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Facing divorce? Take these 5 steps to find your inner power

Facing divorce? Take these 5 steps to find your inner power

Anyone who has divorced knows how long and difficult the process can be. From the decision to divorce, through the separation and judgment, and on to the new normal, the process is fraught with details, meetings, and compromises. Divorce rocks your world, and a late-in-life or gray divorce disrupts decades of expectations and plans. The key to a successful transition—in divorce and other shattering experiences—is finding your power.

Easier said than done? Perhaps. But it can be done. Many wise women have gone through the transition and set inspiring examples of transformation. Their examples show us the way to move through change with grace and strength, and with our eyes laser-focused on building a happier future.

My friend Janet is one example. When she was in her late 40s, her husband walked out and left her with two teenage boys, a handful of unexplained debt, and her own recent diagnosis of MS. It wasn’t easy shifting from her initial rage at the situation to acceptance and, eventually, a good life for herself. But she did it. How? Armed with friends, family, professional advisors, and a skill at making lists, she broke down what she needed to do into small, manageable steps. The smaller the step, the better. Here’s what helped her find her inner power and take the first baby steps towards her new life:

  1. She got help from her closest friends.
    First, she reached out to her inner circle of friends. Sharing your reality can help you face the truth, and even your shame. Luckily for Janet, she had more than a few women ready to support her, including old college friends, other parents she’d met through her kids’ activities, and a circle of friends from her book club. “I was floored by the support they offered—not only from day one,” remembers Janet, “but for what seemed to me like the endless months that followed.” I believe women who have friends that are more than ‘pals who want to socialize’ are particularly fortunate. Our true friends can become our fiercest defenders, our most honest critics, and the people we can count on for a kind word or a strong hug. No matter how young or old you are, or how large or small your challenges may be, look around and treasure your circle of friends.

     
  2. She hired a (great) attorney.
    And not just any attorney. She found a family law specialist with skill, experience, and strength. He helped her achieve a fair settlement, wrote up the judgment, and then went the extra mile (or two) to follow up with all the post-judgment details. That’s where the magic happens. For example, the marital settlement agreement stated that the house was to be sold and the proceeds used to equalize the financial settlement, but with her ex on the title, Janet needed his signature to move forward. The ex tried to nickel and dime her in the transfer of assets. Her attorney stepped in to enforce the judgment and facilitate the process. (I recently sent him a personal thank you for using his “super powers” to help Janet with the most finite details. He was amazing!) That level of dedication and support made a world of difference.

     
  3. She hired a financial advisor who specializes in divorce.
    Yes, that’s me. (Though I was thrilled to learn that her attorney had made certain she was working with a good advisor… and a good therapist. He definitely gets it!) Together, we went through our financial checklist to be sure she was on her feet financially, taking care to break down each step into manageable, bite-sized pieces. I’ve been through my own divorce, and I know just how disempowering it can be. I also know how amazing it feels on the other side! An advisor who specializes in divorce can help you navigate the unique challenges of this transition—emotionally and financially—to get you back on your feet and moving forward.

     
  4. She tackled her cash flow.
    Janet had been a stay-at-home mom for more than fifteen years, so to begin to earn an income was a major hurdle. We immediately looked at her cash flow to identify what bills needed to be paid in the first six months and the resources on hand to cover them. Next, we looked at where she might live after the house was sold and discussed rent versus buy, and how much rent or mortgage was prudent. Cash management is the foundation of all financial decisions—whether for a pack of lifesavers or for real estate purchases. Knowing what resources would be available long term helped her gain her confidence and feel less like the whims of her ex were dictating her life.

     
  5. She looked beyond today.
    After a divorce, life starts anew. With any plan or journey, the starting point is precisely where you are today. Janet had a Gavron order, which meant that in a few years she would have to begin to earn a living. At the moment, however, her primary source of income would be spousal support, so she needed to insure that income via a life insurance policy on her ex. Together we looked at these and other important pieces of her financial puzzle, including updating her estate plan, deciding what kind of mortgage would be best, and investing her marital assets, as well as analyzing her income, protection, debt, and more. The millennials call all this holistic planning ‘adulting.’ After a divorce, gray or otherwise, ‘adulting’ starts anew with baby steps. Janet’s MS diagnosis required some specialized planning, so we made some assumptions about her health and her future. Step-by-step, the myriad details necessary to reestablish her financial future were addressed, and life went on.

A good two years after Janet’s divorce, she told me that she could remember the moment she began to feel confident and in control again. In her words, “I’d found my inner power that had been missing for years, and the moment I did, I could tell my kids could sense it too. Because when I’d found my power, they suddenly felt safe. That was the biggest payoff of all.”

If you are facing divorce, I urge you to take the first steps toward finding your inner power today. If it feels impossible or overwhelming, break it into smaller, manageable actions. One tiny action is to ask for help. Or tinier yet, decide you need help. You can build your new normal… step by step by step.
 

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Mindfulness and markets: a perfect match

Mindfulness and markets: a perfect match

Last weekend I attended a day-long workshop with Sharon Salzberg, a world-renowned author,  teacher, and influencer who, for decades, has been an important voice in the modern movement toward mindfulness and meditation. The title of the workshop was “Equanimity in challenging times.” The timing couldn’t have been more perfect.

Salzberg opened the morning with a simple sentence: “Some things just hurt.” (Isn’t that the truth?!) Of course, her message was about much more than the fact that pain exists. The focus of the day was learning how to stay balanced—to find a path to calm even when it feels like you are being tossed in the storm. Sharon went on to talk about how maintaining balance inside ourselves gives us the power to stop reacting to the small things, and (at long last) to focus on the things that matter.

What an important message! It’s something most of us know on some level, but achieving equanimity is easier said than done in our day-to-day lives. After all, “some things just hurt,” and trying to stay calm when we feel pain can be a major challenge.

That can be especially true when facing a financial challenge. Money, inherently, is an emotional hotbed, which means that the smallest issue can create fear, panic, shame, and a slew of other negative feelings. We’re human: we imbue money with power, and we often cannot control our obsession with it. (Read more on money and emotions in my blog post, Finance, and feelings: Navigating life's twists and turns.) However, what we can do is find a new perspective.

Maria called me the other day, awash in emotions about the current stock market and its impact on her portfolio. At 67, she is in her first year of retirement. As a widow, she is on her own financially. Like many women in her position, her biggest fear is outliving her assets—of becoming a penniless bag lady in her final years. “Since December, I’ve lost more money than I can stand to think about,” she told me. “I worry about it night and day. I can’t take it much longer!”

Maria is no financial novice. She understands how the markets work, she has saved well and invested wisely, and she’s old enough to have watched the market swing back and forth—sometimes wildly—many times. Her fear of the future has thrown her off balance. To ease her mind, I began by telling her a story about one of my challenges: acrophobia. Yes, I suffer from a terrible fear of heights.

I told Maria the story about the night I drove up the coast to a fabulous party with great friends. I had been looking forward to the evening for weeks. As I approached the Malibu cliffs, that old fear started to take hold. I suddenly had the overwhelming desire to turn back. All I wanted in that moment was to be home, safe and sound, with no cliff to be found. (Even re-telling the story now, I can feel my heart beating way too fast in my chest!) I felt totally and completely defeated. I pulled over to the side of the road—not the cliff side!—and called the host to tell her I couldn’t make it. I can still hear her calm, soothing response:

“Lauren, you can do it. Just breathe…and don’t look.”

My friend was right. It wasn’t easy, but I took a deep breath, and I just drove. Once I arrived, every minute at the party was extra sweet. I had accepted that the best way out of emotions is through them. I’d found a path to equanimity by simply following the road to the party.

Of course, keeping Maria’s portfolio is much more important than my ability to attend a party (no matter how fabulous it may be!), so I added to my story by reminding her that this momentary dip in her portfolio is likely just that: momentary. Then I showed her this chart that illustrates the percentage of positive returns of the S&P 500, from the beginning of the index through 2017:

Providing this new perspective helped tremendously. Looking at the market from a distance, Maria saw today’s shifts in the market for what they are: short-term “blips.” Did that make it any less painful for her to see that her nest egg is down by double digits? Absolutely not. As Sharon Salzberg said last weekend, “Some things just hurt.” Despite the pain, Maria could feel that there was no reason to panic. I repeated the words of my friend in Malibu: “Just breathe…and don’t look.” Easier said than done, I know, but Maria is doing just that.

Late in the day on Saturday, someone asked, “Does meditation really work?” Salzberg replied that, yes, it does, “just not always the way we expect it to.” She said that it “works” as the result of a lifetime of regular, dedicated practice. I have to wonder: maybe she was talking about investing the whole time after all. 

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To help the next generation, equip them for a ‘hero’s journey’

To help the next generation, equip them for a ‘hero’s journey’

Have you ever heard of a ‘hero’s journey’? Years ago, I read Joseph Campbell’s classic The Hero with a Thousand Faces, which discusses a path of personal growthshared across time and cultures. In it, a hero leaves home, goes on an adventure, encounters a crisis, is taught by a mentor, wins a victory, and comes home transformed. As parents and grandparents, it’s an important reminder that simply offering a helping hand (or an open checkbook) to the next generation isn’t always the best path forward. Instead, it’s often wiser to give them the tools they need to take their own ‘hero’s journey’ and return with a lifetime of wisdom.

I’ve been in practice for many years. As a result, the majority of my clients are older. With age often comes a complex set of financial challenges—retirement income planning, tax-advantaged charitable giving, risk management, and health issues. At the same time, we see our children and grandchildren experiencing their own challenges. Just as their parents did a generation earlier, those in their 30s and 40s and beyond are building a foundation and pursuing careers. If married, they must manage financial realities with a partner (rarely an easy task!). They may have kids of their own to raise and educate. Perhaps they’re struggling to buy their first home. Yet their journey is not like their parents’ was. In many ways, it is wildly different.

For starters, they have more college debt than any previous generation (an average of about $33,000), and more credit card debt (an average of about $42,000[1]—far above the national average of $5,700). They’re also born entrepreneurs (a study by the American Small Business Development Center found that 59% of Millennials say that with the right idea and resources they would start a business within the next year). Many have grown up with the Internet at their fingertips and a smart phone in their hands. And perhaps because they felt the impact of the financial crisis as kids, they understand the importance of saving for the future; 45% of millennials are actively saving for emergencies, 41% are setting money aside for retirement, and 41% are actively saving to buy a home[2].

But knowing the importance of saving isn’t enough. To reach their financial goals, they need a mentor or guide. According to a recent study by Broadridge Financial Solutions, they’re not getting the advice they need. Sixty-nine percent of millennials reported that they are not working with a financial advisor. Among those who are managing to save and invest, most don’t know what they don’t know, putting their future at risk. For this generation, the time for a financial hero’s journey has come. As parents and grandparents, our role is not to step in and fix their problems, but to prepare them for the journey. It’s time to teach them to fish.

Give a man a fish, and you feed him for a day.
Teach a man to fish, and you feed him for a lifetime.

A few weeks ago, my client Gina put me in touch with her daughter and son-in-law who need help kick-starting a financial plan. In their early 30s, they’re late starters to financial planning. Like many people their age, they have a negative net worth and spend more than they earn. Rather than having someone their mother’s age (yes, that’s me!) work with them, I asked Brittany, our Associate Financial Planner, to step in. Brittany is their age, and she brings lots of financial planning skills to the table (she is a CFP® with degrees in finance, financial planning, and taxation). It was an even wiser decision than I could have guessed. When I handed her their file, her first question was this: “Do you mind if I recommend some Millennial strategies to them?”  My answer: “I don’t mind one bit!” (Honestly, I didn’t even know what she was talking about!)

She elaborated before I had to ask. To help them manage their debt, she wanted to set them up on a personal financial management app like Digit, which tracks spending and analyzes income and then uses that data to determine the right amount of money to save, even transferring the amount into savings automatically. To help them supplement their income, she wanted to recommend a tool like Gigwalk, an app that allows users to earn up to $100 a project by matching their skills with the needs of local businesses on a one-off basis. I was thrilled. Brittany had the right tools to offer—tools a younger couple would appreciate and, most importantly, use to their advantage. By showing them how to catch up financially, set long-term goals, and build a wiser path forward, she is teaching them how to fish. She is the ideal mentor to guide them through their ‘hero’s journey.’

When you want to help your next generation succeed financially, resist offering your gems of parental wisdom (no matter how great they may be!). Don’t offer your assets to fund a ‘solution’ (for more on this tricky topic, read my blog post MoneyRules). Instead, allow them to take their hero’s journey of discovery and arm them with tools and resources to help them pave their own path forward—even when it hurts to watch them suffer.

One place to start is William J. Bernstein’s great little handbook If You Can. (It’s free on Kindle, or This email address is being protected from spambots. You need JavaScript enabled to view it. , and we’ll happily send you a copy to share!). It’s a quick and easy read that offers a simple approach to tackling some of the biggest hurdles to financial success, including cutting back on unnecessary spending, sticking to long-term saving and investing plans, and recognizing bad financial advice before it’s too late. Of course, our team is always here to help as well. The key to success is to give the next generation what they need today to create a strong, confident financial future. Whether that resource is a peer mentor or a little booklet that is packed with great advice, make it your mission to “teach them to fish” so they won’t be, as Bernstein says, “living under a bridge” at our age. 

 


[1]According to Northwestern Mutual’s 2018 Planning & Progress Study

[2]According to data from Ally Financial, Business Insider, January 22, 2019

 

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In Your Best Interest: Our Winter Newsletter 2018/2019

In Your Best Interest: Our Winter Newsletter 2018/2019

Click here to view the full newsletter, including recent news, important dates, financial tips & tools, and more.


Market Highlights Q4 2018

On September 20, 2018, the S&P closed at an all-time high. Then came the new era of volatility. Despite the economy expanding at a rate not seen in many years, mostly favorable corporate earnings reports, strong consumer spending, tepid inflation, and plenty of jobs, investors ended the year feeling anxious and often afraid. As a result, the S&P declined more than 14% in Q4, wiping out earlier gains and closing down 6.24% for the year.

The news media is awash with speculation as to the causes, and with every overwrought pundit and fantastical headline, the market seems to overreact. Yet despite a disappointing Q4, the aging bull did deliver positive highlights. The economy expanded at an annual rate exceeding 3.0%. Unemployment reached the lowest point since 1969. Consumer income rose and purchases increased.

Still, it’s easy to become nervous in such a volatile investment environment. My goal is to be the calming voice of reason and provide much-needed perspective to help you rise above the headlines. Here is some food for thought: 

  • There are not more sellers than buyers in the market. For everyone selling shares, there is someone buying. This interplay between buyers and sellers is how market participants drive price equilibrium.
     
  • Our free market economy will always experience periods of both growth and recession. Economists agree that we are in the late stage of a growth cycle. At this stage, the economy is still growing, but at a slower rate.
     
  • Wise investors don’t get distracted by the short game but focus on long-term growth. No one can reliably predict the timing or severity of a recession, but we’ve been here before. Since 1980, despite annual pullbacks, stocks have returned a compound annual rate of return of 11%. 

Perhaps what is most important is that your portfolio is invested in high quality, diversified investments to protect you from excessive downside risk. And if you’re not mentally prepared for the ‘weather of the day,’ rest assured that we are here to help you benefit from the ‘climate of the era.’ When you need a team to get you through the storms, we are always here to help! 

 


Click here to view the full newsletter.

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To reach your goals, it’s time to think (really, really) big!

To reach your goals, it’s time to think (really, really) big!

It’s mid-January—that time of year when, at least for most of us, New Year’s resolutions begin to fall by the wayside. The surge of gym-goers and dieters has faded, and we’re back to the same old routine. My question today is this: are you taking steps to get a clearer picture of your financial life? If not, then now is a perfect time to begin changing how you think about your money.

Two years ago, in January 2017, I introduced Jonathan Clements’s book How to Think About Money. Since then, I’ve shared three of the five steps in his approach to what has been called “financial feng shui.” Step Number One: Buy More Happiness. Step Number Two: Bet on a Long Life. Step Number Three: Rewire Your Brain. At long last, it’s time for Step Number Four: Think (Really, Really) Big. As we kick off a new year, there couldn’t be a better time to be sure you’re not only thinking big, but thinking big in ways that can help you build a stronger, more confident financial life that lasts not just the next 12 months, but a lifetime.

Clements suggests (and I have witnessed this time and time again, so I wholeheartedly agree!) that the reason most people struggle to think big about their finances is that we’re programmed to view our financial lives as a series of disconnected pieces. Insurance. Property. Debt. Investments. Cash. Because we rarely talk about how all of these pieces fit together, we end up making decisions that make no financial sense at all. We over-insure our cars but under-insure our lives. We carry credit card debt (an average of more than $8,000, according to a recent study by WalletHub) while “saving” money in low-interest savings accounts. We struggle to save for retirement but don’t hesitate to claim Social Security as early as possible—sacrificing a guaranteed opportunity to nearly double the monthly benefit in retirement. (Read more in my post, Social Security and Women: Tackling the Challenges.) We buy lottery tickets with the hope of getting rich quick but balk at investing in a “risky” stock market (which has returned a compound annual rate of return of 11% since 1980, despite multiple downturns and the 2008 financial crisis).

Of course, “we” doesn’t mean “you” or “I.” Or does it? Chances are that at least one or two of these examples resonates with you. If it does, it’s time to start thinking really, really big about your money.

Where should you start? With your paycheck. Your lifetime earnings is the primary source of every dollar you spend, save, or invest from your first job through your first day of retirement. According to Clements, over a 40-year career, our “human capital” is the source of more than $2 million (in today’s dollars). That’s a big number! And the younger you are today, the higher that number will be. To think big, begin by considering and carefully planning what you want to do with those millions. It can suddenly feel a whole lot like winning the lottery after all!

While Clements offers lots of excellent guidance (I highly recommend reading his book cover to cover), here are the most important takeaways from his Step Number Four:

  1. Consider the tradeoffs.
    Even when retirement is in the distant future, funding retirement should be everyone’s first goal. It’s daunting, it’s far off, and it’s not fun. Plus, it absolutely must be done using current income. But during our working years, other immediate goals often take priority. Buying a home. Educating your kids. Keeping up with the Joneses (and the Jones’s kids). Suddenly that 50th birthday rolls around, you’re nowhere near your goals, and time is no longer on your side.

    To gain perspective, start by taking a look at your net worth. (Check out this net worth primer from Yahoo! Finance.) Add up your assets, subtract your liabilities, and you have your total net worth. Next, look at your short- and long-term goals to determine how much of your $2 million paycheck should go to each one. In most cases, retirement and housing will top the list. (Notice that retirement is #1, always!)

     
  2. Remember that all debt is debt!
    Almost every day someone asks me this: “If I can get 0% interest, isn’t it smart to buy the [fill in the blank]? It’s free money!” No. It isn’t. No. No. No. To stress the point, all I need to do is refer to net worth. A 0% loan may feel free, but that debt spent on consumption reduces your net worth. If the purchase is part of your long-term plan, it may be fine to take on new debt and “smooth consumption” by spreading out payments over time. If it doesn’t fit into your plan, it’s simply debt, and it is anything but free. Keep debt service within reasonable boundaries. Banks use 36% when qualifying borrowers for mortgages, and Clements recommends student loan payments shouldn’t exceed 10% of your expected income after graduation.

     
  3. Manage spending.
    At every age, one of the biggest financial levers at your disposal is the ability to vary your spending. If you’re retired and concerned about the recent market downturn, rather than toying with your investment strategy, look at how you can reduce your spending. Avoiding debt and living within your means allows for more discretionary spending. Keep your eyes on your biggest goals, and manage your spending to support the things that matter.

     
  4. Permit yourself to rethink retirement.
    It may be the case that funding all of your goals requires increasing your lifetime paycheck by working longer than planned. Working past the 65-year mark is more common today than ever, and that’s not necessarily a bad thing. The “greatest generation” may have retired with pensions at 65, but they also expected to live for only another 5 or 10 years. I imagine spending my next 20 or 30 years being as relevant and engaged as I am today. Read more on how rethinking retirement can work for you in my post, Is “retirement” the only answer? Take time to rethink the possibilities.

The New Year isn’t the only reason to focus on thinking big. Today’s stock market has newscasters and financial pundits making lots of noise about how to avoid losses and make the best moves in the face of an economic downturn. Remember that the market is cyclical. There will be ups and, yes, there will be downs. By planning based on your paycheck and goals, market volatility will not affect your financial big picture. Commit to thinking (really, really) big and start building a fantastic financial future today. 

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All written content on this site is for information purposes only. Opinions expressed herein are solely those of Lauren S. Klein, President, Klein Financial Advisors, Inc. Material presented is believed to be from reliable sources and we make no representations as to its accuracy or completeness. Read More >