4 Simple Financial Rules you Should Know before Divorce

Anger and hurt tend to figure strongly in divorce, hand-in-hand with resentment, sadness, and fear about your future. And more often than not, these emotional woes all coalesce under the banner of money.

 

Based on National Survey of Family Growth (NSFG), conducted by U.S. National Center for Health Statistics (NCHS), the probability of a first marriage ending in separation or divorce within 5 years is 20 percent. After 10 years, the probability of a first marriage ending is 33 percent.

Anger and hurt tend to figure strongly in divorce, hand-in-hand with resentment, sadness, and fear about your future. And more often than not, these emotional woes all coalesce under the banner of money. That’s because divorce usually hits both parties’ wallets hard. This is one sad fact about money, but this is the reality.

Here are the key financial issues you should consider:

1. Try to Minimize your Legal Fees. If you and your soon-to-be ex are on friendly terms, you can save as much as 65 percent of the legal cost of splitting with a collaborative divorce. It is relatively new way to formally end marriage that emphasizes cooperation over confrontation. Collaborative divorce resolve disputes by removing the disputed matter from the litigious court room setting and treating the process as a way to “trouble shoot and problem solve” rather than to fight and win.

If you can’t come to an amicable agreement, try mediation before calling out the legal big guns or expensive divorce attorneys. Remember that when you communicate with your divorce attorney, the meter is running.

2. Choose between Alimony Payments or Child Support. Keep in mind that a way a divorce agreement is structured has major tax consequences for both parties. Payments classified as child support are not taxable to the payee spouse and not tax deductible by the payor spouse. Unlike child support, alimony is tax deductible for the person making the payments and considered taxable income for the receiver. As a result, divvying up the total is often contentious.

In theory, divorcing spouses may be able to save money in taxes by taking advantage of this difference, but you must be careful in how you should do this.

From my friend’s experience, if you choose to pay the alimony, do not rely on your divorce attorney to arrange your deductible alimony payments. Many divorce lawyers are woefully ignorant on this subject. Instead, you should hire a CPA or tax attorney to check out the proposed settlement.

3. Should you Stay or Go? At the time of the separation, one party may choose to leave the family house to reduce the ongoing hostility with the other spouse. The children tend to stay with whoever chooses to remain in the house.

It’s is probably your biggest asset, so deciding whether to keep the house, and who gets it, can be an emotional process. But financially it’s easy call: SELL. The big family home is often too much for either spouse alone. The resulting financial pain can disrupt the kids’ lives more than moving would.

4. Focusing on Long-Term Thinking. Make sure you understand the financial implications of your decisions. Divorce settlements should cover more than alimony and child support. Work out issues like how to divide retirement funds and who will pay for college, and how. And you’ll probably want to update your beneficiary designations, including those for your 401(k) and insurance policies, as well as you will.
Rather than accepting a car worth $35,000, for example, consider taking a mutual fund with the same current market value. The car will depreciate; the fund, if chosen wisely, probably won’t. Marie Claire Cooper is a Certified Management Accountant. She grew-up in Brewster, New York, U.S. and now working in an investment firm in Singapore. Please read more about practical tips on personal finance management at her blog at PERSONAL FINANCE MANAGEMENT GUIDE

http://personal-finance-management.blogspot.com

15 Sure ways to declutter your mind

from : zenhabits.net

The world of stresses and worries and errands and projects and noise that we must all endure inflicts upon us a mind full of clutter and chaos.

A mind that sometimes cannot find the calm that we so desperately seek.

I’ve had a number of readers write to me, thanking me for my articles on decluttering … but asking me, sometimes with a hint of despair, to write about decluttering your mind, not just your home or your desk.

It’s a valid request — if anything needs decluttering, it’s our minds, I think — but it’s also a daunting task. How do you declutter a mind? It’s not as if thoughts are just laying around, waiting for you to pick through them, finding the ones that should be kept and those that are ripe for the donation box. The mind isn’t like an inbox, that can be sorted through and acted upon.

The brain is a complex and confusing organ, the core of us as human beings (if you feel, as I often do, that the soul is in the mind and not in the heart). The mind is often covered in the scar tissue of old hurts and traumas, and layered in so many levels of consciousness not even the best of psychoanalysts has ever sorted through it.

So how do we begin decluttering? It’s actually not difficult, if you give it a little thought: simplifying shouldn’t be made complex.

You can declutter your mind with simple actions, things we’ve discussed here before, but things that are almost guaranteed to have a positive effect. Little things that can make a big difference, especially when used in combination. Choose a few to try out, and see if they work for you.

1. Breathe. So simple, and yet so effective. Take a few deep breaths, and then for a few minutes, just focus on your breathing. Concentrate on your breathing as it comes into your body, and then as it goes out. It has a calming effect, especially if you continue to return your focus to your breath when your mind strays. It also allows other thoughts to just float away. (Note: some people might call this meditation, but that word scares some people off, so we’re just going to call it breathing.)

2. Write it down. If you have a bunch of things on your mind, it helps to get them on paper and off your mind. This is one of the essential habits in Zen To Done (and GTD, of course) … writing down your tasks and ideas. This keeps your head from being filled with everything you need to do and remember.

3. Identify the essential. This one is practically a mantra here at Zen Habits. (Can you imagine it? All of us here at Zen Habits, sitting on a mat in lotus position, chanting slowly: “Identify the essential … identify … the essen … tial …”) But that’s because it’s crucial to everything I write about: if you want to simplify or declutter, the first step is identifying what is most important. In this case, identify what is most important in your life, and what’s most important for you to focus on right now. Make a short list for each of these things.

4. Eliminate. Now that you’ve identified the essential, you can identify what’s not essential. What things in your life are not truly necessary or important to you? What are you thinking about right now that’s not on your short list? By eliminating as many of these things as possible, you can get a bunch of junk off your mind.

5. Journal. Similar to “write it down” above, but with a little more depth. Journaling (whether it’s in a paper journal or online doesn’t matter) helps you explore different areas of your life that you don’t think about much. And this exploration might allow you to find some things on your mind that you didn’t realize were there, some things that can be eliminated or pursued. And just getting these thoughts into some kind of a journal is a way of getting them out of your mind as well.

6. Rethink your sleep. Sometimes we aren’t getting enough sleep, or our sleeping patterns aren’t ideal. I’m not saying that you should change your sleeping patterns, but sometimes it can do wonders. And if you don’t give it some thought, you won’t realize how much your sleep (or lack thereof) is affecting you.

7. Take a walk. Getting outside and doing some kind of physical activity is a great way to get stuff off your mind. I like to run or do yardwork, but whatever you do doesn’t matter. Spending some physical energy clears the mind.

8. Watch less TV. For me, television doesn’t relax me, although it might seem that vegging in front of the TV is good for relaxation. TV fills your head with noise, without the redeeming qualities of music or reading or good conversation. Watch less TV, and you’ll notice your mind begin to quieten.

9. Get in touch with nature. Similar to “take a walk” above, but without the bustle of activity. I like to go somewhere with water … the ocean, a river, a lake, even just a man-made fountain if nothing else is available. Or watching rain does the trick for me too. Somehow this can be calming and focusing at the same time.

10. Do less. Take your to-do list and cross off half the things on it. Just pick a few things to get done today, and focus on those. Let the rest go away. If you do less, you’ll have less on your mind.

11. Go slower. Seems kinda weird, I know, but walking and talking and working and driving slower can make a very big difference. It’s kind of like you’re saying, “I’m not willing to rush through life, no matter what artificial time demands others are putting on me. I want to take it at my pace.” And as a result, your mind is less harried as well.

12. Let go. Worrying about something? Angry about somebody? Frustrated? Harboring a grudge? While these are all natural emotions and thoughts, none of them are really necessary. See if you can let go of them. More difficult than it sounds, I know, but it’s worth the effort.

13. Declutter your surroundings. I’ve mentioned this before, but decluttering my desk or my home have a way of calming me. Having a lot of stuff around you is just visual clutter — it occupies part of your mind, even if you don’t realize it.

14. Single-task. Multi-tasking, for the most part, is a good way to fill your mind with a lot of activity without a lot of productivity or happiness as a result. Instead, try to single-task — just focus on one task at a time. Clear away everything else, until you’re done with that task. Then focus on the next task, and so on.

15. Get a load off. Sometimes it can make a huge difference to unload our troubles on another human being. If you have a significant other or a best friend or a close family member or coworker … unload your thoughts on them. And listen to them, to return the favor. Sure, it’s just talk … but it can make a huge difference to your mental sanity.

Financial Worry, Health, and the Reverse Wealth Effect As Housing Pops

from : oftwominds.com

 It’s been said that the difference between childhood and adulthood is financial worry. Children are of course troubled by family insecurity, but the gnawing weight of financial distress really eats away at the responsible adult(s).

As you have probably surmised, I know because I’ve been under extreme financial duress all too many times. (That goes with being self-employed in cyclical industries.) But financial worry can also arise from “death by a thousand cuts”– small reductions in income and small cumulative increases in expenses which slowly work to bring household balance sheets into worrisomely negative territory.

The greatest source of stress is the loss of a loved one, followed closely by combat, divorce, the loss of one’s job/livelihood/home/business, serious injury/illness and moving, i.e. “pulling up stakes and starting over.” Unfortunately, the last three are intertwined with financial losses and worry.

We all know financial distress is highly stressful, and that chronic stress is a killer. Though this is hardly news, it is also largely ignored; thus The San Francisco Chronicle’s recent feature on the topic was most welcome: Stress makes us depressed, fat, sick – and we do it to ourselves.

It may be difficult for younger people who have only known prosperity and shallow, brief recessions like 1991 to know just how wrenching a “real recession” like those of 1973-74 and 1981-82 can be. I vividly recall the headline in 1973 announcing that General Motors was laying off 100,000 workers that weekend.

In 1982, unemployment was officially over 10%, and unofficially about 15%. In recent years, most of the unemployed soon find some kind of paying work; in a “real recession” jobs dry up almost completely and so the unemployed stay unemployed. Since there is about 130 million jobholders in the U.S., a 10+% unemployment rate would mean 13 million people were out of work. Most of those laid off will experience financial worry–as will their dependents.

Let’s consider all the feedback loops which are starting to reinforce each other.

1. Housing and the Reverse Wealth Effect. Since a house is the largest asset in most American households, any rise or decline in the home’s value has a profound effect on our deepest sense of financial well-being. When our house appreciates, it makes us feel wealthier, hence the name for this phenomenon, “The Wealth Effect.” When people feel confident in their financial future, they tend to spend freely.

But the Wealth Effect has a flip side, called “The Reverse Wealth Effect”. When housing declines in value, people feel poorer, even when the decline has no measurable effect on their actual income or bank balances.

But in this era of “debt-based prosperity,” the house was not just a reservoir of psychological well-being but a source for cash, extracted via refinancing or HELOCs (home equity lines of credit). Now, the drop in housing valuations has a very direct and measurable impact on household bank balances and spending because, as the cliche goes, “the home equity ATM is closed.” Here are two charts which depict the vast equity extraction of the past seven years:

2. As housing and equity extraction decline, so will consumer spending, leading to recession. As this chart shows, wages have been essentially flat, so where will the money come from to replace equity extraction? The stock market? Most households have little exposure to the markets, except in their pension funds, 401K and IRAs.

3. As the stock market succumbs to lower profits and a recessionary economy, then pension and retirement funds will take a hit. Public and private workers alike have enjoyed outsized returns in their pension/retirement funds for 25 years. All the pension plans are now predicated on outsized returns continuing indefinitely. Yet history suggests Bull Markets don’t last forever, and there is virtually no awareness that pension plans may actually suffer losses rather than 7%-15% annual appreciation.

The net result is a decline in income, for workers will be required to begin contributing, or contributing more, to pension plans as pay-outs exceed investment income.

4. Government “junk fees” and taxes are rising, reducing consumer income. Have you noticed that the parking ticket which used to be $10 a few years ago is now $30? This may sound too trivial to mention, but then add in the 1%-of-gross-receipts “city business license,” the $300/year “rebuild our libraries” bond tacked on your property tax bill, the “fire extinguisher inspection fee” and dozens of other “junk fees” for things which government used to pay for out of property, sales and income taxes, and it starts adding up.

I pay thousands of dollars a year in these “junk fees”–licenses, fees and property tax surcharges which were once paid for by the regular assessed property taxes and sales and income taxes. Cities have increased the costs of parking tickets, vehicle fees, business licenses and the like to harvest more revenue without “raising taxes.” If you’re paying more for “fees,” the net result is the same: your disposable income goes down, tax revenues go up. Is a “fee” not a “tax”? It’s orwellian to say “no” when the citizenry is captive; either pay the absurd $30 parking ticket or we impound your vehicle. Next thing you know, there will be a $10 “processing fee” for your library card.

5. Mortgage re-sets will reduce the incomes of millions of households. The plan to “save” 500,000 subprime borrowers from onerous re-sets is all in the news, but millions of non-subprime mortgages will be re-setting for households which can afford the higher mortgage payments–but it will certainly reduce their disposable income.

6. As consumer spending declines, millions of jobs will have to be cut to preserve profitability. No CEO earns a $100 million stock option “compensation package” if the corporation’s stock tanks and profits turn into losses. Labor is the highest cost for all American businesses, large and small, and just about the only way to slash expenses significantly is reduce headcount, i.e. lay off the highest paid, least productive employees.

Bullish apologists claim “business investment” will save the day, but the world is awash in excess capacity for virtually everything except oil and commodities like platinum. The global ramp-up to industrialize China is much farther along than the Bulls are willing to concede. China has been industrializing for 25 years already, and some leveling off would be natural. To claim that the U.S. economy can put 10 million people laid off in a consumer recession to work making stuff to sell to China, India and Europe is quite a stretch, given that exports are less than 10% of the U.S. economy while consumer spending is 70%.

7. The costs of borrowing and servicing existing debt is rising. As “risk” is re-set in the global financial system, the costs of borrowing and servicing existing loans is rising, regardless of what the Fed does with the Fed Funds Rate. This is true not just for housing but for business as well. In just one example, consider this Wall Street Journal story: Mortgage Pain Hits Prudent Borrowers:

Some of the costs of cleaning up the mortgage crisis are beginning to affect people who pay bills on time and avoid excessive debt. A new fee from Fannie Mae comes as interest rates are heading up and increases in insurance costs.

The new charge from Fannie Mae adds to the general gloom over the housing market. It comes as mortgage interest rates are heading up again after a recent dip — as well as increases in mortgage-insurance costs, tougher requirements on down payments and other moves by lenders to ration credit. And last month, Fannie and Freddie imposed surcharges for mortgage borrowers with lower credit scores.

8. As lay-offs increase, more households lose medical insurance. Since there are already 40 million uninsured citizens in the U.S., what’s another 10-20 million? Perhaps one difference is these households were middle-class, at least they were until one of the primary wage-earners lost his/her job.

If you’re a civilian worker in the U.S., you know the drill: your spouse’s medical benefits may be either poor (“fake” coverage) or non-existent. He or she might be a contract employee, or self-employed, or working at a non-profit or small business which provides no coverage. If the wage earner with the “good” health plan gets laid off, the family loses coverage.

If you’re self-employed, you know how expensive healthcare insurance is: any family policy under $1,000/month is considered reasonable. Sure, if you’re 23 and single you can buy a cheap plan, but if you’re middle-aged with kids, it’s hard to get coverage for less than $800/month.

If a small business falters in a recession, the proprietors may have to choose between keeping the house and feeding the kids or maintaining health insurance. You know what goes–the coverage.

9. As recession takes its toll on the nations’ households, stress increases and health declines. Nobody thought the economy could decline in early 1929, or in 1969, either. people who have grown accustomed to their house rising in value and their stock or pension stake rising like clockwork every year will encounter financial stress they are unprepared for if a family wage earner is laid off.

Though I cannot list any statistics to back this up, an informal survey suggests that an extraordinary number of middle-class households are already experiencing severe financial worry–that is, they’re barely keeping their heads above water as it is. Any shock–an unexpected medical bill, an elderly parent requiring financial aid, job loss or mortgage re-set–can push the household over the edge into insolvency and bankruptcy.

It wasn’t always this way. Wages rose faster than expenses, and people were more prudent with their finances, saving more and choosing modest vehicles and houses. It seems incredible that so many people are stretched to the limit in “good times,” and so unprepared for “seven lean years” or indeed, any financial reversal.

This is how a reversal of the wealth effect, financial worry and health are intertwined and feeding back into each other. It is worrisome on many levels, for people without medical insurance often don’t receive any care except emergency room treatment, which is typically too late to address the underlying causes or chronic conditions. It’s possible that some people will become disabled by financially-induced stress-related diseases, further impoverishing the family. Without healthcare, the condition will go untreated.

As people fall out of the job market, the family loses its middle-class perks like medical coverage. As expenses like mortgage re-sets rise, income falls, and any lay-off could trigger the loss of the home. On top of the high-stress loss of livelihood/job/business, the family may also be forced to “pull up stakes and start over again”–sometimes a welcome escape but stressful nonetheless.

When the economy’s cheerleaders wave their pom-poms, they never consider the reinforcing nature of the negative forces listed above. Yet in the real world, they are tightly linked: being laid off triggers loss of health coverage which then impacts the family’s health and even the breadwinners’ ability to work. Financial strain, if it lasts long enough, can cause once-stable households to break up or lose the family home–even a home with equity and a fixed-rate mortgage.

Those of you who lost your jobs or businesses in 1981-82 and had to relocate to start over know what I’m talking about; and with medical coverage many times more expensive now that it was then (in real inflation-adjusted terms), starting over and reclaiming a middle-class lifestyle after the decimation of a lengthy recession will be that much harder.

Top 20 Entrepreneurial Quotes

I recently read a quote that inspired me and thought, “Why not share it with others?” Here’s a list of quotes from entrepreneurs and other quotes that are relevant to entrepreneurship. Skip and I also included our own at the bottom of the post. I hope one of these quotes inspires you as well.

1. I have not failed. I’ve just found 10,000 ways that won’t work – Thomas Edison, inventor and scientist
2. The only place where success comes before work is in the dictionary – Vidal Sassoon, entrepreneur
3. Entrepreneurship is living a few years of your life like most people won’t, so that you can spend the rest of your life like most people can’t – Anonymous
4. The best reason to start an organization is to make meaning – to create a product or service to make the world a better place -€“ Guy Kawasaki, entrepreneur, investor, author
5. Every worthwhile accomplishment, big or little, has its stages of drudgery and triumph; a beginning, a struggle and a victory – Mahatma Gandhi, political and spiritual leader
6. Failure defeats losers, failure inspires winners – Robert T. Kiyosaki, author, entrepreneur, investor
7. Entrepreneurs average 3.8 failures before final success. What sets the successful ones apart is their amazing persistence – Lisa M. Amos
8. Once you say you’re going to settle for second, that’s what happens to you in life – John F. Kennedy, U.S. President
9. In preparing for battle I have always found that plans are useless, but planning is indispensable – Dwight D. Eisenhower, U.S. President
10. The greatest reward in becoming a millionaire is not the amount of money that you earn. It is the kind of person that you have to become to become a millionaire in the first place – Jim Rohn
11. Some people dream of great accomplishments, while others stay awake and do them - Anonymous
12. Experience taught me a few things. One is to listen to your gut, no matter how good something sounds on paper. The second is that you’re generally better off sticking with what you know. And the third is that sometimes your best investments are the ones you don’t make – Donald Trump, real estate and entertainment mogul
13. The entrepreneur in us sees opportunities everywhere we look, but many people see only problems everywhere they look. The entrepreneur in us is more concerned with discriminating between opportunities than he or she is with failing to see the opportunities -€“ Michael Gerber, author, entrepreneur
14. An entrepreneur tends to bite off a little more than he can chew hoping he’ll quickly learn how to chew it – Roy Ash, co-founder of Litton Industries
15. The critical ingredient is getting off your butt and doing something. It’s as simple as that. A lot of people have ideas, but there are few who decide to do something about them now. Not tomorrow. Not next week. But today. The true entrepreneur is a doer, not a dreamer – Nolan Bushnell, founder of Atari and Chuck E. Cheese’s
16. I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful – Warren Buffet, investor and billionaire
17. I never perfected an invention that I did not think about in terms of the service it might give others… I find out what the world needs, then I proceed to invent – Thomas Edison, inventor and scientist
18. Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover – Mark Twain, author
19. There is a tide in the affairs of men
    Which, taken at the flood, leads on to fortune;
    Omitted, all the voyage of their life
    Is bound in shallows and in miseries.
    On such a full sea are now afloat;
    And we must take the current when it serves,
    Or lose the ventures before us – William Shakespeare, author
20. Genius is 1% inspiration, and 99% perspiration – Thomas Edison, inventor and scientist

Here are our quotes:

Being an entrepreneur is a lot like playing poker -€“ you can fold, limp in, or go for it – Yasmine Mustafa

If you kick it around enough, it starts to look like a ball – Skip Shuda

What’s your favorite quote?