not be tracked by your spouse.
Definitely get a new email address. If you use AOL, go to Gmail. If you use Gmail, go to Yahoo. If you use Yahoo, go to a different service. One of the things that happens all the time is your spouse may have access to your emails. And something that happens all the time with the phone is that your phone's linked to an email account, so when you take a picture of a document or something, all of a sudden that picture shows up on all of your devices that your spouse is going to login to their pictures, and they'll be saying, "Oh, new picture added." You'll have a picture of a retainer agreement or picture of a financial document or a picture of something else. And if you don't have all of these things separated, you're going to unintentionally be providing your spouse access to everything.
So non-online things is get your own bank account. If you are at a bank, like Bank of America, get an account at a different bank. Go to Chase, go to Citi Bank, go to whatever your local bank is, a bank that you don't traditionally use. Because all too often, and I this every week, is where a bank teller starts sharing information about accounts they shouldn't be sharing information on, because you're still banking with your soon to be ex-spouse.
Get a new physical address. It's very easy to set up a P.O. Box for mailing things or one of those mailboxes at a UPS store, very cheap, very easy to do. And you don't have to keep all of these things permanently, but during the divorce process, very well worth doing.
And also monitor your credit report, just to make sure that there's no new accounts being added or new cards being taken out, just making sure that you understand that you have all of the right information. So that's tip number seven.
Tip number eight is avoid court, if you can. I talked about this recently in an interview that I'll be sharing with you in a few episodes. But one of the things that you should try and avoid is don't think that judges have your best interests in mind. Don't think that you're going to have lots of time in court. Don't think that it's the ideal place to get things resolved.
If you're in a position where you can avoid going to court, going to trial, spending tons and tons of money, fighting it out till the bitter end, and also ending up with an even worse result, I would suggest you do that.
Sometimes court's inevitable, and I talk about in my new book, some things about court that you should keep up with. But if any way that you can stay out of court and come to resolutions on issues, you will save time, money, emotional energy, and a lot of other from avoiding the court process.
Tip number nine is stay involved in your divorce process. This is an important tip, because a lot of times you'll have this opinion, you would have spent hours searching for the best lawyer getting recommendations. You hire someone, maybe you hire the most expensive firm in town, or you hire the most aggressive person, or you hire whatever and you say, "All right, my lawyers got this." Well that's not true.
I say this all the time is, "You're the CEO of your divorce process, and you have to make sure that you stay involved with every step along the way." Now sometimes staying involved means checking in. You should be hearing from your various people that are helping you through the divorce process, every couple weeks to make sure you know your case is on track, and you're not missing anything. Hopefully, they're checking in with you, but if you don't hear from them, all of us are busy people, definitely check-in. Make sure that things are going the way that you expect them to.
You have to be the project manager of your divorce, the CEO of your divorce, is make sure that all the things that are supposed to happen are happening. And sometimes things fall through the cracks, but if it does, it's your job to make sure that you put them on track and continue to stay on track.
And the last point in the top 10 is get an experienced divorce attorney. I'll be talking about this particular one in future episodes. Of course, I've talked about it on previous podcast episodes, but those are very important. It's very important to have an attorney help you, even if it's just for parts of the process. It may not be the whole thing.
So in summary, I'm just going to give you a quick recap of all 10 tips, and these are the must follow tips as you go through the divorce process.
One is, face reality head on. Two is, know you got this. Three is get organized, one of my favorite tips, and one of the most important ones. Four is, keep the big picture in mind. Number five is understand your expenses, also another favorite tip of mine. Number six is to create a marital history. Number seven is keep your spouse from spying from you. Number eight is avoid court if you can. Nine is make sure you stay involved in your divorce process. And ten is get an experienced attorney.
Thank you so much for listening to this series of episodes. Make sure you listen to all three. They're very valuable, as you go through the divorce process and lots of great episodes coming for you soon.
In this episode, we're continuing the series on my top 10 divorce tips, and I want to just jump in to the next ones. Tip number four, so if you didn't hear the previous episode, I gave tips one through three. Number four is keep the big picture in mind. If you know or ever heard of Yogi Berra, he has a funny quote that I like that says, "If you don't know where you're going, you're going to end up someplace else." And the point is with keeping the big picture in mind is what do you want? One of the questions that I will ask everyone if they don't have a clear answer for is what do you want out of life? What do you want out of the divorce process? Clearly things are going to be changing during the divorce process, and given that, you need to have some goals, some things that you're aiming for.
Start envisioning what your future looks like, and what I encourage is I encourage writing down your priorities. This is an exercise I go through every week, and I do it for me personally, but this is something you should be thinking about and thinking hard about, and it is, I usually ask two questions for if you're going through divorce. One is what are the three most important things that matter for you in the future? And secondly is what are your three most important goals for your divorce? The point is this, is if you think about your future and think about what your life may look like or what you really want to get out of life, you might not have concrete answers. Sometimes it might be a well, I want to be able to support my kid until they reach this age or get off to college, or maybe I want to start a new career, or it may be I want to pay off some debt and start fresh. There's any number of potential goals you may have. It may be I want to move. I've talked to a lot of people who say, well, I've been thinking about where I've lived isn't the place I necessarily want to be. I've been thinking about moving to some other place.
Whatever that is, it's worth writing down your goals and ultimately then sharing them with the people who are here to help you. Because one of the things that we can do, your attorney can do, you can do, is really guide yourself and guide the divorce process so that people are working towards the goals that matter most for you. And oftentimes in the divorce process, you have options, and one of the most valuable things that I think that I do and that an attorney can help you with is, hey, you have this pool of assets, but there may be five different ways to split them up that gets you to the same place, but maybe way number four is the one that actually gets you to the goals that you're aiming for. But if you don't know what those goals are and you're not able to share them, it's hard for all of us collectively to get you on the right path.
The next tip, which is tip number five, is one of my most important and one of my favorite tips when it comes to the financial side of things, and that is understand your expenses. I have a line, so I've written I guess three books at this point. One of my first books is more general financial advisor related, but I have a line in there which is one of my favorite lines. It says expenses are guaranteed, making money and investment and income is not. And so what I mean by that is that you have a fixed base of expenses. Some people call it a monthly net, monthly nut, some say it's just your expenses, but it's your housing, your car, your food, your activities, your clothes, just the normal way that you live your life. And most people don't sit down to understand, well how much do I need to cover my expenses each month?
Now, I do know some of you who know offhand, and that you know that every month you spend $8,000 or you spend $24,000 or whatever the case is, and you kind of have a pretty good idea, but most people have no idea how much they spend every month, and it's usually a shock to once you sit down and figure out what your expenses are. And so one of the things I really encourage you to do is to understand your expenses and your expense picture as you go through the divorce process and figure out what areas you might be able to cut as you go down later. Now if you complete a financial affidavit, in many states the financial affidavit or statement and net worth statement has and requires some very, very detailed expense information. And while it's admittedly a pain and perhaps kind of overwhelming to fill out that information, on the plus side, that information is very helpful when it comes to planning your future, because you'll have a baseline of like, hey, here are all the things that I've been spending on. Do these expenses make sense? Can I continue this lifestyle afterwards, or most likely, for most people that I talk to and work with is, is that you'll have to make some adjustments.
But that's okay. At least you know. And so one of the next steps I really encourage everyone to do is an exercise also that I personally do, even though I'm not in the middle of a divorce, but I do almost every month, is really understand all of my expenses. In my book Divorcing Your Money, How to Avoid Costly Divorce Mistakes, I have a great checklist of expenses that you should go through, everything from housing expenses, food, clothing, entertainment, insurance, medical expenses, transportation, debt service expenses, be it credit cards or otherwise, if you have education or child related expenses. Kind of list out the things that you should be thinking about. But like everything, when it comes to expenses, you don't always have to over complicate it. One of the things I do, and I've said this before, is I always just start with a blank sheet of paper.
I carry around stacks of blank printer paper, because that's what works for me. And I also carry around a notebook that has blank paper in it, and I just start listing things out and I say, hey, that expense is about $250 a month, that Netflix is $12 a month, this is whatever. And I just start adding it out on a monthly basis and then start figuring out, oh hey, I've got to get my car serviced once a year, which costs X amount. I had some maintenance issues on my car this year with some tire replacement. So I figure that's every few years, and I kind of plan that out. But I just, I know what my housing costs every month, electricity, water, et cetera. And I just list those things out and figure out, okay, well I spend this dollar amount a month, so it means every month just to stay even, I need to make at least this amount.
When you do this, I've worked with people of all income levels, from people who make $20,000 a year to people who make $20 or $30 million a year, and we still go through the same exercise in the same way and 100% of the time the answers are surprising to those I work with, because you're not used to looking at how much you spend, and when you really do list out all of the things that you spend money on, it will help you really figure out, well, what do you need? What do you not need as much? I spend a lot of time thinking about small subscriptions, be it a $10 a month or $20 a month thing, because I started looking at them as like, well, if I spend $10 a month, I'm probably not going to cancel that subscription. So let's see, $10 a month for a year is $120, and if I probably keep that subscription for five years, that's a $600 expense. So before I sign up for something that's $10 a month, I say, hey, is this really worth $600 to me? Because even in the short term, it doesn't feel like much every month, but in the longterm that certainly adds up. And so it's really worth thinking hard and listing out those various expenses.
Finally, one more tip that I want to get into for this episode is creating a marital history. Now, I've talked about this on the podcast before, but it's an important topic and it's worth doing, and very simple, is that you should list out all the key events when they happened in your marriage. They can be financial events, they could be relationship milestones, they could be kid related things, they could be educational related things, but what I do, it can be real estate transactions, whatever the case is, but the goal is to create a timeline. Now, why do you create a timeline of everything that happened during the marriage? Well, I put dates, could be specific dates, could be month and year. It could just be year, if that's all the information you have at the moment.
But the importance of the timeline is that when you have a timeline, it can help you in that when you have other professionals working with you, be it your attorney, be it a financial person, be it a mediator, be it whomever, they can walk through this timeline and they will be able to see, okay, I'm starting to get a picture of how the relationship started, the key events in the relationship, and in the span of five minutes, we can figure out, all right, here's a pretty good way to catch up on the last five years, 10 years, 30 years or more of marriage and understand it succinctly, rather than when you try and tell it to us, it's easy to get sidetracked. It's hard to keep everything straight. It's easy to forget different events, but when you have just a timeline, it's easy for us to say, okay, here's the key things we need to be thinking about in mind, and here's better ways that we can understand this history and therefore inform how we approach the strategy and execution of the various elements of the divorce process.
Now, when I talk about a timeline, people ask, well, what format should it be in? Does it need to be notes? Does it need to be ... I say, whatever works for you, so long as it's easy to follow. The important thing about a timeline is that it's in order. So one of the things I like is an Excel spreadsheet where one line or one column is the dates. The second column is just a short description, a sentence, two sentences, maybe three sentences at most, of what happened and why it's relevant, and in an Excel spreadsheet, it's easy. If you have a Word document, you just put it there and organize it.
The point is there's no need to over complicate it. It's just so everyone knows what's going on, and it's very useful looking back even for you as to many of the things that happened during the course of the marriage, and keeping them succinct, because if you get into them, there's oftentimes a lot of contexts you want to share and and oftentimes it's too much too soon, but you don't necessarily need to get into all of that immediately and right away. So one of the things I recommend is just keep it succinct. If there's something that your attorney is going to have more questions about or that that I'm going to have more questions about, or your financial professionals or an accountant or a business valuator, whoever it is, is going to have additional questions about, we'll ask. We know what to look for. Some things might not be relevant to us, but it all just helps, and we can distill down a lot of information quickly when you start preparing this marital history, this marital timeline of all of the key events, be it emotional, financial, family related, et cetera, that occurred, and it really helps us and helps us help you a lot better.
So the three things for this episode, is keep the big picture in mind, understand your expenses, and create a marital history. And in the next episode, I'm going to cover a few more important tips out of my top 10. We've covered the first six, and we will get into just a few more in the next episode, and some really important ones.
In this episode and the next couple of episodes, I want to get into the top 10 must follow divorce tips. I want to cover a bunch of different areas quickly so that you can... If you only have to focus on 10 things, these are the 10 items to focus on. And I'm going to cover them and get into them, and in this episode I want to cover three areas of the top 10 in particular. The first is face reality head on, the second is know you can do this and the third is to get organized. The first tip is to face reality head on. When it comes to divorce and it comes to planning for a divorce or being in the middle of divorce, one of the things that you have to think about is understanding and accepting that this is happening.
Yes, it's happening to you. Yes, this is your life and this is real. And many times during this process, it can be easy to want to feel denial. Feel like you're not going through this or not want to deal with the hard and harsh reality of a relationship and maybe you want to bury your head in the sand, not accept what's happening. Maybe you're overwhelmed or anxious or depressed or filled with emotion. And unfortunately, when it comes to making decisions during divorce, particularly financial decisions, but much of many of the decisions during divorce, is you need to face the reality head on and accept that it's happening and put your emotions to the side. And even though you feel like you may have or you may have a lot of emotions floating around, when it comes to making the best financial decisions, whether you keep a house or retirement account or when to divorce or how to best protect yourself, emotions can't really play into it.
If you want to end up in the best decision possible, you have to treat it like you would a business deal. Now, it doesn't mean that you can't work through your emotions, but those are for a therapist, those are for your friends, those are for your emotional support team, but when it comes to your financial team and making financial decisions, accept it's happening and now, okay, the divorce process is happening or about to happen, what can I do to best protect myself, my kids and my future?
The second tip when it comes to the top 10 tips is understand that you got this. You have to keep in mind that the decisions that you make today are going to potentially affect you for the rest of your life. And so understand that also, you're going to get through this. Divorce in most cases last six months, a year, two years for most people, and then you're going to have the rest of your life ahead of you. And even though this may be the first time and hopefully the only time you have to go through this process, you probably have most, if not all the skills you need to get through it and make it through in one piece. And the phrase that I like to say when it comes to divorce is you have to treat yourself like you are the CEO of your divorce process. You are the chief executive officer. You are the conductor. You're the person they're in charge and making the key decisions as you navigate your life and you navigate all of the different complications in the divorce process.
Now, some of you listening, I know because I talked to you are the CEOs or are executives in companies, in which case although the situation is personal, deeply personal, you're used to making hard decisions on a daily basis, just this time it applies to your life. Others, you might have been a stay at home parent or may not have been involved in the finances or just may feel overwhelmed with the divorce process, but the funny thing about it is 100% of the people I've ever spoken to, worked with, talked to through the divorce process, have the skills to navigate through this process even if they don't feel like they have the skills to navigate the divorce process and make those key decisions and be the CEO of the divorce process.
I'll give you just a very simple example is if you are a stay at home parent, you've probably been used to running the family. You are the CEO of the family, making sure the kids got to the right place, making sure all of the appointments were handled and their lives ran smoothly. And so you may have been the CEO for the kids and the family and so it's taking this very, the skill set that you have, you may not realize you have and applying it to this really difficult and challenging area of your life, but you already have those skills. And so it's just realizing that you have those skills, those capabilities, and it doesn't mean you have to go it alone. It doesn't mean you can't get help. A good CEO has help for various divisions, so it might be legal help, might be financial help, might be emotional help, might be help with a specific issue as it comes to the divorce process. Being a CEO is not a solo job necessarily, but it does mean that you do have the power, the capability to get through this process.
And the third topic is get organized. Third tip is get organized. One of the best, most helpful things, whether you're at the beginning of the process, in the middle of the process, is just having everything organized. In fact, myself, I spend much of December and January just organizing my year because once you do it and get most of it done, it's very easy to formulate plans of attack going forward. But if you don't, if you're disorganized, it's very hard to make decisions, know where to go, be able to check to make sure you're on track with certain things, to formulate a plan, and there's a lot of different elements related to just getting organized the first time. In fact, I've spent the last two weeks and I still have another week where I am literally just spending every day, a few minutes a day organizing everything from last year and my plan for this year because that's how important it is and it makes the rest of the year regardless, I know there's going to be challenges and hiccups, but it makes it go much smoother.
And so in my new book, Divorce and Your Money, called How to Avoid Costly Divorce Mistakes, right in the beginning of the book around page 20 or so or 21, 22, is I have a really good getting organized checklist, and it covers all of the different documents that you will need to start thinking about as you go through the divorce process and I encourage you to put together a binder or if you use computer, electronic folders with all of this information, but when you get organized for divorce, it's things like when you got married, your kids' names, personal information, social security numbers, stuff like that. Just the basics, but it also includes things like listing out your major assets. When did you acquire them? What dates did you acquire them?
It has information like getting tax returns, income statements, pay stubs, things like that. Employment records, whether you have stock options. I talked to a lot of people who have stock options or incentive compensation, financial records like bank statements, investment account statements, loan statements, whether you have pension plans, there's lots of different financial details to gather regarding retirement accounts, debt, getting your credit cards and most recent credit card statements together, real estate statements, figuring out home values, mortgage balances, et cetera, but what I encourage you to do is gather up all your financial information, put it in a folder or save it on your computer somewhere, save it on a thumb drive, and when you have it organized, it's something that you can, once you... It will take you some time to sit down and gather all of your documentation and put it in the appropriate folders and file it appropriately and determine what you have and make sure you have it.
It will take you several hours, but once you have it, whether it comes to working with a divorce attorney or working with financial team, be it someone, a certified divorce financial analyst like me or an accountant or your home appraisal person, whoever is helping you during this process, you'll have the information ready and if you need to find something else, you already have such a good base. It'll make the process, all things considered, smoother and easier for everyone involved, not just you when you get organized up front. And so one of the favorite parts of my book is just there's probably five to eight or 10 pages of all the different documents you can do or you can gather to get organized and formulate a document, be it a folder or an electronic folder of information when it comes to the divorce.
Because one of the things your accountant may ask you or one of the things your attorney's going to ask you or that I might ask you is, "Hey, do you have the account statement from December, 2019, the year end account statement for your IRA account from fidelity?" And because we want to figure out the value and what to do with that state, what that account or get an approximate value for it. And if you have that information handy, it makes it very quick for us to analyze and know what to do with something versus, "Oh, hey, let me dig it out." And in two weeks you finally get access to the account. But if you have it upfront, it'll make things much easier.
So those are the first three tips in terms of my top 10 tips to start the year and top 10 tips for getting divorced that you should follow as you think about going through this process. And just a quick recap, first is, look, face reality head on. It's happening, deal with it, accept it. That's that. Second is even though you understand that it's happening and it's going to be hard, it's going to be really, really difficult. Know you've got this. This process will end. You will get through it. Take it a day at a time, take it a minute at a time. Sometimes take it a few seconds at a time, but you will get through it step by step.
And then the third thing, at least for this episode, is get organized. People who are organized, it will just make the process much smoother, much more efficient. You'll save a lot of money and time just from the organizational process. The more you can do the better. And it is one of my most important tips in terms of everything is just getting organized even if you just got organized and handed those documents off to your attorney or to me, or to whomever and just said, "Just take it." It is much better to have a set of organized documents than nothing at all or a bunch of scattered and sporadic documentation.
Get the new book here: https://divorceandyourmoney.com/book/
Ending a marriage may be the most challenging life event you will ever face. Whether you’re contemplating divorce or in the middle of one right now, you need to be prepared to face the tough questions:
If you’re overwhelmed by the prospect of divorce or you’re simply fed up with one-size-fits-all online articles and advice, you need Divorce and Your Money: How to Avoid Costly Divorce Mistakes.
Written by Shawn Leamon, MBA, Certified Divorce Financial Analyst, and host of the #1 divorce financial podcast, Divorce and Your Money, this no-nonsense, user-friendly guide provides a complete plan for facing the tough decisions in your divorce.
Shawn’s work has been seen in Time, USA Today, Yahoo! Finance, Nasdaq, San Francisco Chronicle, and many other publications across the United States. His website, DivorceAndYourMoney.com has over 1 million viewers and his podcast has over 500,000 downloads.
With the practical strategies outlined in Divorce and Your Money, you will take control of your divorce, your money, and your future. Learn the essentials of planning for your divorce, like how to choose the right divorce strategies, determine if your attorney is fighting for you, and how to move forward to benefit you and your family.