Posts Tagged ‘Finance’

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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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:


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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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When it comes to divorce, many women still believe that all they need to do is hire a good lawyer –and then, they’re all set.

These days, however, ending a marriage typically involves much, much more than “just” legal considerations, and that’s why it can be extremely beneficial to build a team of qualified professionals who can help you achieve the most positive outcome possible.

Read more…

Article by Jeff Landers

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Welcome to money-issue Wednesday.

The article we’ve reposted below has some great advice that lots of people don’t realize until it’s too late. Keep your emotions out of the process and pay attention to what it has to say before it’s too late for you and your children.

Managing Finances Through a Divorce
by Andrea Murad

Divorce is a trying time for anyone—especially when children are involved.

The separation process is long and filled with paperwork, especially when it comes to sorting out finances and budgeting for separate households. Experts advise parents strive to maintain their children’s lifestyle during and after the divorce to keep a sense of normalcy and planning a budget for potential custody or child support will help to make the split easier for all parties.

The problem in every divorce is that you have the same income but two households, says Randy Kessler, founding partner of Kessler & Solomiany. “Very few people make enough money to support a child the way they want to.” Lawyers and judges try to fix this problem by determining the minimum amount one parent can accept and the most the other can afford to pay for their children.

“Before you break up, become a better parent—take your kid to school, make them lunch,” says Kessler. Spending time with your kids as well as staying calm and saying nice things about the other parent, will help the custody case process.

Before heading into the legal process, work to create the custody outcome you want, recommends Kessler. If a judge has to make a decision about custody, he or she may keep the parents’ current arrangement. “If they share the child like they would in a divorce, they don’t have to pay a lawyer.”

Understand How Much your Child Costs

Maintaining a child’s lifestyle post-divorce requires parents to negotiate expenses and child support. “Every state has guidelines so a judge has a starting point for child support,” says Kessler. A judge will calculate child support and explain any deviation from the guidelines because of, for example, housing, extreme travel costs, medical needs or tuition for a child requiring extra training because of a learning disability.

Child support can be adjusted up or down after the divorce since a person’s income can change due to a raise or job loss. To avoid future trips back to court, Kessler suggests making payments a percentage of income.

To know how much you spend on your child, review 12 months of bank and credit card statements, says Tracy Stewart, certified public accountant and personal financial specialist in College Station, Texas. “Break down expenses for mom, dad and the children into categories like clothing, groceries, transportation and dining.” Also include summer camp and other activities. For categories like groceries that are shared by family members, figure out each person’s percentage of expenses. Adding up the numbers will help create a baseline for the money spent on your children in the last year.

It’s important to be clear about your expenses and that you’re able to live within a certain budget, says Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial. “In general, the court will ask you for budgets or for you to provide records to help determine the amount of child support payments.”

While you review your child’s expenses, experts suggest examining your budget as a single parent. As a general rule, Jonathan Clements, director of Financial Education for Citibank, suggests keeping fixed costs like housing, utilities, food, insurance and property taxes at 50% of pre-tax income. The great litmus test is whether you can save on a regular basis—if you can’t, your expenses are too high and you’re probably spending too much on housing, says Clements. “You want to live within your income reasonably comfortable. Your finances will spiral out of control if everything is too tight.”

Experts suggest deciding whether you can spend the same amount of money on your children after the divorce. “If [child support] plus your income isn’t enough to maintain your child’s lifestyle, you’ll have to make tradeoffs for your child or yourself,” says de Baca.

Financially Protect Your Children

Consider insurance polices. The parent paying child support should have a life insurance policy, as well as disability insurance, recommends Stewart. The life insurance beneficiary should be the children or structure the policy such that the money is used to raise the children. Disability insurance will replace lost income if the person paying child support becomes disabled.

Negotiate medical costs. “You’ll want to look to the working parent to put the children on their health insurance,” says Stewart. Decide which parent will pay out-of-pocket expenses and how you’re going to pay and reimburse each other.

Prepare for the Future and Begin to Co-Parent 

You’ll have to make joint decisions for your children years after the divorce, says Stewart. In the future, they may have to discuss whether to send a child to summer camp of if a child can get a car, cell phone or tattoo. “You want the parents to be able to come to an agreement on these things in the future years. You cannot predict some expenses at the time of the divorce because you won’t know what can occur in the future.”

“Depending on the divorce situation, your spouse may not want to talk and the judge may decide on guideline support,” says Stewart. Parents who aren’t talking during the divorce may not talk after, which makes for uncomfortable parenting.

Although divorce is enormously upsetting, Clements doesn’t suggest funneling your emotions into the battle over finances—everybody ends up worse in this situation. “You want a reservoir of goodwill because you’ll need to ask your ex to watch the kids. If you have a nasty divorce, a flexible parenting agreement is likely to be impossible.”


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