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A Woman’s Financial Reality

Irene Smith is a Certified Divorce Financial Analyst™, Certified Financial Planner® and Certified Public Accountant with Smith Financial Management. We are proud to be hosting three of Irene’s excellent financial seminars this summer. For more information about Irene’s seminars, visit our events page at TheLawCollaborative.com/events.htm. These seminars are free but space is limited. Please RSVP if you wish to attend.

A WOMAN’S FINANCIAL REALITY: Your financial future is up to you … and no one else.
Presented by Irene Smith

Will this be your future? Did you know that Social Security income represents two-thirds of income for women 65 and older? Did you know that without Social Security, an estimated 58% of widows aged 65 and older would live in poverty? 1

These findings are from a 2010 U.S. Congress Joint Economic Committee report. As Rep. Carolyn Maloney (D-NY) put it, “Social Security is literally a lifeline for most elderly women.”

That lifeline is barely adequate. With inflation and other economic pressures, a mature woman relying on SSI may eventually have to choose between food or medicine, or rent or car repair, or contend with other stressful money dilemmas.

When these women were younger, did they envision such a meager future ahead of them? Probably not. More than a few probably wish they had understood money matters better or actively invested for retirement.

How much do you know about personal finance? The more knowledge you have, the more action you can take to define and pursue your financial goals and build retirement savings. You can also respond to a few financial realities common to women’s lives.

The average woman spends 12 years out of the working world. So finds WISER, the non-profit formally called Women’s Institute for a Secure Retirement. Typically some of this absence is for parenting, some of it for caregiving. This means the average woman has 12 fewer years to pour steady money into that 401(k), 403(b) or IRA.2

Women live longer. According to the latest estimates from the Centers for Disease Control and Prevention, female life expectancy is at roughly 80.5 years versus about 75.5 years for males. The reality unnoticed in these numbers is that many women will live on their own for a decade or more after being divorced or widowed.3

Women face an earnings gap. On the whole, women do not earn as much as men. In 2009, the Government Accountability Office noted that women earn $0.78 for every $1 that men earn. Some people question this statistic, arguing that it reflects gender inequality in career paths rather than distinct salary discrimination. Regardless, the gap exists – and it is even more pronounced for women of color.4

At work, many women are worth more than the salaries they receive. Some women are reluctant to negotiate a better salary for themselves. Will it upset the equilibrium at the office? Will it be seen as too aggressive? The answers here are probably “no” and “no”. It takes confidence (and it may take a little research) to affirm your professional worth in front of your boss – and it should be done.

A rich spouse does not equal a retirement strategy. It is nice to have a spouse whose wealth allows you freedom from financial worries. Yet even if you are blessed with a rich and attractive mate, there is no telling where that mate (and that money) might end up someday but for fate.

How do you plan to arrange a comfortable future for yourself? If you don’t want to end up dependent on Social Security, then see that you have the financial education that will let you make major money decisions with confidence. Study fundamentals of investing and read up on the basics of retirement and estate strategizing. Follow up by meeting with a financial representative who can help you put a strategy into action.

Irene Smith may be reached at 818 884 4888 or Irene.smith@investmentcenters.com.
www.smithfinancialmanagement.com

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty.

Citations.
1 – thehill.com/blogs/on-the-money/801-economy/126543-changes-to-social-security-could-negatively-affect-women [10/29/10]
2 – mainstreet.com/article/retirement/women-still-far-behind-retirement-plans [4/25/11]
3 – nytimes.com/2011/03/17/health/17brfs-ART-AMERICANLIFE_BRF.html [3/17/11]
4 – civilrights.org/archives/2009/04/291-equal-pay-day.html [4/29/09]
5 – montoyaregistry.com/Financial-Market.aspx?financial-market=money-and-happiness&category=29 [6/5/11]

Baby Boomer Break Ups

Photo credit: FoxBusiness.com

Why are so many Baby Boomers divorcing? An article  by Casey Dowd for the column ‘The Boomer” interviews Karen Stewart, a divorce and relationship expert, on this topic. Stewart answers questions that cover, for example, the most common reasons for splits among the age group, how Baby Boomer’s can protect their wealth and children, and if she believes the trend will continue.

When there is a lot of money in marriage, divorce is a reasonably easy financial solution because when it comes to dividing the assets, there are enough for both parties. Marriages with not a lot of money tend to be more financially strained which can lead to stress and increase the risk of divorce. The baby boomer generation is hit most by those extremes.

To read the interview in its entirety, click here.

It All Adds Up, Know Your CDFA – Irene Smith, CPA, CDFA

Certified Divorce Financial Analyst (CDFA) Irene Smith speaks with Ron and Robert regarding the financial matters all divorcing couples must know. A CFDA is a new designation for assisting couples in divorce. A CDFA is a member of the Institute for Divorce Financial Analysts who specialize in the financial issues surrounding divorce. The role of the CDFA includes acting as an advisor to one party’s divorce lawyer, or as a mediator for both parties. A CDFA uses his or her knowledge of tax law, asset distribution, and short- and long-term financial planning to achieve an equitable settlement.  CDFAs are also helpful in reducing the costs of divorce.

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Untold Secrets

Mike Emrani is a multi-lingual insurance agent with forty-five years of experience. One of his specialties is divorce financial planning. He recently sent me this article regarding the most common errors people make buying insurance, and I’d like to share it with you as well.

Do NOT blindly trust your agent, no matter how well you trust him /her. Ask questions and ask him/her to show you in writing every single subject or promise that he/she orally represents to you; especially in your life insurance policy. A lot of flaws in insurance occurs when clients blindly trust their trusted agents and do not carefully REVIEW their policy(ies).

To read the rest of this important and informative article, click here.

Financial Infidelity

According to a survey of more than 200 American consumers, 80% of couples have at least one member who spends money their spouse does not know about. Almost 20% of married individuals have a credit card with a balance unknown to their spouse. 38% of those with secret spending habits and credit card balances worry their spouse would consider divorce if they ever learned of the Financial Infidelity. (PacDivorce.com)

FINANCIAL INFIDELITY
Originally posted on ASeriousGirl.com

The other day I came across an article about “financial infidelity”. Wikipedia defines financial infidelity as “a term used to describe the secretive act of spending money, possessing credit and credit cards, holding secret accounts or stashes of money, borrowing money, or otherwise incurring debt unknown to one’s spouse, partner, or significant other. Adding to the monetary strain commonly associated with financial infidelity in a relationship is a subsequent loss of intimacy and trust in the relationship.”

Basically, according to the Internets, married people are cheating on each other with money.

Within a week of our moving in together, Mike had added my name to his checking account and I’d closed mine out and deposited all of my funds into his account. I wouldn’t recommend this to all couples, for in some situations that could be a really stupid thing to do. Yet in our case it made sense. For one thing, I had excellent credit and a knack for data entry, while Mike made lots of money that he never took to the bank. He used to get all his bills in red envelopes, not because he couldn’t afford to pay them, but because he never had money in the bank. Instead, all his money was scattered across the kitchen table, shoved into cracks in the walls to keep out drafts, tucked into books like so many bookmarks, and wadded up in the dryer lint catcher. It drove me crazy. So when we agreed to move in together, we agreed to a joint bank account so that I could manage our finances. And manage them I did! Every night when Mike came home from work he would put all his cash in a cigar box we kept next to the bed. Every morning I would deposit his cigar box cash at the bank. I paid all our bills, balanced the checkbook, and watched our budget. By the time we married we had zero debt and a nice little nest egg. Then we moved to New York and blew it all. Then we paid down our debt again, built another nice little nest egg, and moved back to California.

The value of a man who, without complaint, hands over his paycheck every week, is not lost on me. I know how lucky I am to have a partner who is so careful of his spending, so sincere in his desire to help me build the future we want for ourselves. It’s a blessing to know that we have the same goals in mind and that we’re both doing the best we can to meet them. Which is why the thought of financial infidelity is so absolutely horrifying. Aside from death or actual infidelity, I can’t imagine many things more terrifying than discovering that my husband has secret credit card debt. Or secret gambling debt. Or secret anything.

I thought about all this when I read the article, then I googled “financial infidelity” and found 809,000 more articles, and with each word I read I climbed higher and higher on my money-management pedestal. Patted myself on the back and told myself how superior we are because we would never lie to each other about money. We’re better than that. And then I remembered the parking ticket.

If I get a parking ticket and send the check off and don’t say anything to Mike about that $55 – is that financial infidelity? What if I go shopping and tell him I only spent $100, but I actually spent $350? We each have a budgeted personal allowance of $80 a month and Mike never spends that much, but in the past I have spent three times my allotted amount. Yet I’ve never told him (until now). I’ve just let him think I stay within my budget because I don’t want him to get mad, and it’s not like he ever looks at our budget sheets because he totally trusts me to take care of it – so am I cheating on my spouse with money?

AM I A CURRENCY INFIDELITE?

What do you think? Oooh, touchy subject, this is. Money! Scary stuff, I know. But I’m curious. What do you think?

Budgets for Lovers

Originally posted on ASeriousGirl.com
BUDGETS FOR LOVERS

This weekend, for the first time in weeks, Mike and I found ourselves with a free afternoon. We used to have regularly scheduled budgeting sessions, much like our regularly scheduled dates, but since we moved across the country for the second time in four years, all that has fallen by the wayside. So how did we spend our free afternoon? We sat down with coffee and cookies and we drew up a budget.

I don’t know if you’re big on budgeting your expenses, but we definitely are. It’s a habit we got into when we wrote our pre-nup, and we’ve found that whenever we slip out of it, life starts to get really stressful. Money can be frustrating enough, but when you’re in the dark about how much is coming in and how much you’re spending and whether or not you can make the bills next week, it’s hard to focus on much else. Alternatively, when we’re staying on top of our finances, everything else seems to fall beautifully into place.

The first two years we lived in New York we didn’t have a budget. Sure, one had worked before, but I didn’t need that crutch anymore! I could just keep track of our finances in my head! Why waste time writing a budget? Budgets are for sissies! Ahhh… those were the years. The years of expensive restaurants, shopping sprees, and crushing guilt. The years we lived off frozen soybeans and microwave popcorn because we’d spent that week’s grocery money at a bar. The years our debt stacked higher no matter how much we paid on the balance each month. The wilted salad years.

When we were both laid off in 2008, I discovered Crazy Aunt Purl’s Budget Worksheet. It was serendipitous, if you ask me. We were in dire straights and one day, on a break from searching the Craigslist job ads, I got curious and clicked a link and there it was, in all its automatic built-in mathematic glory. I plugged our numbers into the appropriate cells and discovered that we were spending waaaaaaay more than we were earning, and had been for a long, long time. Which explained our credit card situation.

That was when we started getting hot and heavy with our finances. In 2009 we made less than half of what we’d made the year before, but because we were living by our budget, we felt like we had more income than we’d had in ages. Our budget included money for dates and personal spending, and when we stuck to it we had everything we wanted and more. That budget enabled us to get out from under our debt and save enough money to move home.

Then we moved and stopped paying attention to our finances all over again, so yesterday was a real eye-opener. But I’m glad we did it. It’s a huge weight off my shoulders, even if the news isn’t what I hoped it would be, to know what’s going out and what’s coming in, instead of ignoring the bankbook and crossing my fingers. And I swear, budgeting goes hand-in-hand with romance because when we’re not worrying about money we can do other things that are a lot more fun.

Whether you’re married or single, knowing exactly where your money goes every month can help you redirect your funds so you can live a life that’s congruent with your goals and dreams. And because I’m a giver, I’ve attached my version of Aunt Purl’s Budget Worksheet. It’s basically exactly the same as hers, except I added cells for things like Date Night and Savings and then I renamed it Budgets for Lovers. Click it! It’s downloadable!

Budgets for Lovers

If you’d rather download her Personal Budget Sheet, click here, then scroll down past Archives and past Categories, until you get to Knitting Recipes. You’ll find it there.

If you’ve downloaded Budgets for Lovers, you might be wondering where you’re supposed to come up with the numbers for the cells. That’s what this baby is for:

Weekly Budget Worksheet for Lovers

I drew that one up myself, so it’s not nearly as fancy and automatically mathey as Aunt Purl’s, but it does its job. At the end of every week I sit down with my checkbook and all the receipts from Mike’s and my wallet, and I plug in everything we spent and what it was spent on. Then at the end of the month I plug the totals from my weekly sheet into Budgets for Lovers and voila! An eye-opening glimpse into the real-life mysteries of an American couple’s spending habits.

How do you take care of your finances? Is it something you pay close attention to? Do you make lists and notations and use a calculator? Or do you fly by the seat of your pants and let things work out as they will? What helps you feel like your finances are under control?

What women need to know about divorce

The Second Saturday workshop was developed by WIFE, the Women’s Institute for Financial Education, founded in 1988. It is their mission is to empower women to succeed and prosper.  WIFE is dedicated to providing women with information and education during life transitions and their quest for financial independence.

The Second Saturday Workshop is held the second Saturday of each month, and is designed to help divorced and divorcing women take the next step in their life, no matter where they are in the process of untying the knot.  The workshop deals with the legal, financial, family and personal issues of divorce in a logical, yet compassionate way.  With the guidance of trained professionals, workshop participants gain greater understanding of the confusing divorce process.

Second Saturday is a great opportunity for women anywhere in the divorce process. The next Second Saturday workshop is scheduled for Saturday, June 12, from 8:30 a.m. to 1:00 p.m.  Speakers will include attorney Robert Borsky, Certified Divorce Financial Analyst Irene Smith and marriage and family therapist Rosalinda O’Neill.  To register for the event, or if you’d like more information, email Info@TheLawCollaborative.com.

Money Talks = Happy Marriage

Ron Lieber, writer of Your Money for The New York Times wrote, “Divorce tends to be emotionally gut-wrenching for the people who go through it (not to mention those around them). But most couples don’t realize that divorce can also be among the most ruinous financial moves anyone can make.

So how do we avoid divorce?  According to Lieber, you can lower your chances of divorce by talking about money before you get married.  He shares four specific topics he believes should be at the top of your discussion list and I’m sharing them here because I think they should be at the top of your discussion list whether you’re engaged, happily married, thinking about divorce, in the middle of a divorce, or somewhere in between.  Click here to read on.

What experts are involved in the collaborative process?

Ron Supancic answers that very question in this short informational video.

Reduce Your Legal Fees

The dissolution of a marriage often comes at a time when a family is going through a financial as well as emotional crisis. Sometimes the emotional crisis can make the financial one worse by increasing the attorney’s fees incurred and costs expended. For example, if a spouse is vindictive or just plain upset, he or she can refuse to negotiate in good faith, or act in such a way as to provoke numerous court appearances or otherwise delay the proceedings. When this happens it is usually beyond our control, and we have to cope the best we can though the mechanisms provided by the court. Frankly, it can be extremely expensive and frustrating.

However, you can help to keep your fees and costs to the minimum for your case by following these simple rules:

1. Remember that talking to me on the phone is expensive. My time and skill in the law are all that I have with which to make a living, and I must charge for the time I spend on the telephone just as I charge for research, document drafting, and court appearances. Therefore, you can save yourself a great deal of money by not always asking to speak directly with me. As a general rule, discuss your needs first with my paralegal, my law clerk, or my accounts manager, or my front desk administrator. If legal advice or intervention is needed immediately, they are trained to recognize it and will bring it to my attention, as soon as possible. Furthermore, if I am in court or working on a research project, or otherwise unavailable at the time, a detailed message through my staff will get my attention a lot faster than simply asking me to call you back. Better yet, my assistant can often handle the problem right then and there. If you wish information on a court date, the status of service or filing of papers, or other similar information, they can help you as well as I can and at much less expense to you. My account manager can answer all of your billing questions, again at less expense to you. Finally, if you merely wish to leave some information such as an address, telephone number or some figures that I have requested, please leave the message with my staff or with the answering service if they are available.

2. Remember that I am trained as an attorney, not a counselor. Certainly, unless I understand the nature of your relationship with your spouse, I cannot represent you as well as I might. For that reason, I will spend some time with you exploring this interaction, especially toward the beginning of the case. From what you tell me, I may be able to point out some of the “games” that are being played and how to avoid being one of the players. A dissolution or other family law matter can be one of the most stressful times of a person’s life, and it is to your best legal interest that you cope with the stresses. If you are not thinking clearly, you may be inclined to make decisions on whether or how to settle the case that will be very expensive in the long run. However, at some particular point, I will have learned what I need to help you legally, and I will be giving you the best advice I can on how to cope with the legal and practical aspects of the case. From that point on, my listening to your non-legal experiences with your spouse, your spouse’s faults and other matters will usually appear on your monthly statement. Generally, this will be the case after the initial consultation or first court hearing.

3. Participate as effectively as you can in your own case. Your time is likely to be less expensive to you than mine, and you will certainly be more familiar with many of the details. Therefore you will probably wish to obtain and organize as much of the information and documents for your case as possible. For example, in a case involving child or spousal support, the required income and expense forms are long and complex and require extensive background information and documentation. Experience shows that if you use your best efforts to complete these forms and provide the information and documents before the appointment at which we will discuss them, you will save up to two hours at that appointment and will be able to most clearly and favorably present your evidence to the court. If my office has to do all the work involved in preparing these forms and organizing the information, your case will become more costly. If there is a delay in preparing and filing such documents, the other side could apply to the court for sanctions in the form of a money judgment against you, use the delay in answering as an excuse to postpone court dates, request that the court prevent you from having your evidence submitted, or invoke other penalties.

4. Organize your questions and concerns so that they may all be discussed at one time rather than on separate occasions. It is generally much less expensive to have one long discussion rather than several shorter ones.

5. Think about settling the case instead of going to trial. Under the best circumstances, a trial’s outcome is uncertain. It is very unusual for husband and wife to recall things in the same way, especially the circumstances and understandings involved in acquiring assets or incurring debts. Because of such factual disputes and because there are numerous unsettled areas in the law, neither I nor anyone else can accurately estimate the odds of any particular outcome, nor can any single result in the case be guaranteed, if trial is necessary. For these reasons, trial is generally not in a client’s best interest if it can be avoided, and it is almost always best to settle the case if we can obtain a reasonably fair agreement. Therefore, as soon as we have enough information to evaluate the issues, I will usually seek your authority to negotiate a settlement.

Despite this, my usual office practice is to file a request for a trial date fairly early in the proceedings. This has the effect of putting an externally imposed time limit on negotiations. Even if the case may not actually be tried on the first assigned trial date (usually because the court schedule is overcrowded), there is an incentive to negotiate and achieve the best settlement for you. We present the position that we are prepared to try the case, unless we receive an acceptable offer. Just because we have filed a request for trial date, you do not need to assume that your case will go to trial or give up on trying to think of constructive settlement possibilities.

6. Particularly if your spouse has an attorney, please do not try to settle any major issues directly with your spouse unless you have discussed your proposals with me first. You have hired me because of my knowledge of the technicalities and practicalities of California Family Law, and if you try to negotiate major issues yourself you may unwittingly waive substantial rights, fail to provide for certain common contingencies, or otherwise damage your case. On the other hand, after discussion I frequently advise clients to attempt to settle who is to receive items of furniture, furnishings, appliances, and other personal and household items directly with your spouses. “Trying the Tupperware” issue usually results in spending more money to divide these items than it costs to replace them.

7. Please call the office if your address or telephone number changes, so that we can reach you. Sometimes it is important that I talk to you within a few hours, and it is most helpful for us to have both a home and a “daytime” number.

8. Please call the office if there are any important changes in the facts or your circumstances. These changes can drastically affect the case, the best strategic approach to it, and our position. I may not be immediately available to talk to you, but I will do my best to return all calls that require a response or have them returned by my staff. If you need to speak to me, I will be happy to accommodate you as soon as possible. I only want you to remember the financial realities; my time is billed at a much higher rate rather than that of my staff. Just as I give attention to your case when I am working on it, I have other cases that also require full attention when I am working on it, I have other cases which also require full attention when I am working on them.

9. In all cases, tell us the truth and provide complete and accurate documents, even if you fell that it is embarrassing or may not be information you want to share. Having to work without full and accurate information almost always leads to performing work over and over again that should have been finished the first time and unpredictable, to say the least, hearing in court.

I don’t want you to have the feeling of “Don’t call us, we’ll call you”. On the contrary, there will be times, perhaps many, when you will need to speak to me. I urge you to do so when necessary. Please bear in mind that, in the most literal sense, my time is money and if you always insist on speaking to me you will probably be wasting your money. Again, my assistants and my accounts manager are trained to recognize when your case requires my immediate attention and to assist you at other times. Most legal matters move slowly. Unless a threat of physical violence or other irreversible and immediate harm is present, there are few situations that require immediate action (or in which immediate action is even possible).

Similarly, while you can leave messages with my answering service evenings and weekends, and while I can usually be reached in a real emergency, there is almost no action I can take until normal business hours that you cannot take yourself. You will have copies of existing court orders. With very few exceptions, new or different orders cannot be obtained after court hours. Please try to be patient, organized, and bear in mind which services can be provided best by myself, by my staff, or by someone else.

TLC, Bringing peace to the legal process.