Monday, November 30, 2015

Living Apart, Living Large

This is a post in a series on divorce. The list of divorce topics is here.  Understanding this process can be incredibly difficult, I felt compelle to share some of what I have gone through and learned personally. If you'd like to read the first post, click the link above.

Once the assets have been divided, it is then time to start living a separate life. For me this meant dealing with a series of issues around money, time, and space. This post talks a little bit about the money aspect of the separation/initial divorce period...this IS a finance-focused blog after all! In the next post, Reclaiming Life, Restarting Goals, I will discuss more about the other aspects, time and space, but for this post, I am focused solely on the money aspect and the impact that living separately has on someone in this situation.

Personally, I was fortunate while I divorced to have a good job and to be able to afford my own apartment and living expenses. While this may seem good at first, this inevitably had a reverse effect in my experience. I have long followed suze orman and I enjoyed sometimes how she told people that they were buying things they don't need to impress people they don't like etc. Well, I like myself and now that I was no longer in a relationship, I didn't have to check my purchases with anyone else. I could buy whatever pleased me whenever I wanted.

The next step was to move out and pick a place to live. I know of some people who end up purchasing expensive digs after the breakup because they want to show how much better their life is now. Personally, I didn't do that right away. I first started with a room in a shared apartment and became a roommate again. This was cheap but the apartment wasn't clean or as well kept as I would like. Separately, it was a problem for me to feel comfortable so I moved out.

My next diggs were better but definitely more expensive. In addition I had to purchase all of the items for the new place and get used to paying for all of that out of my own paycheck. Not cheap. That included the following:
1. Living Room furniture
2. Desk/Chair
3. Carpets/Lamps
4. Silverware/Dishes/Pots
5. All new food/linens/staples

Nearly everything that I had purchased over the next 6 months were things that I had already during my marriage and had to replace because I didn't take them. I left everything. While this is not horrible because I was able to get what I wanted, it was extremely expensive, costing about 6K before I was finished. While I needed these things, they were primarily to ensure that I didn't feel crummy while I was dating.
Looking back at this period in my life, I certainly understand why I did what I did. And I am sure it is a common reaction to the situation of divorce. The challenge I'd make to anyone going through this process though is to make a budget as follows:

1. Decide what items you need in the next 6 months and how much you expect to spend
2. Take that budget and cut it in half. Repeat this process until you've bought what you need. You will likely find you need far less than you thought.

As for me, I gave most of that stuff away less than a year later when I moved. Do you want to waste that much money?

Wednesday, November 18, 2015

Reclaiming Life, Restarting Goals

Reclaiming Life, Restarting Goals is the title I chose for this post, one in a series of posts about coping with the aspects of divorce. Originally I wanted to write these posts because this is mostly a blog about my finances but I also realize that largely this is a blog about life.

Reclaiming Life is something that is hard to imagine, but it is an absolutely necessary step if your divorce was tragic and had a profound impact on you. I'd imagine that this is true for most people, but it is worth noting that I am speaking only from my personal experience.

Reclaiming is from the verb to reclaim:
verb: reclaim; 3rd person present: reclaims; past tense: reclaimed; past participle: reclaimed; gerund or present participle: reclaiming
  1. 1.
    retrieve or recover (something previously lost, given, or paid); obtain the return of.

    "he returned three years later to reclaim his title as director of advertising"

    synonyms:get back, recoup, claim back, recover, regain, retrieve

    "traveling expenses can be reclaimed"
    • redeem (someone) from a state of vice; reform.

      "societies for reclaiming beggars and prostitutes"

      synonyms:save, rescue, redeem;

      "Henrietta had reclaimed him from a life of despair"
    • archaic
      tame or civilize (an animal or person).
  2. 2.
    bring (waste land or land formerly under water) under cultivation.

    "little money is available to reclaim and cultivate the desert"

And so, it is not just the first definition, but also the second definition that makes sense here. Life truly has to be recovered after divorce. Indeed I'd argue that without this step, you cannot proceed in any effective way, emotionally, spiritually, financially or physically. It is essential.

Recovering in this sense to me simply means that you are back to living. Living involves making choices, taking risks, having a good time, and being present in the current experiences and emotions of your existence. In short, being active rather than passive. Recovery in this sense isn't easy and there are a number of things available to you.
1. Friends, Family, existing support systems can help you recover your life. Not everyone is fortunate enough to have those things however, so for them, I'd focus on other options below.
2. Church/Synagogue/Temple etc where you can meet with fellow believers of your faith and perhaps deepen your connection with a higher power. For me, Church was where I feel I recovered the most. It slowed me down. It got me thinking about others besides myself which helped me really notice where I was. And most of all it gave me some structure and ability to get comfortable with who I am again.
3. Therapist and/or Support groups. These like anything can be complex and expensive or simple and cheap. Don't short change yourself on professional help, but at the same time be smart about your choices.

After recovery, you can begin the second aspect which is to bring your life to cultivation which is what the idea of goals really means. What do you want to accomplish with your life. I find that these are difficult in a way that I wouldn't have expected. It can be so consuming and difficult to recover from a trauma, that you forget to make plans for the future.

My advice about this second aspect of cultivation of goals, restating goals is:
  1. Start with restating them and writing it down.
  2. Do not worry about when/how these will get met or if at all. Just practice writing and having goals.
  3. Don't wait too long to start.
  4. Once you are comfortable with the idea of having goals, get serious and pick one or two small goals to set and work toward. This is a great way to start this habit.
In the end, the best way to restart your life is to have something to live for and to live towards. If you can manage it, start small with your goals and then build them up until they are bigger and take time and real, concrete steps to complete. Accomplishing a mix of small and larger goals is a great way to feel good about yourself and get some distance from the pain of divorce.

Friday, November 13, 2015

Making the Decision and Having the talk

When it comes to making the decision to divorce, unless there is some overarching circumstance, I view it as a mistake to do it rashly. In order to make the decision, dealing with the feelings and emotions involved first made the most sense. Often when things get changed in our lives it is because we have become fed up with the current state in some way or shape. In this case, there is a feeling that the time for Divorce has come.

Deal with your Feelings and Emotions first, noticing that there may be some distinction here. For me my emotions are concrete: Happy, Sad, Complacent, and perhaps fearful. Feelings are a bit more nebulous. I might feel trapped. I might feel subservient. I might feel powerful. None of these are truly emotions, but they are intangible, and somewhat subjective. For me, once I felt unhappy in the situation, I tried on various occasions to deal with why I had these unhappy feelings.

The feelings, more than the emotions were the primary driver of the change. More than anything, you should try to be clear about the feelings you have that are a direct result of something being wrong in the marriage. Use your gut to help you figure out if those feelings are temporary or if they are lasting. Then write it down and wait for some period of time before acting further.

Once you have your feelings in place, you can try to understand what the cause is. Perhaps you feel less important because your spouse is spending more time/energy on something else. Perhaps you feel less loved because of how you are treated/talked to. Perhaps you feel less connected since you don't spend so much time together raising the kids. Whatever the feelings are, they have reasons. Figure them out and write them down. It is good for you to have it be concrete. This will aid you when you have the talk.

Writing down reasons you want to get divorced makes the process real. Don't leave that lying around, but make sure to carry it and review it. Perhaps a day, perhaps a week. Take some time and sit with the idea that you might not be with this person anymore. Do not act rashly, but then reach out to one or two trusted friends and discuss how you've felt over lunch or over coffee. Nothing heavy. You do not want to over burden your friends so they don't feel blindsided. Some friends will feel dual loyalty. You should consider that early on.

After discussing with your friends, discuss with your family. Undoubtedly, they will be impacted by the process and if you've gone far enough that you are still certain, it is time to get them in the loop. Some people would caution against this, but for me, I think it is essential. You will need these family members to help you when you are dealing with your emotions and pain.

Once all of this is done, you are ready to have the talk. If you expect it to be particularly emotional, I recommend engaging a spiritual mentor (a priest or a rabbi if you are religious or perhaps a social worker or therapist). If you feel confident you can proceed alone, consider aspects of your safety and then ensure you have an immediate exit plan should things get ugly. Write down all of the details of the conversation once it is complete as this may be important.

Finally, consider the tenor of the conversation so far in the marriage and consider whether you want to proceed with getting a lawyer or a mediator before the conversation. None of what I describe here is legal advice, but only advice I can give based on my own personal experience.

Evening out the inequalities, Separating the assets
Moving out One Year Later
Living Apart, Living Large
Reclaiming Life, Restarting Goals
Dating with Data, Digging for Gold
Comparative Compromise, Coping with Change

Sunday, October 04, 2015

Blogging Wealthtrack - BOTSFORD: RETIREMENT INCOME FOCUS September 25, 2015

Wealthtrack remains one of the most fascinating and enjoyable shows out there for financial topics. Consuelo Mack continues to host this show with a variety of guests ranging from the practical experts on retirement like Erin Botsford and Mary Beth Franklin to more bookish and technical guests like Donald Yacktman and Cliff Asness who have 'been there, done that' with respect to investing large sums of money for their clients.

This week was interesting because for one of the few times I've seen on the show Consuelo took a personal turn with her guest, Erin Botsford. She described a scenario when Erin was young where she was involved in an accident and was subsequently involved in a lawsuit as a result of a death in the accident. Being very young at the time, this sounded like a terribly challenging event for Erin (it was made clear that she was not at fault during the episode).

This tragic story turned to news you can use: get umbrella insurance for your house and your car(s). In the case of Erin, the insurance amount recommended is 2 million OVER your total net worth. What is interesting from my perspective is that Erin views this kind of insurance as your primary protection in the event of this horrible kind of tragedy so that if you are involved in this kind of an event, you don't lose all of your money.

The wrap up advice was equally interesting -- to focus on guaranteed income for your long term, known needs in retirement, things like good annuity products instead of volatile stock investments etc.

Both of these turned out to be interesting pieces of advice and I know I have some homework now to start investigating into Umbrella insurance and also for options that might work as a plan for a guaranteed retirement income.

Sunday, August 09, 2015

Evening out the inequalities, Separating the assets

This is the third post in a series of posts about divorce, covering a variety of topics and including a series of advice which in hindsight seems obvious, but before going through the process, seems very essential.

In deciding what the best way to even the equalities out, I found that I needed to decide first where my feelings were about the other person. In my case, the soon-to-be ex still held a place in my heart, something which has undoubtedly diminished over time. But at the moment in time when the decisions of divorce are taking place it is impossible to know the future. So, I would strongly recommend that you consider your feelings toward this other person and other people affected.

Separately, you should examine any morals or principles that you have to honor when you are going through the process. For me, I shared everything, I literally wanted to give my whole life to someone else. And that was something that I cannot even begin to explain in words, so this moral idea seemed no big shock to me; because it was an additional layer of treating others the way I want to be treated. I always knew that I needed to treat others better than I was being treated; this was how I thought about the world.

Once you have a grasp of your morals, principles, and feelings, you can really begin to go through the process of evaluating assets. For me this was quite simple: all assets are either owned already OR are some future income stream (like income expected from working). In court, frequently people talk about spousal support/alimony/etc and I find that this is something that is painful and difficult. I didn't want to be involved in anything that left a tether between me and my ex. For you to move on emotionally, separation and space are important catalysts along with time for emotions and issues to be ironed out.

In my case, I divided the assets we had by value and understood what was the most valuable for each of us. Considering the likely lifestyle going forward, it became easy to manage the process around dividing the existing assets. Some people have large amounts of equity in real estate. These kinds of situations are very difficult because they often require the sale of the real estate to free up the capital. In my case I was able to offset retirement account balances against real estate to be able to proceed forward with minimal effort.

In terms of ongoing payments against future income, like Alimony or Spousal support, I would strongly recommend that the money be paid in full up front rather than over time. The biggest factor in this kind of decision is ability to pay, but in the case of up front payments, this avoids creating a debt into the future which is an additional burden to carry from the divorce which is unadvisable in my opinion.

The biggest aspect of the divorce from the legal standpoint is the division of property, but for survival, it can often be emotional health and well-being. To maintain emotional health, it is important to make the asset separtion efficient. Going back and reviewing this multiple times is not usually helpful; a simple spreadsheet will do. And avoiding ongoing payments of any kind is a good option in my experience.

Friday, May 08, 2015

Adjusting To Divorce - An Overview of Topics

This is the third article, but arguably should have been the first, in a series of articles I wrote last year with regard to my divorce. For me, this was an important part of the process to be able to consider the aspects of the topic in a detached, analytical way. 

It has been a very long time since I posted anything to this blog, and now with the new year, 2015 in full swing, I will provide some detail about what has been going on for me in my financial life. Finances when it comes to divorce are a difficult proposition to be sure.

In this series of articles, I will provide some clear details about what the steps are that I have taken to keep my financial house in order, the steps I've taken that have set me back, and also my ongoing struggles to make sense of all of the various decisions coming for me in the future. I welcome comments and ideas; I am not an expert on these financial topics by any means and I think that it makes a lot of sense to consider carefully what will work for you; your mileage may vary.

The topics that are relevant to divorce when it comes to finance are varied, but I think this is a good sample of my personal considerations around the topic. As I write and complete the various posts, I will update the links ago, but for now consider this list simply a preview of what is coming:

Separation Vs Divorce
Making the Decision and Having the talk
Evening out the inequalities, Separating the assets
Moving out One Year Later
Living Apart, Living Large
Reclaiming Life, Restarting Goals
Dating with Data, Digging for Gold
Comparative Compromise, Coping with Change

The above topics are completely subjective, but in a large way, they characterize the various aspects of my divorce that I would like to discover. I don't expect that things are very novel depending on what kind of separation/divorce you are dealing with...all of them have similar issues and you must work through them each carefully. My sincere hope is that by reading these articles, you'll learn more about yourself and that this will help others' and their relationships.

Saturday, May 02, 2015

From the Archives: An apt time to rebalance - from March 2013

Author's Note: I have recently restarted my blog and I will be posting old posts as a way to show how things have changed in my original thinking versus when I wrote the article. Also, it is a great way to look back. I'll label these posts as "FromTheArchives". This post was originally written in March 2013.

Recently, it was a short week at work with the Good Friday holiday. There were only four working days available. Then to make matters worse, I was coming off a few days of vacation. But all of this lamenting makes it important to reflect on the upside of something that I decided to do recently: rebalance.

At my current position, I am fortunate to have a 401k match and safe harbor contribution that I will continue to cherish as long as I have it. Additionally, I am working to continue to put myself in a better financial situation each month. One major way in which I do this is to aggressively monitor my retirement accounts. I think this is essential because of the downturn I experienced. Of course, I strongly agree that market timing is a loser's game and that long term buy and hold investing of index-based/passive mutual funds with low fees is the best way to invest for the average investor for any medium to long-term goal.

Unfortunately, my work plan does not allow me to invest in such funds within my retirement account and with that kind of free money coming my way, I am not exactly in a position to look a gift horse in the mouth. So, what is there to do? I need to continue to monitor my asset allocation with respect to investment choice: stock, bonds, cash, commodities, real estate etc.

For me, at this point, the smart money is telling me that we cannot expect to have double digit returns in the next series of years (more than 5, less than 20) which is going to be the majority of the time that my money is generating growth for my retirement account. So, if that is the case, I need to strongly consider the amount of growth I expect. Personally, I believe that we'll probably see 7 percent growth for the period I care about (reinvesting dividends).

All that said, I think that the markets are risky for me personally. I want to be feeling good about my accounts, not have the fear that in 3 months I could lose 50% again. So, I am stuck. I don't want to put it into cash because over 50 years, my money will be worth less than the toilet paper it could buy because of the inflationary pressures. I read Bob Brinker and he continues to exclaim that deflation is much more of an issue, but the long term trend is inflation, for sure.

The result for me is that I continue to invest in the accounts that are available to me in my retirement account where I get the match, over and above the match. For the money that is invested in the accounts, I simply try to spread it out over various assets to get some diversification and just accept the fact that the fees are unfortunately going to eat into some of the return. But the far better way to think about it in my view is to be greatful to have something; something's better than nothing.

Thursday, April 30, 2015

Moving Out - One Year Later

This is part one of a multi part series of posts related to the process of divorce. In this post, I describe the process of moving out as part of separation. This article is written as a retrospective though, since it was written during the time of the events, but only recently did I decide that I would publish it.

I moved out a year ago in late March/early April. I actually wrote about this process back then, but decided to hold off on posting about it. In fact, I have not updated this blog since that point. Now, I think the time has come to write about the experience from a financial perspective and with that, here's my first post:

After a very long relationship of nearly 15 years, it is now over. Recognizing it is over is often the most difficult thing to do. And while the emotional stuff was a whole separate set of issues that I won't get into here, the real issues with the financial stuff is where there is definitely some interest and so far, I think that things are going ok.

I am incredibly grateful that we had the financial resources to do this. I consider how difficult it can be for many people to separate due to the issues around money and how expensive the separation process can be. Then I reflect on the fact that it was the simple principles that were followed, day after day for weeks and months and years that led us to the point that when the relationship had finally run its course, that there were few issues with separating. There were enough resources for us to separate and for both of us to be ok.

And the principles were these:
0. From the very beginning of the relationship, I was clear that we should each maintain our own stash of money. I never wanted anyone to be staying with me because of the money. That is just a bad way to be together--to be depending upon another person in such a way that you can never make your own choices. Once that is settled, the other principles can take place.

1. Live below your means, and if you are going to splurge on anything, make sure it is a one-time fixed cost. Do not splurge by continuing to expand your monthly expenses.

2. Save automatically, regularly. For me, it was a matter of saving more than 10% of my salary into my 401k each month. That is the kind of money that you need to be comfortable saving regularly if you want to be in a good place financially.

3. Invest in yourself. Work hard at your profession and make yourself indispensable to the people you work for. Or, find yourself a union so that your income is protected. Either way, develop your income stream and work to protect and secure it once you have it. The income stream is what matters because when you separate, if you have income, you can rebuild a life. If you are without income and have no means to it, then the money will run out fast.

Saturday, April 25, 2015

Separation Versus Divorce

This is part two of a multi part series of posts related to the process of divorce. In the previous post, I mentioned how I had moved out a year ago, but I realize now that this was somewhat putting the cart before the horse. However, the principals there describe some very important aspects of maintaining a healthy financial picture while the relationship is still good. And in many ways, that is where good things start: as discussions while the relationship is healthy.

But, since this is a financial blog more than a personal account, it makes much more sense to orient on those aspects of the process. However, it has been said many times that the most important financial decision you can make is about who you decide to marry. And I agree wholeheartedly. This was not something that I was keenly aware of many years ago when I began the relationship, however. And regret solves nothing. For me this process was an emotional one, and it evolved naturally through drifting apart, separation, moving out, and then finally divorce and grief.

As part of this multi part series, I will inevitably share things that are personal in nature. While I feel that the world is very different than it once was, I still feel like privacy is important. But in this series, I am deliberately choosing to describe some details of my experience, giving up some privacy in an honest hope that this will help someone out there who might be reading.

So, in this post, I will describe how separation is different from divorce. In describing separation, I will provide some context and specifics as it is often the first step in the divorce process, but doesn't necessarily have to be. And while preparing to separate is a very difficult process, the process can be embarked upon in a rational manner, despite the emotions involved. Distinguishing the emotions from the process is not the same as ignoring the obvious emotional implications involved with separation. Finally, I will describe some very specific steps you can take if, after all considerations are taken into account, you decide you want to continue to prepare to separate.

Separation is not Divorce

It is often difficult for people to imagine that a separation is a good idea. Of course, separation does not have to be a long or permanent change. It is something that could be a good change of pace for you. Separation, strictly speaking, is different for everyone. Sometimes, people separate but continue to occupy the same home. In this case, they file legal paperwork indicating separation. In other cases, people physically live in different locations without yet filing paperwork to divorce.

In the strictest terms, separation is temporary, regardless of outcome. Divorce is permanent; it is a severing of the commitment made between two people and represents the final destruction of a relationship that you've built with someone else. There are many people who separate who end up getting back together. In my own personal experience, separation is not to be undertaken lightly however. Before you start to strongly consider separation, consider what you would believe to be the best outcome. If you want a happy marriage, a separation with a short period and finite/strict rules is probably the right strategy over an open-ended long-term separation.

Consider strongly your reasons for separating. Are they emotional? Financial? Or perhaps even physical/external forces? If those forces are enough to cause you to feel the need to separate, will those forces become better with separation? If not, you're not likely solving a problem by separating. Rather, I view separation as a great first step if there are difficulties that seem too enormous to be dealt with in the immediate term and you feel that being together with someone is toxic. Also, separation may be a perfectly reasonable way to deal with some problems which are not relationship-ending in severity, but yet still require some space or distance to sort out. In the latter case, I would strongly consider using the term vacation rather than separation. In this circumstance, you almost certainly intend to stay together.

Get Happy about your Emotions

The first thing that is worth doing and trying is to get happy about your emotions around separation. Separating is an emotional experience. This is completely normal. When you're feeling overwhelmed, and you don't know how to cope, sometimes this is the only way you can do it is to start to consider the possibility that you'll separate. Remember that separating is an emotional experience, and if you are feeling emotions, even very dark ones, you can rejoice in that and be glad. This means that you still have capacity to feel. So get angry, get sad, feel happy and alive. Your emotions are there. They are real and they can be the fire that motivates you to move and make a positive change in your life and in your relationships.

Dealing with the emotions is different for everyone. Consider doing things that clear your mind. For some people this may be meditation or spending time in nature. Personally, I find great peace in my yoga and spiritual practices, but for others it may be attending synagogue or other forms of worship. Do what works for you and spend some time doing things that allow your mind to relax. Give yourself permission to try new things and to make mistakes! Nothing has to be perfect the first time. Don't force yourself to dwell on these difficult problems for long periods without a break. These choices that free your mind allow you to focus and channel your emotional energy toward a positive change.

Once the emotions are in a good place, find one or two trustworthy friends that you can communicate with during this time about your process. If you can find friend(s) that are separate from your significant other, that will be ideal. If it is a friend who is rational and organized, all the better. This will allow you to vent when necessary, but also to ensure that you don't get too far afield with your thinking.

Staying Clear, Preparing for Change

Once you are clear and have a practice that regularly redirects your emotions to a good place, you will be able to evaluate your situation toward separation. This blog is oriented on personal finance, so obviously that is the focus. However, many people make choices financially that are emotional and that is where large amounts of opportunity and money is lost.

Review your income. Do you have a steady job that you think you could continue to work at throughout the divorce? Are you currently in good standing? It is important to realize that your professional reputation could take a hit during this process. Both separation and divorce are extremely stressful and if you are on shaky ground for your income, stabilizing that can often be a good first step in the process. Ensuring that the process is smooth is your best defense against professional impact.

Review your savings. Do you have a large amount of savings? Liquid savings are definitely the best types of assets to have during any kind of personal storm like separation or divorce. They provide a large cash cushion to ensure that unexpected expenses can be handled quickly and easily. Additionally, they avoid issues that are involved with variable prices for non-liquid assets like Real Estate.

Review your obligations. Do you have children, rental properties, aging relatives or other considerations that impact your ability to easily change your living or financial situations? Obviously if that is the case, you will want to consider each of these options and develop one or two contingency plans for each of these obligations to ensure that items are dealt with correctly and quickly.

If one or more of these items are not in a good state, it is not insurmountable. Remember that separation, if you should decide to go that route is a highly individual process which can certainly take time. And what is more, it should not be embarked upon lightly. Discuss your relationship with your significant other regularly. Is it something you want to embark upon? Is it something that you want to execute? Before making any serious decisions, consult that friend or friend(s) who you really trust. Stay tuned for the next article in the series