Divorce Financial Planning: Take Control of Your Finances

Do you know your credit score or the details of your Social Security report? Can you find the deed to your house, mortgage, life insurance policies, car title, car insurance policies, tax returns for the past 5 years, brokerage and bank statements for the past year? Do you know what your spouse earns or how much is going into a 401k plan annually?

Getting divorced is often a wake up call when it comes to finding out what you know and don’t know about your family finances.

Managing your finances is not about knowing which stock, bond or mutual fund to buy. It’s about knowing what you own (assets); what you owe (liabilities); what’s coming in (income) and what’s going out (expenses). It is about paying attention to where your money is going and being organized.

You’re going to be asked to produce a lot of financial paperwork and documentation for the court, your attorney or mediator and for your soon-to-be ex spouse. So, let’s get started:

Clear off a workspace and gather all your statements: bank, brokerage, credit cards, etc. Other supplies to gather: paper, pen or pencil, 3-ring binder, hole punch, index dividers, highlighter and sense of humor.

First, we’re going to tabulate your net worth (difference of what you own versus what you owe): make a list of everything you own: house, car, brokerage accounts, life insurance, retirement accounts and their value (the internet can help- try KBB.com and zillo.com). Then, list everything you owe: mortgage, car loan, credit card debt, school loans and their outstanding balance. Keep this information stored in the first section of your 3 ring binder.

Next, find where your money is going (the cash flow), or the reality of not having a clue as to where you spent all that money. The easiest way to determine your cash flow is a computer program like Quicken or QuickBooks. A useful website is mint.com. If you prefer not to use the computer, this can be done with Excel, columns on lined paper or on graph paper.

To make a budget, gather your checkbooks, check stubs and charge card statements. Give each expenditure a category and a subcategory. Example: Utilities: phone, Utilities: cell phone, Utilities: cable and enter your expenses for each month. You will get a total for each subcategory as well as a total for the whole category of Utilities. Don’t forget to enter your income, including income from child support and alimony. Print a report every month, and a quarterly report every 3 months. Put these in a Cash Flow or Budget section of your binder.

It may take you several months to get a picture of your income and expenses but it will become the foundation to manage your finances as well as negotiate child support and alimony.

With a handle on your cash flow, you can look for places where you can reduce expenses or control spending. Try taking 10% off the top of your income as savings. Then, rework your expenses to see if you can still manage. Utilize whatever amount of money you are able to save to:

• Get out of debt – pay down credit cards and loans

• Have an emergency fund not invested in the stock market. Aim for a minimum of 3 months of household expenses in savings. If possible, have an additional 3 months in a short term CD or money market account

• Take advantage of retirement plans

Put this information in your Savings Goal section of the binder.

Armed with this information, a consultation with a Certified Divorce Financial Analyst, early in the process, can help you meet the challenges of divorce with more confidence and dignity than might otherwise be the case.

The Wright Place – Finances

Women have a love/hate relationship with money. Most of us do not enjoy dealing with it, yet we know not having finances under control will cause our entire family to suffer.

A recent guest on the show Karen Franks, explained how important your credit is and how you should check on it often. ‘At least twice a year”, says Karen Franks. Checking our credit is one important proactive way we can make sure we are in good financial shape. She also mentioned that many married women have better credit score than their husbands, even if they do not make as much. When another show guest, Dan Contreras talked about financial planning, he stressed using a professional. ‘Don’t rely on hearsay, get some real understanding about your situation.” And Linda Hollander the author or Bags to Riches says “Mentors are the fast track to success”. Find someone who has reached the same financial goals you want to reach and then do what they did. This simple technique works even if your goals are modest. While everyone’s situation is different, I really just want to motivate you to do something to have a positive effect on your finances. Here are a few simple things you can do that will start the ball rolling.

1. Get a copy of your credit report and check it for errors( free if you have been turned down for credit)

2. Look at your savings plan, are you on track, do you need to increase or decrease the amounts you are trying to save?

3. Look for your insurance policies, be able to get them immediately, know exactly where they are.

4. Start some financial education with your children. Start a student saving account.

5. Start planning next year’s financial goals. What do you want to change, what goals do you want to accomplish, what new accounts do you need to open and which accounts should be closed.

If you handle your finances you’ll be in The Wright Place!

It’s Time For Millennials To Get Their Finances In Shape

Most millennials are now in there 20s and 30s, beginning a career climb and also the time when you are making major financial decisions. These financial decisions can include home ownership, investment strategies, and family planning. Certainly, you want to try and avoid some of the financial hazards that have transpired in the lives of previous generations.

Financial literacy is seldom taught in school, so if you didn’t learn it at home growing up, your first time in the “real world” may get you into some financial distress. Read below to learn some of the top financial tips that will help millennials make smart financial decisions.

Take online money management courses

Because most millennials excel at technology, I would suggest signing up for courses in basic economics, accounting and budgeting. These types of courses can be very affordable and very well delivered by the online professor. I feel this is a very efficient way to update yourself on financial topics that may simplify and improve your financial life.

Build up your retirement savings

Did you know that Wells Fargo revealed that almost 50% of millennials weren’t planning for retirement? Make sure you participate in your employer’s 401(k) plan, even if you can only afford to contribute the minimum every month.

Make a list of your whole financial picture

I recommend you make a list of everything that is spent each month. After you have digested this information, ask yourself this question. How am I going to pay for all of this? There are also four essential things everyone should know about their finances: income, expenses, assets and liabilities. Having a firm comprehension of these items will help you make sense of your finances. There are many online tools that can help you connect all your accounts – Mint, Quicken just to name a few. I believe this is your first step in improving your finances.

Research passive income opportunities

Most of us work for money all our lives and never really put it to work for us. It is possible to use your job income for passive income from your investments. For example, the IRS says passive income can come from two sources: rental property or a business in which you do not actively participate. Make no mistake; passive income is not about getting something for nothing. It involves a lot of work and is definitely not a “get rich quick” scheme.

Start a savings account

Open up a share account at your credit union even if you can’t make regular deposits. You can use this account to put extra money aside for your short term and even long-term goals. This can also be used as your emergency fund. Shoot for 3-12 months of expenses, put aside for emergencies.

Pay yourself first

Once you have money in your hand from your paycheck, IRS refund, etc. always pay yourself first. Arrange for automatic transfers from your checking account directly to your share account every payday or on a monthly basis.

Do you know the impact of your credit score?

Everyone, but especially entrepreneurial millennials need to understand that their personal credit can be the defining factor in getting working capital in the future. Getting approved for a loan can be very challenging when your credit score is low. Learn how to read your credit report and check it frequently.

Reduce your debt faster

Pay off small debts first and gradually tackle the larger ones. This will allow you to see results and stay motivated.

Enlist the assistance of a trusted mentor

There is an overabundance of information online regarding financial literacy. However, picking the brain of someone you know and trust is better. Their insights are often tailor-made to your specific needs.

Remove extra costs

It is a proven fact that millennials have expensive habits ($5 lattes every day, eating out on a regular basis, designer fashions, etc.). Keep a close eye on your expenses and trim them where you can.

Raise your children to be financially savvy

At this point you may already have young children or planning to start a family. Teach them that saving money is essential. When they are old enough take them to your credit union and help them open up their own accounts. This will hopefully excite them to continue saving their own money.

I hope you use these financial tips to keep your finances on track while you are young. Remember, you have a very bright financial future ahead of you if you start now and stick with it!