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Archive for the ‘Money Issues’ Category

We just read the article If the Reason You Earn Money is Just to Spend it, You will Always Financially Struggle on thesimpledollar.com. Of course he’s right. If you look forward to your paycheck so you can get the latest or a bigger this or that, be seen here or there, or go wherever, instead of using it for the essentials and then saving the rest, you will always struggle financially.

But even though that registers mentally, for some, spending money is tied to emotions. For example, I (Tracy) definitely spend more money when I have a job I don’t like or live in a place that doesn’t excite me. My money isn’t buying things. It’s buying happiness. (Yes, I’ve actually analyzed this.) When I’m happy it’s much easier for me to think about where my money is going and to control it.

During a divorce or separation ,one household becomes two. And items that your partner used to pay for (or at least their part)  will have to be paid for by you, or else disappear from your life. This is no time to go on a wild spending spree. Yet, this might be exactly when you fell most like doing it to make you feel better. To buy happiness.

If this sounds like you stop. Don’t make impulse buys. Sleep on it. It’s amazing how something you just had to have in the store is the last thing you think about the next day if it was a “want” and not a “need.”

Also think about what you won’t have if you buy that shiny new thing. Food, the ability to pay your electric bill, money for gas, money for car repairs, rent? You get the picture.

Think about what your money is really buying. And if it’s happiness, believe me, there are free ways to achieve that (exercising, listening to music, being with your real friends, doing something for someone else, for example).

P.S. If it’s social status and that really makes a difference to your friends, are they really your friends? Think about it.

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Christmas gifts.

Christmas gifts. (Photo credit: Wikipedia)

We know that that it’s the thought that counts, but after the thought, you still may have gifts hanging around the house that you just, well, don’t want need. And these gifts can be a burden in two ways if you in the midst of a separation.

1) They add to the things you have to pack if a move is in your future; and

2) They could be replacing things that you do want like other items or cash, both of which can be very valuable if you’re strapped for money due to a separation.

The good news is that by doing these 5 things, these gifts can keep on giving to you. Here’s a list as seen in the article,

5 Smart Ways to Turn Unwanted Gifts Into Extra Cash by Elyssa Kirkham (GoBankingRates.com).

1. Return Unwanted Gifts

Great for: gifts for which you have the receipt and/or know where they were purchased.
Go ahead and ask gift-givers for copies of the receipt if you need them; it might feel awkward, but if they are in a true gift-giving spirit, they will probably want you to end up with something you love. If they don’t have the receipt, you can still try and return the item as long as you know where it was purchased.
How to Return Unwanted Gifts

It’s easiest to return an unwanted present if you have the gift receipt, but there are ways to get around this.
Stores with the best return policies will accept returns or exchanges without a receipt, including Costco, Walmart, Target, Nordstrom and Macy’s. Most stores will require a valid government ID, such as a driver’s license, however. Additionally, many stores will only issue store credit for returns without a purchase receipt.

2. Resell Unwanted Presents

Great for: gifts you are unable to return, valuable or popular products, and gift cards.
If you can’t return an item, you can always try selling it. You might not get the full retail value in return for the item, but cash in hand is better than having to figure out what to do with an unwanted gift.
How to Sell Unwanted Gifts

There are a few venues you can try to resell your extra holiday goodies. The obvious choice is to sell the item yourself, through listing services such as Craigslist or eBay. This is a particularly good choice if you have items with a lot of inherent value, such as name brands or in-demand electronic devices.

If you aren’t up for the risk, responsibility or hassle that comes with selling directly to buyers, you can try the “Fulfilled by Amazon” service. You simply send in your unwanted items to Amazon, which in turn warehouses them and includes your price on the product listing. Once a buyer is found, Amazon will handle all the shipping and give you a check or credit after taking a small cut.

Lastly, if you were given a gift card to a store or restaurant you’re unlikely to frequent, there are several services that make it simple to get cash in exchange for your unwanted gift cards. Some top-reviewed sites to sell gift cards include CardPool.com, GiftCardGranny.com, Raise.com and CardHub.com.

3. Regift Your Holiday Loot

Great for: generic gifts like gift baskets, consumables (check expiration dates) or gift cards.
If you get a duplicate gift or already own a similar product that isn’t worth enough to sell, it could be the ideal candidate for regifting. Examples include accessories for electronics, entertainment media, jewelry, and health and beauty products.

How to Regift Unwanted Presents

Consider if there is anyone you know who you think would appreciate or use the item you have. If it is specific to your interests, such as sports memorabilia, chances are there is a family member or friend who is a fan of the same team. Just make sure to follow proper regifting etiquette to avoid any uncomfortable scenes.

Once you’ve decided who to regift the item to, label it with a Post-it with a reminder of the intended receiver’s name and occasion (i.e. birthday gift, anniversary, house-warming, etc.).

Items that have general appeal are ideal for regifting, as they can be given to a wide variety of people. General items can be kept on-hand as easy, last-minute gifts for any occasion. When an occasion comes up that calls for a gift, you’ll already have an item ready to be wrapped and given away.

4. Swap It For Something You Want

Great for: entertainment media, gift cards and apparel.

How to Swap Gifts You Don’t Want for Ones You Do

Gift-swapping parties are a great way to switch out something you’re not crazy about for something you are. One person’s trash is another’s treasure, after all. Arrange a get-together with friends or family and ask them to bring items they were given that they don’t love. Then guests can mingle and check out each other’s loot, and agree on a fair exchange.

If you would prefer a swapping system that is more automated, there are several swap sites out there to help get the job done, such as Swap.com or SwapAce.com for entertainment, and SwapStyle or ThredUP to sell or trade apparel.

For exchanging gift cards, try CardPool.com, which allows you to trade gift cards as well as sell and buy them.

5. Donate it For a Tax Write-off

Great for: unwanted toys, clothes and anything you feel would help someone in need.

How to Donate Gifts

There are several charities that will take gift donations, including Goodwill, the Salvation Army and Toys for Tots. In addition to those larger charities, many churches, synagogues and homeless shelters are in constant need of clothing, food and toys for needy families in their area or people without homes.

Donating gifts is a wonderful way to help those in need, but could also help you with your end-of-year finances. Many donation centers, religious institutions, educational charities and welfare foundations are 501(c) charities, which means that your unwanted Christmas present can become a tax write-off, potentially increasing your tax return next year. To make it easier to write off the donation, make sure to ask the organization for a receipt that denotes the value of the item given.

Do you have any other ideas?

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Personal Budget Plan

Personal Budget Plan (Photo credit: Wikipedia)

Divorce creates the need to gather and track lots of financial information.

  • Your assets make up one set of financials.
  • Your expenses as you go through the divorce make up another. These may include money that you’ve spent on expenses the you should not have paid.
  • A final set may be based on the budget you may create.

This means that there’s going to be lots of numbers and papers floating around. How do you keep track of all this necessary paperwork during a time when you have so much other things to deal with?

Well some of you may already be using a spreadsheet to track the numbers. Still, you have to take the time to put everything in.

And then some of you may be scanning receipts and other financial documents to keep them all on one place, but you still have to take the time to enter numbers into your spreadsheet.

Wouldn’t it be great if you all you had to do was scan and then have the data automatically be converted to your Excel spreadsheet?

Well, there is — with a PDF to Excel converter.

Now we just heard about this and haven’t tried it ourselves. But it sounds like a great productivity tool and a good way to keep track of all of the financial data that can play a big role in the divorce process.

It seems as if you can buy these converters or get free ones online.

Have any of you tried this type of product? What tools do you use to keep track of financial data?

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Here’s the gist…

On Wednesday, Britain’s top court ruled against an oil tycoon in a divorce case. The ruling stated that he has to give his ex-wife assets held by companies he owns.

The implications…

Alison Hawes, a specialist family lawyer at law firm Irwin Mitchell, said the ruling meant “that business people cannot deliberately ‘hide’ their assets in businesses and corporate structures to protect them in the future in the event of a divorce.”

The court insisted it wasn’t establishing a general principle allowing courts to “pierce the corporate veil” and seize assets in divorce cases. But legal experts said the judgment was still significant.

“The Supreme Court has handed down a landmark decision in which, for the first time since at least the end of the 19th century, it has accepted a general exception to the rule against ‘piercing the corporate veil,'” said Michael Hutchinson, a partner at law firm Mayer Brown.

“This is an extraordinary decision and the implications for corporate governance are potentially huge.”

Associated Press UK Top Court Rules Against Oil Tycoon in Divorce

While the article states that the ruling potentially impacts wealthy couples, you don’t have to be wealthy to have a company in which you can “hide” assets. If it’s something you’ve thought of doing, beware….

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During the divorce process, whenever you have someone do something for you, you’re going to pay. There are times when you have no choice to do so. There are times, however, when you do have a choice. Gathering your financial documents is one of them.

A recent article in US News & World Report (“How to Get Your Finances in Order Before a Divorce”) outlines the some of documents you might need.

All divorce courts require a financial affidavit, which outlines your earnings, living expenses, assets and liabilities. However, states have different definitions of what mandatory disclosures include. To get an idea of what you’ll need, Freedman (who is also a CDFA) outlines some of Florida’s requirements:

• Federal/state/gift/intangible personal property tax returns from the last three years

• Forms W-2, 1099 and K-1 from the past year

• Three months of recent pay stubs

• Specified loan applications, deeds and lease agreements

Bank account statements, including checking, savings and credit cards

• Retirement plans

• Life insurance

It goes on to say:

If you have children, calculate the costs of their food, shelter and clothing; most discretionary expenses are irrelevant. “Child support doesn’t pay for things like private school, or karate, or dance,” says Len Nassi, a certified financial planner and CDFA in Hollywood, Fla.

In addition, there are some commonly overlooked assets. “A lot of times with collectibles, one party might look at them as things they just like to collect and love, but it can turn out they have a [significant] dollar value,” Freedman says. Experts say it’s also worth hiring an appraiser if you have valuable possessions, like jewelry or art. Big-ticket items, such as houses, cars and vacation homes, must also be assessed for their current value.

Check your credit report. Gerri Detweiler, director of consumer education at Credit.com, says it’s crucial to look at your credit report before a divorce trial. Review your credit history to make sure your spouse hasn’t missed payments on any joint accounts, opened any credit cards in your name or engaged in other behaviors that may have damaged your credit. (It’s also just a good habit to vet your credit report for errors every so often.)

After either party has filed for divorce, begin separating your finances, starting by closing joint accounts. “As long as those joint accounts are open, you’re both 100 percent responsible for any debt incurred by either person,” Detweiler says. If you can’t afford to pay off debt on a joint account, create a payment plan with your spouse, so you have a timeline of when you will be able to close the account.

Paste this link in your browser to read the entire article:

http://money.usnews.com/money/personal-finance/articles/2013/05/17/how-to-get-your-finances-in-order-before-a-divorce?page=2

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Current logo using "Dodgers" Script

Current logo using “Dodgers” Script (Photo credit: Wikipedia)

Have you heard about the post divorce woes of Frank McCourt? Well in case you haven’t…
  • Frank McCourt is the former owner of the Los Angeles Dodgers baseball team.
  • Jamie McCourt is the former Los Angeles Dodgers CEO and Frank McCourt’s ex.
  • The two were married for 30 years and have been divorces since 2010.
  • Jamie received a $131 million (tax free) settlement in exchange for her share of the team. She also got four of the six homes she shared with her ex.
  • Now, three years later, she claims that the settlement was a “huge mistake” and wants it to be thrown out.
  • Why? Because at the time of the divorce the team was valued at $300 million, but was later sold for 2 billion. (Less than a year after the original agreement, the team went into bankruptcy.)
Now you might not be the owner of a famous baseball team, but this case shows that even after the divorce agreement has been signed, your ex can still try to get more money from you.
Maybe you get a raise or a better job. If your ex gets wind of it, they may be able to say, “Hey, I want some of the loot.” That’s right. Even though the two of you are divorced.
How can you prevent this from happening? Make sure a Consent Order is drawn up that records the agreement the two of you made and states that neither of you can make financial claims against each other in the future.
If you ask us, this is a must if you want to avoid the problem that Frank McCourt is facing.

If your ex is honest, they won’t mind signing. If they protest, you now know that this is one of the best financial agreements you’ve ever made.

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Tax

Tax (Photo credit: 401(K) 2013)

Tax time is approaching and if a divorce is also approaching for you, there are some things that you need to think about.

Divorce lawyer Robin Roshkind , Esquire suggests that you consider the following (from Tax Issues in Divorce, The Palm Beach Post):

  1. Do you or your spouse owe the IRS monies? Who will get the debt in divorce court?
  2. Who will get the head-of-household exemption?
  3. Who will get the child exemptions?
  4. Will you be filing “married filing jointly,” or “married filing separately”?
  5. Alimony is taxable to the recipient as income and deductible to the payor.
  6. Child support is taxable to the payor and non-taxable to the recipient.
  7. Retirement plans can be divided between husband and wife by Qualified Domestic Relations Order (QDRO) without any tax consequences if rolled over properly.
  8. Transfers of property need to be done properly, with tax ramifications considered in advance.
  9. There may be capital gains tax on property you receive in a divorce settlement but sell-off later.
  10. Are there any deficiencies or tax penalties and who should get those — the husband, wife, or both?

Should all else fail, ask your tax advisor about the “innocent spouse” defense, which you can file with the IRS.

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