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.