A view of the ancient city of Toledo, Spain, spread out like a page from a storybook, seen from our hotel window. A lifelong dream to tour Spain-realized with my month-long vacation last fall.

Me? Take a month-long vacation? Not possible, I told myself for a long time. I’m self-employed. I’ve never been anywhere for a whole month. My clients need me. I do speak Spanish, but to be away for that long? Yadda yadda yadda. All the reasons why I couldn’t possibly.
But I’ll confess, I actually do take my own advice sometimes! And the advice I took years ago was to save. I save 10% from every paycheck. That’s MY money. Not for bills, not for the house, not for anything, really, just to have for FREEDOM. And it’s my freedom money that enabled this trip.

A 7 day tour with an alumni group in Catalonia, 90 minutes north of Barcelona with my ‘significant other’, followed by another week or so of travelling on our own to Pamplona and Madrid. And then he went home, and I had the extra gift of 10 days travelling in Spain with my adult daughter in Madrid, Toledo, Granada.

I/we visited so many of the places I’ve studied throughout my life, as a Spanish speaker, a Spanish major in college, and a Spanish teacher (junior high and college) before I became a financial professional. Truly a lifelong ambition, the top item on my ‘bucket list’. And I did it.

With the power of intention- Yes, I can! And the power of saving. When I started my freedom account, I didn’t have any specific thing in mind. Maybe you will- whatever you dream of: travel? Buying a house? A musical instrument with lessons to learn to play? A friend of mine has a ‘tummy-tuck fund’. Whatever you want can be possible with those two things: An intention, and enough money to fund your dream.

Is it selfish to put aside some money for yourself? Maybe. And maybe we need to revisit the definition of ‘selfish’. Taking care of ‘self’ is not a bad thing, not something to feel guilty about. But that’s a story for another time…

For now- I invite you to start saving. It doesn’t have to be much, but it helps if it’s regular. Something from every paycheck, every week/biweekly/monthly. In an account with just your name on it.

Start now- and see where it takes you when you are ready. The results can be amazing! In Spanish, Maravilloso!

Let’s create a Financial Freedom Plan with YOU at the center! Schedule your free Financial Clarity session today so we can help YOU create a financial freedom plan – www.calendly.com/ContactAGrace

1.  Are you eligible to claim your children as dependents?  This is usually clarified in the divorce settlement agreement, but that’s not quite enough.  The IRS has a required form: Form 8332- Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent.  The must be reviewed, signed and attached to both of your tax returns.  Go to www.irs.gov for a copy of the form and more information.
2. Did you remember that you can alternate who claims your children as dependents from year to year?  A child can be claimed as your dependent long as he/she is under age 19 (on Dec 31) and lives with you for more than half of the year, or is a full time student up to age 24.
3. What status will you use to file your taxes?  If you were divorced by 12/31, married filing jointly is no longer an option.  You can choose between single and head of household.  Check with your tax preparer to see which works better for you.
4. Are you receiving or paying alimony/spousal maintenance?

Remember that alimony is taxable to the recipient and a tax deduction to the person who’s paying.  If this is the first year you are receiving maintenance, and you haven’t been putting money aside for your tax bill, brace yourself for the shock, and start saving now.  You can open a savings account for taxes, and have money transferred monthly from your checking account, to minimize this problem going forward.  Discuss this with your tax preparer, to see if you need to make estimated payments during the year.

Child support is tax-neutral: it’s not taxable to the recipient, and it’s not tax deductible to the person who’s paying.

Your first tax return after your divorce, is just one more step on your journey to financial freedom.

The next step is to start planning what the future looks like. Talk about what you each see and expect out of the next few decades.

• How do you want to split expenses? Do you deposit all funds into a joint account and then pay everything from that?  Some people prefer 50/50 even if one person makes more money. Others divide expenses based on income. Some couples even work out more creative solutions, such as: One person pays all the living expenses while the other does the saving and paying for extras, like vacations and concerts.  Figure out what works in your relationship that won’t lead to misunderstandings or conflicts.
• Do you want joint savings and/or checking accounts? Depending on how you share expenses, you may want to share savings and checking accounts, too. Create some infrastructure that helps you reach your goals. For example, a joint savings account for your dream home that each of you automatically pays into each month. Or, if you share groceries and other living expenses, you might create a checking account for those expenses, so you don’t have to keep a ledger. The more you can set and forget, the easier achieving joint goals may be.  Make certain that you talk about this on your Money Dates, so that one partner doesn’t overdraw, due to poor communication. 
• Talk contingency plans such as creating a nest egg for emergencies,  life insurance, and other safety nets. It’s a good rule of thumb to start with savings that can cover expenses  for three to six months.
• Are you interested in buying a home together? What kind of house?  How much would it cost?  Can you save up for a down payment?  Making a plan together and writing it down can help you reach that goal.
• Talk about kids and aging relatives. As a couple, you should discuss future  expenses and any expectations you have about future responsibilities before it becomes an issue. From preschool, private school and college to eldercare, there are lots of expenses that come with dependents and should be considered in your long-term planning.
• What does retirement look like for you as a couple? Discuss what retirement looks like for you.  How much income will you need? Have either of you started to save in an IRA or 401(k) plan? Did you know that 60 percent of couples and almost half of Boomers don’t have any idea how much their Social Security benefit might be?3 The information is readily available on the Social Security website if you want to start factoring that into your retirement plans.

Celebrate successes 

There will be struggles and wins on your path to financial security. Talk about how  you want to celebrate the milestones you receive. Do you want to throw a party to celebrate making the last payment on your student loans? A family night out when your emergency savings account hits its target? Recognize your successes, and make it fun.

What was once an uncomfortable topic can become the glue that binds your relationship together. Communicating about the future you want to build together can be fun! So, when are you planning your Money Date?

For more ideas on how to manage your finances, call me at 716.817.6425 and we’ll tackle this together.

If you’d like to discuss any of these helpful tips, schedule a Financial Clarity session with me at www.calendly.com/contactAGrace.

Walking from room to room can evoke years of memories, both good and bad. You may have remodeled, decorated and redecorated every inch of it, with treasured items at every turn. Or unhappiness may lurk there, in every dark corner. The equity in your house — the part you own, without the bank — can be your pot of gold, cash to fund your freedom.

However you feel about the house, it’s likely the biggest asset you own jointly, and what you do with it next, will be an important part of your divorce settlement. Most women and mostly all children -would prefer to stay where they are. But this is an important decision to be made by the adults. This is a time of change. The challenge is to separate the emotional from the practical, and take a long, hard look at your home, and
make important decisions about it.

Part of my job, at Transitioning Finances, is to complete the financial analyses needed to help you see if you can afford to stay- and for how long. Here are some key questions for you to consider, if you’re going through a divorce and want to keep the house.

Why do you want to keep the house?

Is it because it’s easier to stay than to pack up and go? Maybe it’s in a convenient location near the kids’ schools or close to where you work? Or, maybe your parents and siblings live just around the corner, and you value the support and connection. Try to keep emotions out of your decision, so that you can reach a divorce settlement agreement that puts you on a solid financial footing.

Can you afford to keep the house? This is important at every income level. How do the expenses of the house impact your soon-to-be-single budget? Is there enough money in the new budge to cover everything? Beyond the mortgage, taxes, utilities, insurance, maintenance, there are the unexpected repairs and constant upkeep. The‘honey-do’ list is all yours now, and you may have to hire professionals to take care of things your spouse used to do. A house costs money. Even affluent women have to thoughtfully weigh their options.

Would some other assets be worth more to you than the house? It’s important to understand that not all assets that are valued the same are actually worth the same.

Here’s an example:
Let’s say you’re trying to decide whether to keep a $500,000 savings account or a $500,000 house that’s completely paid off. On paper, they look the same. Your dream is to stay in this house until your youngest graduates from high school — thee years more, and you’re betting that the house will grow substantially in value. In addition to all the expenses we mentioned above, when you eventually sell your home, there may be
expenses to make the house ready for optimum sale- things to be fixed, painted, landscaped. These expenses are yours. Let’s assume you bought the home for $150,000, your neighborhood is now in high demand, and it’s now worth $500,000. Your capital gain is $350,000.

Sounds great, doesn’t it? But wait. Subtract your $250,000 capital gains exclusion as a single person, and you’ll have to pay capital gains tax on $100,000. At the current capital gains tax rate of 15%, that’s a tax bill of $15,000. Add that to the costs of sale, estimated at 8%, for another $40,000 off the top.

In three years, the savings account could be worth est. $520,000 (at approx. 1.25% ) It could alternatively provide extra cash to cover your expenses. Your house could net you $445,000, after taxes and expenses, only after you sell. You may have a different opinion about keeping the house vs taking the cash.

What other living options are available to you?

Is there a good alternative, for the single person/single parent you will be? Maybe your house is just too big for your smaller family. Maybe a fresh start would be good for everyone. Are there rental options nearby? Smaller properties available? Keep in mind that there are lots of different places you can call “home.”

Going From We to Me can be very challenging. Avoiding the emotional roller coaster of divorce when making important decisions about your family home isn’t easy- but it can be crucial to your future financial health.. With the help of your advisors and CDFA, make the best decision you can, as a part of a comprehensive plan for continued financial stability and security in the future.

Avoid the common mistakes most women make about money, especially when they are in crisis- divorce, widowed, etc.  Schedule a free consultation with me at Calendly.com/contactagrace; or call me at 716-817-6425.

ADRIENNE ROTHSTEIN GRACE, CFP®, CDFA
CERTIFIED DIVORCE FINANCIAL ANALYST
1404 SWEET HOME RD, SUITE 9 AMHERST, NY 14228
716-817-6425/FAX 716-313-1754
ADRIENNE@ADRIENNEGRACE.COM
WWW.TRANSITIONINGFINANCES.COM
MEMBER, NYS COUNCIL ON DIVORCE MEDIATION.
EMPOWERING YOU. FINANCIALLY.

SECURITIES AND ADVISORY SERVICES OFFERED THROUGH CADARET, GRANT & CO., INC., A REGISTERED INVESTMENT ADVISOR AND MEMBER FINRA/SIPC. DAVIS FINANCIAL SERVICE AND CADARET, GRANT & CO., INC. ARE SEPARATE ENTITIES.

1. https://www.nerdwallet.com/blog/average-credit-card-debt-household/

Where do YOU stand in relation to the ‘average U.S. Household’?
Do you have one of these- or are you working under the trifecta of debt- with several or
perhaps all of these weighing you down?

How does this make you feel? Are you confident? Scared? Overwhelmed? Do
you need some help?

A financial plan can help you to structure your financial life, so that you can get a better
handle on your debts- and your goals! and move forward in a positive way to a secure
financial future.

As a Certified Financial Planner (CFP®), I help people manage their financial lives with
ease and confidence, and build toward the goals they want to achieve.
Call me for a free consultation about creating your financial plan.

Avoid the common mistakes most women make about money, especially when they are in crisis- divorce, widowed, etc.  Schedule a free consultation with me at Calendly.com/contactagrace; or call me at 716-817-6425.

Adrienne Rothstein Grace, CFP®, CDFA
Certified Divorce Financial Analyst
1404 Sweet Home Rd, Suite 9 Amherst, NY 14228
716-817-6425/fax 716-313-1754
adrienne@adriennegrace.com
www.TransitioningFinances.com
Member, NYS Council on Divorce Mediation.
Empowering You. Financially.
Securities and Advisory Services offered through Cadaret, Grant & Co., Inc., a Registered Investment Advisor and Member FINRA/SIPC. Davis Financial Service and Cadaret, Grant & Co., Inc. are separate entities.

Remember that putting “fun” into your life balance is key to a healthy life, healthy relationships, and a healthy outlook. It is as important to budget for fun as much as to budget for your healthcare or your child’s car.

“Fun” does not have to be expensive, but it has to be planned for in your budget at whatever level will give you balance. By planning for financial security with a sound budget, you can make these the best years of your life. A budget is simply an evergreen document that gives you a picture of your income and expenses, and helps prioritize both. It changes as your circumstances change.

If you’ve never had a budget, you’re not alone. More than half of Americans don’t use a budget regularly according to the National Foundation for Credit Counseling 2011 Consumer Financial Literacy Survey. As you enter your 40s, you’ve got important decisions and changes to make. In addition to your ordinary monthly expenses, your children may be about to go to college. Your parents may need additional care, and retirement is not very far away. No matter what stage of life you’re in, it’s never too late to begin managing your finances. 

Step 1. Get the big picture first. Determine whether you need a weekly, monthly or other time frame budget based on the regularity of your income and expenses. List all the money you get in a month, from your job or business, interest on your savings and investments and any other payments you receive. List all your expenses, including taxes, housing costs, transportation, food, insurance and health care, debt and utilities. Make allowances for irregular categories, such as entertainment and recreation, clothing and miscellaneous.

Step 2. First place to start: subtract your expenses from your income to evaluate your budget health. Decide what your expense priorities are and calculate the way to get there. Track your spending with the smallest of detail (too often we overlook seemingly insignificant expenditures that end up totaling more than we think). Look for opportunities to shave money off your expenses (bundling in-home entertainment and internet, shopping around for lower-cost service companies, etc.). Start to limit your use of credit to make purchases. Save more money. Consider charitable giving now or as planned giving in your will. 

Step 3. Prioritize the funding of your retirement by increasing your contributions. Place at least 10 percent of your income into retirement savings accounts and max out the contributions allowed through your employer. Talk with a financial advisor about your money needs for the future. Most Americans have an unrealistic idea of how much money they will need to live comfortably in retirement. Aim for about $1.5 million to $3 million in the bank so you don’t outlive your money.

Step 4. Review all your investing alternatives. Determine whether you’re being too conservative or on the other hand entertaining too much risk in consideration of your future financial priorities. Make necessary changes. Talk with a trusted professional help to find out if there’s a way to allow your money to grow — and last longer — without adding too much risk or instability to your investments.

Step 5. Focus on paying down your mortgage. Investment advisors agree that by the time you are in your 60’s your mortgage should be completely paid off. This is the first step in a comprehensive effort to reduce your overall debt load. Spend your 40s eliminating your entire debt burden so you can enjoy your later years.

Step 6. Analyze your insurance needs. Be sure you are budgeting appropriately to cover life, health and long-term care insurance needs. Plan your estate. No matter its size be sure to create a will, decide on power of attorney and set your medical directives. These are important adjuncts to your financial life at this stage. They ensure that all the hard work you’ve done in accumulating wealth doesn’t get intercepted as you progress toward ending your formal work life. They also ensure that your earnings and savings will benefit your loved ones.

Step 7. Budget for fun. Your 40s may seem all about responsibility; you work hard and care for your family. But you shouldn’t neglect yourself either. This stage of life offers an opportunity to pursue put-off passions with the stability you’ve built over time. Create room in your budget for travel, adventure, and that convertible you’ve always dreamed of. Now is the time to enjoy the fruits of your labor.

1. Is there anyone at all on whom you are at least partly financially dependent?
2. What would happen if that person was no longer able to deliver their end?
3. Are you prepared?

Well, contrary to popular belief, sometimes, life does give you a “do-over.” You might call me the women’s financial do-over. But the key to a “do-over,” is to do it over the right way. No matter what your lifestage, there are simple steps you need to follow to plan your financial future… over…

Let’s consider what women should be doing at various points in their life.

For those of you who are in your 20’s

• Remember the “save a penny for a rainy day” mantra, well start an emergency fund – you should have three to six months pay saved up in case you run into financial surprises. Surprises are.. after all… a surprise. But you can be prepared.
• I know you are not really thinking about retirement yet, but if your company offers a 401(k), sign up. Contribute at least the minimum percentage needed to qualify for the full employer match – you will get the most out of your employer benefits this way.
• Be financially prudent. Limit yourself to just one credit card, and pay the entire balance monthly. If you have an outstanding balance on credit cards, pay as much as you can as quickly as possible, starting with the highest interest card first
• Work on paying down any student loan debt
• And check your credit report to make sure there are no discrepancies – you would be surprised what can show up on your credit report that you are unaware of

For those of you in your 30’s

• Take a look at how your 401(k) or IRA money is being invested – a woman at your age may be able to afford more aggressive investments as you have many years before retirement
• If you’re buying a home, put 20% down to a void the cost of mortgage insurance. Your mortgage payment should be no more than 28% of your monthly income. These two benchmarks assure that you buy smartly
• Take out a disability income insurance policy if you don’t already have one, to protect you from the unexpected.
• Work with a lawyer to establish a will, and to address any other estate planning needs you may have. Working on your will is not only a way to address your estate planning, but will force you to answer some questions you don’t even realize are out there.

For those of you in your 40’s

• Review your life insurance policies to be sure you have the right amount of coverage and the right type as your needs may have changed. What we needed in our 30’s is not likely the same as what we need in our 40’s.
• Explore options for long term care insurance – buying young gives you more options for better coverage at better rates.
• Take a look at your 401(k) plan or IRA investments.  Your investment objectives may have changed as your life has undoubtedly changed.  Update your investments to better reflect your goals.
• Give your credit report another solid “once over” to be sure it reflects a true statement about your money management habits.

For those of you in your 50’s

• Revisit your retirement savings goal to make sure it still makes sense, and that you are on the right plan to reach that goal.
• If you are behind on savings, you can catch up by taking advantage of higher contribution limits in 401(k)s and IRAs.
• Review your estate plan to make sure it is up to date with changes in your life and current laws. Confirm you executors are the ones best suited to carry out your desires.

For those of you in your 60’s

• Consider your retirement income strategy. Determine whether you can live off of a small percentage of your retirement assets and continue investing the majority.
• If you earned a traditional pension, compare the payout options and make sure your choice doesn’t exclude you from other retiree benefits.
• Find out when you can receive your full Social Security benefit – you may want to hold off on collecting your benefit up to age 70 to increase your monthly payout.
• Get yourself ready to enjoy your upcoming retirement in every way, not just financially.

For Sheila, reducing today’s expenses by selling the family home and downsizing to a smaller place makes the most sense financially. Yes, it is yet another change that she and the children will need to absorb. It could mean changing schools and disrupting children’s neighborhood friendships.  In fact, all of the family’s habits and comforts will be disrupted more than it already is. Emotionally, this is a very tough decision. But financially, it is vital to keeping the family on track to their future.  As time goes on, there will be college tuitions to pay, weddings to be hosted, cars to be replaced and emergencies handled.

Clients come to me from all walks of life with the same question – “How can I maintain my lifestyle after my divorce?” For some – they simply cannot. Their marital combined income that may have barely supported just one household, will now be split into two. Where once Sheila had her husband on tap for quick household repairs and maintenance, she will now be hiring outside services. Sheila’s husband’s small business allowed him to be available for child care in the afternoons – now afterschool daycare costs need to be added.  Not only will Sheila have less money to cover expenses – she will also have more expenses.

This is a time of hard decisions.  As the adult in the family you need to be the one to face them- and help everyone, including yourself, move on.  Sometimes this very hard decision is the only one  that will provide a secure future for all of you.

If you have not planned your estate yet, take inventory. Spend a half-hour and jot down the assets you own, major and minor. Who should own these assets after you die? Your spouse should do this, too – and you should talk about your preferences. It may not turn out to be the easiest conversation, but agreement now may preclude family squabbles and legal challenges down the line. (If you have a prenuptial agreement in place, you may have already discussed some of these matters.) You should also consider two scenarios – what happens if you die first, and what happens if your spouse dies before you do.

If you and/or your spouse have children from prior marriages, there may be some dilemmas for each of you. If you die, there is a real possibility that your current husband or wife will not elect to provide for your children from past marriages. So what might you do to prepare for that possibility? You might make a child the primary beneficiary of a life insurance policy, or set up a trust for your kid(s), or place certain real property under joint ownership with a child.

If you have already written a will, it will probably need revisions. They could be considerable. You want to be extremely specific about which heir gets what; you need to state bequests convincingly, because the more convincing your bequest, the less ambiguity.

How up-to-date are your beneficiary designations? Out-of-date beneficiary decisions are an Achilles heel of estate planning. Be sure to review them; you may want to revise beneficiary forms for retirement plans, investment accounts, and insurance policies.

As you consider these revisions, pay particular attention if you have been divorced. Divorce may actually preclude you from changing beneficiaries in certain cases. Turn to a lawyer and show the lawyer a copy of your divorcee decree; ask if revising your beneficiary designations will violate it. Should you be unable to make beneficiary changes to your life insurance policy, you may want to buy another one in consideration of your new spouse.

Take a look at irrevocable trusts. They can be used to provide for your spouse as well as your kids. Some people establish a separate property trust to provide for their spouse after their death while directing most or all of their real property to their children.

Those aforementioned pre-nups can play an estate planning role as well. They allow you to designate personal assets (such as assets within a college savings account) for existing rather than future children. Post-nuptial agreements (similar to pre-nups, but drafted after a marriage) can also accomplish this. Some states do not view pre-nup and post-nup agreements as legally valid, however – and sometimes carrying out the terms and conditions of these agreements is up to a judge.

Be sure to consult legal & financial professionals. When estates become this complex, collaboration with professionals having a thorough understanding of estate planning and tax issues is essential.

Insurance

1. Apply for COBRA or other health insurance, if necessary
2. Change your insurance: auto and homeowner’s/renters from a joint policy to one for you, even if your address stays the same.
3. Draft and execute a new will, trust, power of attorney, living will and health care proxy.
4. Change the beneficiaries on your life insurance, 401k, pension and IRA (Roth and Traditional), 529 plans and any other accounts which have a beneficiary designation.
5. If purchase or maintenance of life insurance policies is mandated, follow up to ensure that it has been completed. Ask for proof, and set up an annual compliance procedure to be sure that policies stay in force with appropriate beneficiary designations

Assets:

6. Divide your assets- and debts- as agreed in the decree. You may need a financial advisor (CDFA) to help with this.
7. Change the locks and access codes and passwords on all secured items: real estate, vehicles, boats, safety deposit boxes, post office boxes, email, bank accounts, etc.
8. Remove your name, or your ex’s name from any joint accounts or mortgages. If the divorce decree requires a quitclaim or warranty deed, follow up until it is executed and recorded.  Your attorney may assist with the deed.  If refinancing is required, start the process as soon as possible.
9. Meet with a financial advisor (Certified Financial Planner, or Certified Divorce Financial Analyst) to put together a financial plan for your new future. If you had an advisor during your marriage, consider working with someone new, to avoid potential conflicts of interest.  Review investments received as a part of the settlement to determine if they are appropriate for your new circumstances.  Reallocate as needed, especially regarding Steps 16, 17, below.
10. If transfers of investment, retirement and savings accounts are included in your divorce settlement (IRA, Roth IRA, other accounts), follow up until the transfers are made into your own accounts. Your financial advisor can be very helpful in tracking this.
11. If a Qualified Domestic Relations Order (ODRO) is required to divide 401k, 403b, pensions, other retirement accounts, contact your attorney, or a QDRO specialist to have the order drafted and sent to the appropriate place(s). Follow up, or have your financial advisor help you follow up until the orders have been fulfilled and retirement funds have been transferred to your name.
12. Hire a new CPA or tax preparer to help with your tax return. Review and adjust your withholding allowances to reflect your new filing status, income level, payment or receipt of maintenance, etc.
13. If you or your spouse is age 70 or over, recalculate your Required Minimum Distribution.

Budgeting, Banking and Credit

14. Review your income and expenses. Update or create your budget to live within your means, or determine how much additional income you need and what you need to do to earn it.

1. Open a checking and savings account in your own name, if you don’t already have one.
2. Establish a credit card in your own name, if you don’t already have one.  Use it wisely!
3. Set up direct deposit or automatic transfer for payment or receipt of child support and maintenance.

Congratulations!  Your transition is underway.  You are several steps farther along your path to empowering yourself, financially.