Episode 6: Rachel Kieras, Finances and Divorce
In this episode of the Queer Divorce Club, I had the pleasure of chatting with Rachel Kieras, a financial expert with certification in the divorce process. Together, we dive deep into the crucial topic of managing finances during divorce. Rachel breaks down the essential financial aspects to focus on and provides a step-by-step approach to navigate the complexities of the process.
Beyond the logistics, Rachel emphasizes the emotional aspects of finances and the importance of building a supportive team during divorce. We explore budgeting strategies and setting yourself up for a prosperous life post-divorce. This episode is a valuable resource for anyone contemplating divorce or currently undergoing the legal process. Even if you've already finalized your divorce, Rachel shares insightful advice on budgeting and saving that you won't want to miss.
Music in this episode is from Bungalow Heaven. You can find more music from Bungalow Heaven and singer/songwriter Gretchen DeVault at gretchendevault.com.
Rachel Kieras
Rachel Kieras is a financial advisor with Edward Jones, located in West Michigan. She partners with clients to develop personalized strategies that help them achieve their goals. Rachel's focus areas are working with divorce individuals, young professionals, the LGBTQ+ community, and small business retirement plans. She loves being outside, warm weather, and food-motivated travel.
You can find Rachel online at Edwardjones.com/Rachel-Kieras on Facebook @EJAdvisorRachelKieras.
Show Transcript
00:00:00:00 - 00:00:23:17
This computer. Hi, Rachel. Welcome to the Queer Divorce Club. I'm so excited to have you on today. Hello, Tera. It's great to be here. I'm hoping you can get us started by telling our audience who you are, what work you do, what education you have, maybe related to divorce and finances, and what work you do with people who are going through a divorce.
00:00:23:19 - 00:00:54:06
Yeah. Loaded question there Tera. Well, it is your job, Rachel. So I. Well, I partner with both individuals and small businesses in working through their financial goals. So we talk through what's most important to them. We figure out where they are today. Define that. Talk through where they're working towards what goals that they have. Figure out can we get there?
00:00:54:06 - 00:01:23:07
How can we get there staying and back over time. And so that translate into divorce as well. And at the end of 2020, you ask what education I have in this area with divorce. And I chose to really hone in my practice and focus my education and divorce. So at the end of 2020, there is a pandemic going on now, if I remember that.
00:01:23:08 - 00:01:58:20
Yeah. And so I went and got my certified divorce financial analyst title and so and a CD and that. So that's been almost three years now. And I did go through a divorce myself, a handful of years prior to that. So taking what I experienced, knowing what I know in my field and then carrying that over through divorce is it's just elevated in so many different areas because we have these goals that we thought were important to us.
00:01:58:22 - 00:02:21:05
And then everything changes, everything gets flipped upside down. And so I tried to change my practice a little bit. I mean, I still work with individuals that aren't going through a divorce and small businesses and whatnot, but that sort of spot where my heart lies has really been focusing on this. This divorce plan.
00:02:21:07 - 00:02:42:00
Yeah, and that makes sense that you need somebody that's specifically focused on finances when you're going through a divorce, because finances are one of the biggest stressors in divorce. I know that that was one of the biggest things for me. One of our last podcasts, Paul, a mediator, talked about how in mediation, that's one of the things that we go through.
00:02:42:00 - 00:03:01:08
So finances are important. And I wanted to get you on here to talk with us a little bit about some ideas for setting the foundation for yourself if you're going through a divorce, what areas to look at, you know, what do you need to focus on? So could you give us a rundown of what categories of finances, individuals who are going through a divorce should be focused on what?
00:03:01:11 - 00:03:31:06
Absolutely. And one of the you said one of the biggest triggers or one of the biggest hurdles to get through is just working through that finance. So I would say, number one, give yourself a clean slate. Give yourself some grace, give yourself a safe space to look through things because it's not always the easiest to look at. It's not always the easiest to talk through, not only by yourself with yourself, but with other people as well.
00:03:31:07 - 00:03:59:11
And so you are laying it all out there and that's okay. That's a good thing. So some of those things that we really want to focus in on and that you can start taking control of, even if it's just through awareness, is cash flow. So figuring out what you have coming in and figuring out what you have going out, even though those numbers may change if you're in the process of going through a divorce and you're not quite sure what lies ahead, that's okay.
00:03:59:13 - 00:04:19:04
It's okay to not know those things, but to really start tracking what is coming in, what is going out. And if you don't know, that's okay. Start taking it one day at a time to say, Oh, what did I have to pay money for today? You know what bills and do today? How much was my gas when I filled up the car today?
00:04:19:06 - 00:04:42:24
How much was the grocery bill and just start writing it down. That can be so helpful to have this awareness. Then it's less of a daunting task if that's something new for you, and if it's not something new for you, that's okay too. But do do start writing those things down. And I know there are a lot of apps that will track that for you as well, and I don't think they're innately bad.
00:04:42:24 - 00:05:08:20
But when you're first starting, I think the power and pad of paper and a pencil or a pen and you've physically writing things down can be monumental and just be so helpful to those things. So number one, I would start there because that is something you can do. I guess that's it. If you haven't made any decisions on finance, that is something you can do.
00:05:08:22 - 00:05:36:16
And if you need an account ability, partner will talk to a friend about it, a family member, or reach out to a financial advisor that can start checking through those things with you as well. That's a lot of what I do with clients when they're still going through a divorce, even though we're not ready to start managing assets and doing things like that, we are talking about what's important to you while day to day cash flows pretty important.
00:05:36:18 - 00:06:07:24
So let's start getting a handle on what here. Let's talk through it. How did you feel about that? Things like that. And so it's just number one in cash flow. And then number two, I know it can be scary or sometimes exciting or whatever it may be. It's going to be different for every person. You start thinking about what your priorities are for you and whether you have kids or not, it still applies.
00:06:08:01 - 00:06:38:20
Your world is changing and give yourself that space to think about what is most important to you and start putting some visions around that. Put details into that. Write that out, check that out to give you something to be working towards. I'm just thinking as you're talking about it, how intriguing it is to me about how much emotion is connected with finances and with the money process.
00:06:38:20 - 00:06:57:15
Like you're talking about cash flow and then your future goals and where you want to be in your life. And I think I think even for me and I'm sure for others or think about this is numbers something overlaying. But it sounds like you really understand that money is the flow for, you know, the basics for helping you live and also reaching your goals.
00:06:57:15 - 00:07:20:17
And it's super important to have a good solid foundation of that when you're going for the door through the divorce and creating the life that you want in the future that you. Yeah, So we're focusing on cash flow and your priorities. I think the big categories, I think about our retirement and investments. What are those other categories to focus on?
00:07:20:19 - 00:07:43:09
Yeah. So when you're going through the divorce, there will be some type of division of assets, right? And a lot of for a lot of people, those big assets are those retirement accounts, whatever those maybe it's through a workplace or an IRA or something like that. So know that it's going to be different for everybody depending on what you have.
00:07:43:11 - 00:08:08:06
But retirement dollars equity in a home, money at the bank, those are all different categories. But that's something else you can do as well, is to spend maybe you already have if you're going through a mediation or you're working with an attorney and this is something they'll have you do that to start writing down those assets. What do we have?
00:08:08:06 - 00:08:39:02
What are we also? So assets and liabilities. And something to keep in mind is whether or not those assets were acquired during the marriage or if you acquired them before. So if you have some old inherited account from a great aunt that passed away 20 years ago and it was never co-mingled or anything like that, and to keep that in the back of your mind, you want to talk through that.
00:08:39:04 - 00:09:06:13
So yes, we have retirement assets. Those have a special tax treatment to them. So we want to keep that in mind. I don't want to go too far in the weeds. It's just an an overview. We want to know that different and assets, like I said, a car house, a retirement account, a bank account, each dollar in each of those buckets don't always equal each other.
00:09:06:15 - 00:09:33:19
So we run three of the buckets. Mm hmm. And that's where bringing in a professional can help identify what bucket some of those assets go into. So even if you don't know the breakdown, to be able to start writing down is helpful as well. That that that's a that's a big thing to keep in mind if you're dividing all or one pay or work plan.
00:09:33:21 - 00:10:07:16
There are special tax documents that you would need to divide that if you're dividing an IRA or anything that has investments in it, you're going to want to make sure that it's stated equitably in the decree, things like that. And so if you're trying to do the divorce on your own without professional help and you have these other assets to be divided, it may be worth bringing in a mediator or something like that party.
00:10:07:19 - 00:10:33:00
It doesn't have to be a because everything's contentious. I know that there are a lot of small details that you're going to want to work through and make make sure those are are addressed. Right. So it doesn't have to mean you're not getting longer figuring it out. But a professional could help you figure out actually how much assets you have, how many liabilities, not miss something that you that's really important to be divided, that sort of stuff.
00:10:33:02 - 00:11:05:04
Yeah. Yeah. An attorney mediator or a financial advisor? Yeah. Yeah. I partner with a family law attorneys a lot. And when? Because because I don't charge hourly for that. Something like that. We can take the time. We can take time to go through those individual pieces and help divide them out. And that would be really helpful. But something to keep in mind when you are dividing those assets, is that the dollars are equal.
00:11:05:04 - 00:11:30:13
So if, for example, if you just have an investment account and it has grown significantly, so you bought something for a little bit and it's grown to be a lot, there's a large capital gain in there, meaning if you were to sell it, you're probably going to owe a significant amount in taxes where if it was just cash at the bank, you don't.
00:11:30:15 - 00:12:07:13
So it's little things like that. You want to make sure that everything's being divided equitably. Okay. When I say equitably, it doesn't. I want to be conscious in how I say this because it's going to be different for everybody but a safe default, at least when you're setting expectations for yourself, I would likely say, is to think 5050 that if you go into it saying, I'm taking everything or you're not getting anything, that's legally probably not how it's going to work out.
00:12:07:17 - 00:12:39:00
Yeah, So, so much of that comes down to setting expectations and then that's where you want to bring someone in that's going to be able to tell you, does this equal this or those different? Yeah. Are you getting this one? Are you getting it or how do we make them. Yeah. Equal or equitable. Mm hmm. I know. I was just thinking about my ex-husband and I as we went through the process and talking about our cars, and we traded off cars for retirement, actually, you know, we were able to look at those assets in different ways.
00:12:39:05 - 00:12:59:03
And I was also just thinking about how yesterday, more than a year after we've been divorced, we finally refinanced his car and put it in his name because it was on my credit report. It's still like there's stuff that those financial details that I was like, oh, maybe I didn't even think about that. That his loan on his car that he got in the divorce still has my name on it.
00:12:59:03 - 00:13:20:03
It doesn't just automatically come off the loan. It's like, oh, important to figure out a year later, we figure it out. So it's good to tell this little things. It's just one of things you hope it's done and they just keep trailing and that's okay. You're not you're not giving out, that's for sure. Yeah. Stuff comes along because you can do three credit reports.
00:13:20:03 - 00:13:41:24
You can do a free credit report and read that. Not that it's the most thrilling to write, but it could tell you if there's something you missed that is not be on there. Right? Yeah. Red flags right. Okay. So if I'm going back, thinking about the categories you just said. So figure out your current cash flow. What are you actually spending?
00:13:41:24 - 00:14:03:05
What's going in, What's going out? What do you need to live? Second, think about your future, your goals. You know, you're whether you have kids or not, what you want for your next part of your life, because it's going to be separate from what you were doing together. And then through you look at through what your actual assets and liabilities are and look at, generally you're going to be dividing those 5050.
00:14:03:05 - 00:14:26:07
Of course, you'll talk through that and mediation or whatever in your divorce. But look at what what's actually there, what are the liabilities of each asset and how to figure out. But you know, who goes to what and you know, all the money you actually have, all the ability, the liabilities you actually have to get those. All right.
00:14:26:09 - 00:14:49:22
Generally speaking. Yeah. What am I missing? What do I know? Everyone's going to be so different that that. Yes, that's a better when you're just thinking about a set in your own expectations. A Yes, I would say you would. You nailed it. Yeah. We want I know day to day we want to give ourselves the space to think what we're working towards.
00:14:49:24 - 00:15:17:01
We do want to know what we have and what we owe and then what that future cash flow might feel like and giving ourselves that space to write things down, to lay things out, even if it at some point it becomes overwhelming. Step away, sleep on it and come back to it, or go for a walk, whatever it is, that's fine, but stick with that.
00:15:17:04 - 00:15:49:00
And then because when you if you are working with attorneys or you are applying for mediation, things like that, divorce can be crazy expensive. It can those attorney fees can track that and they're just doing their jobs. It just can be really, really expensive. So the more you can sit with those numbers and look at them, the more you'll be able to have a pragmatic approach when you're just talking through the division of assets, because I get it.
00:15:49:00 - 00:16:18:15
Sometimes you just want to say that I want the I don't know, I want the air player. No, I'm right here. And it's like, oh my gosh, the the 15 minutes of attorney time. You talking about the air prior or an hour or whatever it was, you could have just bought three of them, you know. Right, right. So I'd say do that and be be conscious of, oh, what are those trigger things?
00:16:18:15 - 00:16:47:05
What are those things that when I think about, I do I really do get worked up about that and know that know that you're not alone because you can really feel isolated when you're going through that and you don't have to be. You are the one doing it. Yes, you were the one going through whether you're excited about the divorce or you're terrified about the divorce for your heartbroken about the divorce, it's difficult.
00:16:47:07 - 00:17:11:15
It's just a difficult thing to go through a matter of what your emotion is around it. So just know I'm doing something really hard and I'm doing it and right. And of course, we're moving the ball forward. You were the one doing the heavy lifting that you're not alone. So get get those people in your corner. Some of them are going to be family and friends.
00:17:11:17 - 00:17:35:12
Some of them are going to be professional and build out someone. And each of those have someone you can talk to about finance, how someone with legal knowledge have someone you can say, Let's go to happy hour. Right? Right. Yeah that would to keep accountable I have someone that you can go hey I don't want to I don't want to talk about anything.
00:17:35:12 - 00:17:58:16
Let's just go for a walk. Whatever it is, start that you'll let those people in your corner, too, because you'll it's it's just. It's a lot of tasks. A lot of things to work through. Mm hmm. And you can. And you will build in that team. That's good. You need a team. You need a team behind you, and you get divorced.
00:17:58:16 - 00:18:02:21
It's very true. Very, very true.
00:18:02:23 - 00:18:29:17
I was just thinking, asked, you know, and there's so many ways. I was just thinking about the cost factor and how you're saying it's important to think through what your triggers are and what your priorities are. And I think that that makes sense, too. And when you're talking to your legal advisor or financial adviser or whatever it is to to it's important to think about that stuff on your own before you go and connect with them.
00:18:29:17 - 00:18:50:08
But there's also sometimes you don't you don't know what you don't know. So that's the time you might want to spend the money, right? You might want to talk to a financial advisor because you're like, My priority is I come out with a certain amount of money each month, or my priority is that I keep my retirement over keeping this car or, you know, keeping this my the radio system in our house is really speaker system.
00:18:50:14 - 00:19:12:01
I'm aging myself and the House is really important to me, you know, what are those priorities before you go? But then using an advisor to help you understand the things you might not know, you don't know when it comes to the time to actually do the divorce, it is more than okay to not know it. You said a lot of we don't know.
00:19:12:03 - 00:19:43:01
You likely haven't done this before or you have only once or twice whatever. It's not something. You're ready. You're frequently doing it. So it's okay not to know that it's okay not to know what your questions are. It's okay now to know exactly what you're doing. It's okay to reach out and say, I feel overwhelmed and I thought I should call someone.
00:19:43:03 - 00:20:09:09
Yeah. Okay, great. You know, talk to someone that knows. Okay, well, what about this? That can ask some identifying questions or something like that to start letting some things out and to break it down. Because, like I said, it doesn't always have to be extremely difficult in terms of logistics. Sometimes it and I don't want to overstate that.
00:20:09:15 - 00:20:30:24
It's just a lot of steps. Yeah. To partner with someone that knows more of what those steps are can be really helpful. Yeah, it is. And I'm just thinking about the emotions of it. We're just talking about how emotions of finance go together, but also when you're going through a divorce, like you were saying, whether you're excited about it, whether you ask or didn't ask for it, it's emotional transitioning your life.
00:20:31:01 - 00:21:16:18
You're transitioning from a two person household or a family to an individual with shared parenting time or on your own. And so no matter what, that changes a difficult time and emotional process. And so having somebody on your side that's and the emotions of it will help you get through in a better way. Mm hmm. Yeah, I can see things from a different point of view and working with clients that are going to be one to ever have walked away with far more than enough to get by because for whatever reason they were, it wasn't their role in the relationship to know what the finances were of the house they were doing that they're taking
00:21:16:18 - 00:21:53:07
on other tasks for them, for the household. And then I can look at them and run the numbers and say, You're going to be totally fine. You know what? And here's why. It's a measurable, tangible numbers to that. Or sometimes that saying, I see why you're concerned. Let's come up with a plan for you know, let's have a strategy talk about I know a lot of times specifically with parents, keeping the house can be very important and say, okay, let's look at that.
00:21:53:07 - 00:22:18:14
Let's look at what that means. And sometimes it means, okay, we're going to keep it. But we know that in the next 3 to 5 years, we might need to be looking for something else or whatever it in this transition for the kids. We need to keep this in place, whatever. And keeping something in your head and being scared of it is always going to lose to talking it out.
00:22:18:16 - 00:22:41:21
Right? Right. And be able to start living things out and talking it out and putting together a strategy to make some things happen. It's not always ideal and then sometimes it's more than ideal. You know, I plan to go go to Italy, go to go do the trip you want to take or go buy a new car because it works with your it works and the number is not.
00:22:41:21 - 00:23:05:01
You go for it and sometimes that's it, but that's okay. But let's have that expectation. And so instead of saying, Oh, I'm just going to close my eyes, press my fingers and hope for the best, and it makes me a little bit upset, so I'm not going to think about it. Oh, you're going to probably have a lot and queasiness for a good amount of time instead of just, Yeah, hey, here's what I want to make happen.
00:23:05:02 - 00:23:25:05
How do we make that happen? Yeah, a couple of things. I think this is silly, but I'm thinking about a children's book that my son has. It's called Ruby's Worry, and she follows along with her worry. It's there behind her and it gets bigger and bigger. And then she has one conversation with somebody and it goes away and it's thinking about this moment and it's sad.
00:23:25:05 - 00:23:42:18
But yeah, it's a good way that you do it. You do. It's Ruby's worries, worry things. Okay. But I also was thinking about about how good I am at that too. And in the financial process when I was going through divorce. So I was terrified of it. Like I manage our finances at our house for the most part.
00:23:42:20 - 00:24:02:08
But there was stuff I did not understand and there's stuff I didn't understand, like I was just talking about with the car to, you know, that I needed to be able to be like, have somebody else say, These are the categories you need to focus on. These are the things you need to focus on. And for me, having a financial advisor in that moment really helped to squash the stress of it and talk through it.
00:24:02:08 - 00:24:25:16
I was still nervous about being able to make it on my own financially after that. But you're right, having a plan in place is so, so good. You speaking about plans? I want to talk about a plan specifically for individuals who may be going through divorce where one of the spouses was working spouses we're working full time, and the other one either had a part time job or worked from home.
00:24:25:16 - 00:24:54:12
So maybe their financial load on the household was lower while they were married. I've heard from a lot of people in this scenario, seen it online in different groups. I'm at that. It's scary to go from not working, running the household to getting divorced and having to do that on your own. Can you talk a little bit about what things these individuals would need to keep in mind when they're starting to budget, save, pay for their things in the future and what financial tips you might have for them?
00:24:54:14 - 00:25:21:18
Mm hmm. I can I come back to a piece of paper and a pen and writing everything down? It is scary. And depending on how long you are together, you know, sometimes spousal support or alimony isn't a part of the picture. So if you've been married for a good while, that's objective. So I'm going to keep it at that.
00:25:21:20 - 00:25:55:03
If you've been married for a good while and spousal support is not part of the conversation, Red Flag will just say that Red flag. But for a lot of people, you know, if the marriage was relatively shorter and there was a spousal support, it's not part of the picture, then we do really want to know what are the things we need to be covering in terms of bills and keeping food on the table, in terms of keeping the lights on and keeping a roof over our heads.
00:25:55:05 - 00:26:28:00
And as scary as it can be, it is about awareness because for many individuals, when we're stressed out, we can tend to want to say just purchase extra things, or we can choose to turn a blind eye to things that overwhelms me. So I don't focus on it. But if you know, Oh well, what I was doing before was bringing in this much and I need twice that to cover the bills.
00:26:28:02 - 00:26:51:24
Okay, then we know what that shortfall is. Okay, well, maybe I need a second job to cover this much. And when you're first when you're first transitioning, you're going to be figuring a lot of things out. So know that some things can change. Change can be scary, but change can also be really good. So I would say keep that awareness.
00:26:52:01 - 00:27:27:00
You do want to be careful and how much is and how much you're spending on housing versus discretionary spending versus savings, things like that. And that's going to be so different for everybody depending on what your cost of living is. So I can't give exact salary. That's right. But you just want to be conscious of that. If if you feel like you're spending a little bit too much in one area, will one either work with a financial advisor to talk through it?
00:27:27:06 - 00:27:48:17
You can Google budget forms, you can Google budget guidelines, things like that. And I don't want you to be overwhelmed with the information out there, but just look at where your spending is and see if you're proud of where that spending is. If you feel comfortable with that, if there's anything, oh, well, I spend way too much here.
00:27:48:19 - 00:28:10:02
Oh, okay. Well, that was your natural inclination to say that about it. Okay, well, let's be really aware then. If you're always writing down your spending and you feel like, gosh, every time I every time I fill up the car with gas, I go in and I get a few snacks or whatever to keeping the car. And it's always 10 to 20 bucks.
00:28:10:02 - 00:28:36:17
And I do that ten times a month. Oh, that can really it. Why am I doing this or whatever it is? And that's why I say think about your priorities, because that helps dictate some of those spending habits. And we want to know what we're doing when we're not thinking about it. And then we want to know. They also want to know what our basis is, what is our base that we're going to have to cover and how do I make that happen?
00:28:36:19 - 00:29:10:05
And how do I hold myself accountable to making that happen and know that some things that make us a little bit uncomfortable in those times that we grow in that, oh, you know, I, I, I remember at one point I was like, I really want to do I want to I want to try martial arts. And I didn't have any experience, but it's not innately bad.
00:29:10:05 - 00:29:32:14
It's a good thing. It's healthy, it's good for your mind, body, everything. And I'm just going to try it makes me uncomfortable and I do it. And it was a great experience, you know, fantastic. And so that same, you know, they say in yoga exposed start to impose hurts, you know, some things like that. Sometimes it's okay to be okay, to be a little bit uncomfortable.
00:29:32:16 - 00:29:58:21
We can work through that. We do work through it. We can go through it, be aware, and we can go out there and get it again. And you're not alone. You've built a team into place and you have that Step one. Yeah. So step one, put your team in the place. Step two, understand your priorities and your cash flow like we're talking about before.
00:29:58:23 - 00:30:15:23
Talk with your attorney about the legal aspects of spousal support and how that's working. It's going to depend on what state you're in when you're getting divorced, what the rules are around spousal support. But it could mean if you've been married for quite a long time, you have kids, you could have child spawn spousal support potentially. So it's important to talk to your attorney about that.
00:30:15:23 - 00:30:47:19
So get all the facts, understand where you're at. Don't let somebody tell you you can't have spousal support if you talk to your own attorney, make sure that you have get what is rightfully yours. All right. So understand all the facts, understand what you have coming in and what's going out, what you need to have. And then third, make a plan for how to fill that gap and then find spaces where maybe you're spending money that you don't need to be spending money or that you can switch, you know, switch to an alternate plan or whatever, even if it's just for a short period of time.
00:30:47:21 - 00:31:16:18
Okay. And sometimes it's okay to spend money. I'm going to say that, too. Yeah. If you are spending enough and saving and you're having a hard time paying the bills, yeah, we need to be really conscious that we're spending is that sometimes sometimes it's my job to make sure my clients don't feel bad about spending their money. But it's my job for you to do the things that you want to do and not feel bad about it because we've been responsible.
00:31:16:18 - 00:31:37:03
We know what we're doing. We know what our decisions are. If we know what goal we're working towards and we're on track and we have extra and something else is really important, go do it and I will encourage you to go do it, things like that. So I just want to layer that into it. It's not that if you're going through a divorce, you can't spend spend it on anything.
00:31:37:05 - 00:32:07:06
It's not always the case. Just know where you're at, know where you're at, and let yourself do that. Let yourself establish where you're at. So I must say, maybe start with what your priorities are, because that might be more exciting than of of the excitement that's involved. And I guess, yeah, I think there's a lot of misunderstanding about, about budgeting and finance.
00:32:07:06 - 00:32:28:14
And we're not taught this in school. And so I know personally for me that it was terrifying going through this process and understanding where to send money when even I run my own business for seven years before I got divorced. And so I still was not understanding how exactly to save enough money for taxes. Well, you know what part of my business would I need to share with my spouse, if any?
00:32:28:18 - 00:32:51:02
You know what that income all looks like, how all of that structure works. It's confusing and stressful. So I talked to a financial advisor, but I'm also just thinking now about budgeting and spending money. I'm wondering if you can talk a little bit about the budget of what are some of the main things we should keep in mind as we're getting divorced?
00:32:51:02 - 00:33:09:06
So your priorities are, you know, maybe the basics. There's you have the basics, things like your house, food, what other categories would you say are basic? So we need to make sure that we're paying for that. You would say, of course you need to have this money in the first step, we would split it between fixed and variable.
00:33:09:12 - 00:33:39:15
Okay, What do you do? Have control over what those numbers are going to be? I can't just have that. I mean, I guess I can turn lights off more, but, you know, utilities are going to be pretty flat. They're going to have rent or mortgage. You know what those diamonds are. You can't really change that. And then there are going to be some variable numbers that come down to groceries, entertainment, that you all can kind of go either way for your car.
00:33:39:17 - 00:34:01:12
And then I'll leave that for you to define if it's extra driving versus pretty fixed for words or something like that. So I would first separate, you know, what, if even if I did nothing but sat at home and meditated all day, what bills would I still have, what expenses I still have, versus what are some of those numbers that can change?
00:34:01:14 - 00:34:27:11
And the more the more we can anticipate, the better. You know, if you have, let's say, post post separation or post divorce, you're living alone for the first time or whatever it is. As soon as you're able to get on a fixed payment plan for your utilities or something like that, that can be really helpful. So you know what that monthly post is going to be instead of it being all over the place.
00:34:27:13 - 00:34:50:04
But then having a separate line item to say, what do what? Do I have some discretion over that? If I was really tight, where could I pull back? You know, and I am I already spending the bare minimum on my groceries or do I really just get whatever I want? Right. And how much of my spending and entertainment going out and could I pull that back?
00:34:50:07 - 00:35:16:01
I needed to to just know that was in there. Not even saying you have to stop doing them, but to know what those are because of that, you are looking at this going, Oh my gosh, I'm going to be a one income household. And what I do, I know this, these bills have to be paid. Okay? And then this I could heavily skewed remember this and know it's okay to not be able to write all that down in one sitting.
00:35:16:03 - 00:35:45:09
Sometimes it takes going to the grocery store a few times, you know, might take you a month or whatever to start saying, Oh, well, that's about what it is every week. It's a page you don't know right now. That's okay. We're figuring it out as we go. Sometimes. So those are the biggest categories, fixed and variable. And then the variable I would break out between necessary and discretionary.
00:35:45:11 - 00:36:08:10
Okay. So like groceries could be variable, but they're necessary. And my Netflix account, it could be is is not fixed. It's not something I have to pay for. It's not necessary. But I could and needed to keep it on my entertainment budget because now I'm home alone for a long time. Right. And my kids are going to be the answer counter all of those.
00:36:08:10 - 00:36:36:24
There's other it's this I guess that that how much they're buying and saving. If you have one rep recommend, they're you going to go in and cancel for subscription service and maybe maybe not. But to just see it say if I want to spend how I spend without thinking about it, here's what I need. Okay. Exactly. Would you say that you have are able to say to somebody that a certain percentage of savings that they should have in their fixed line?
00:36:36:24 - 00:36:59:22
So if you're just starting of no savings account or maybe you got like $500 in your savings account after the divorce because you didn't save when you were married, what would you say which should be in an important number in that savings account? So for tracking emergency funds. Yeah, emergency funds day to day savings. So of course, you get saving goals for if you're going to buy a house or whatever.
00:36:59:22 - 00:37:21:22
But day to day emergency fund, what should you be saving for day to day? I would say 3 to 6 months worth of living expenses, which you now know because you've done the whole cash flow. Okay. And and that where you think about, you know, if you did have an emergency or are you going to cancel Netflix or probably not.
00:37:21:24 - 00:37:50:20
Right. And think okay, if we're just going to use easy math numbers, if my spending is $5,000 a month, I should have 15 to $30000 of my savings. And I'm saying bare minimum, right. If you're spending left and right and it's five, but you easily could cut back to three. But we will use use three as your number and then say six.
00:37:50:22 - 00:38:22:18
So that being said, 3 to 6 months, that's a pretty wide range. Right? Right. I would for that You used an example. Let's say someone has $500 or less in their emergency fund. I say start one step at a time, try to get to about ten, look at your spending, look at your end and say, okay, I'm going to try to get to a thousand and how fast can I get there and try to get there as fast as we can.
00:38:22:20 - 00:38:51:05
And then your next step, try to get to 5000 if you're noticing and even numbers I use even personally and in my practice, I use even numbers for myself and with clients because with an emergency fund, we need our brains to be able to easily cancel them out as if they don't exist. So the emergency fund goal is 10,000 and you have 10,500.
00:38:51:05 - 00:39:23:20
It's really easy to look at it and go, it's got 500 extra dollars, right? And if your emergency goal is 9750 and you've got 10,500, you know. Right, right. It is harder to do the math. And we have it doesn't exist except when an emergency happens. It totally exists and we know how much is in there. So then that 3 to 6 months, if you start with three, of course, always start with three.
00:39:23:20 - 00:39:50:08
If you have variable sources of income, maybe you can air closer 2 to 3. If you have one salaried job, maybe try to pump it up a little bit, get closer to six, because if you did lose your job, you lose all of your sources of income, Right? That makes sense. But if you've got a few side gigs that you do most of your job, maybe it can be 3 to 4.
00:39:50:10 - 00:40:16:13
And I say try to start with an even number because it gives you something to work for and it gives you something that your brand can easily cancel out. Yeah, I like your basic mantra here of start with even number three is keep it going, you know, see the money, get in there. It seems attainable, even though it seems like there's no way I can save $1,000 in the next month or two months like it does seem attainable.
00:40:16:15 - 00:40:40:06
Be like I can do this little by little, step by step. You're better off tomorrow than you were yesterday, and get yourself a measurable amount. You're trying to look at your cash flow and say, okay, on paper and paper I should be able to save this amount of money. Yeah, So I'm going to try to do that and then and then track it for few months.
00:40:40:08 - 00:40:56:13
Then, you know, if you're not well, where where's it going? You know, don't beat yourself up about it, but acknowledge it. Look at it right there. How do you feel about that if you're like, well, you know, my cat had an emergency vet appointment and that's where it went. Well, you know, that's going to happen. It's an emergency.
00:40:56:15 - 00:41:19:15
But if it was like, well, you know, I did all medicals at Goodwill this week. Yeah. Then yeah, we said, okay, yeah, now I'm aware of it. And so when we get to the next level and you're walking into the Goodwill go, I think maybe I. Wait a second. Yeah, I'm trapped last month. Okay. I'm going to be aware of it.
00:41:19:17 - 00:41:50:12
Yeah. And start that one of the budget thing then you have so then you know the tangible number you were saving. Once you get it, then you say, Oh my gosh, I did it. I got my goal. You need to. And now you're definitely driven by goals that you're so excited about reaching your goal. Oh yeah. I think what's important to you for those because yeah, sometimes an emergency fund feels less exciting or retirement.
00:41:50:12 - 00:42:19:24
I would say some for some people, a retirement goal is not all that exciting, but right. Being financially independent, being able to travel or being able to or whatever it is whatever it is that really gets you going. That's what we focus on. So we need to know we're going to take that emergency fund goal that you were saving and put it towards this other goal because you really care about it and it doesn't mean you're just throwing your money away and you're never going to see it again.
00:42:20:01 - 00:42:41:22
You're saying, Oh, no, when I do that, that means one day I'm not going to have to work for a paycheck. And it might mean for the first ten years. And if you can't tell, I love travel. So I usually or maybe ride. I love classic cars and I really would love to have a classic car or hobby in retirement.
00:42:41:22 - 00:43:01:22
We say, okay, well, if we increase your savings into this goal, buy this much, you can make that happen. Then it's said, Oh, instead of going, I'm just paying more for future, right. No you're you're buying your classic are happy. Yeah that's good. Reframe the goals for yourself. I'm just thinking about my goals as I go to like for my emergency fund.
00:43:02:03 - 00:43:21:09
It's more important for me to be less stressed if something big happened, like thinking about it's not an emergency. But I know that thinking about my future self, my car breaks down and you just put $3,000 in it. Me being able to just take that money on my savings account feels like a lifting off my chest versus being like emergency fund for whatever could happen.
00:43:21:10 - 00:43:42:13
I'd be like refrigerator broke down to being able to buy a new refrigerator. Also feels good. Yeah. Oh my gosh. I got to reframe like that would be fine if you don't have it yet because emergency fund goals are like, whatever, I'm never going to get there. Well, let's break it down. Let's get this first goal and then the second goal.
00:43:42:15 - 00:44:05:20
But then could picture yourself right? If you don't have that yet picture you're driving on the highway and your tires blow and it's, you know, 800 hours to get new tires like that ever happens. It's always an example. Oh, yeah, your tires load any new tires if you don't have the money. That is stressful. Yeah. Yeah. So stressful.
00:44:05:21 - 00:44:26:14
But if you have it, I mean, it doesn't feel good to dip into it. It doesn't feel good to have to spend money. You weren't planning on spending the fully. How is that a different scenario, if ever? And then you have to work to refill it versus having to finance it and pay 20% interest on it. Right? Right.
00:44:26:16 - 00:44:44:06
They're digging that hole. Mm hmm. Ooh, Digging out of hole makes me. I can feel. I feel like my financial goals are set by this, like stress I'm getting in my chest right now. What bothers me about it? Where is your stress now as we're talking about this people, that's what you hear about. You should think about you reframing your goals.
00:44:44:06 - 00:45:10:01
Okay. But having money for tires, that feels good. All right, so about your budget. Look what your fixed costs are. Look at your variable costs. Think about 3 to 6 months potentially for an emergency savings. Reframe that if you need to what your you know how you set that up, start with what's attainable and work towards that actual 3 to 6 months.
00:45:10:03 - 00:45:28:20
I also like your your idea that depending on what your job is, if you have a full time salary job, remember that you should probably have more the bank if you lose your job versus me, like I have contracts working with home sellers, you know, that sort of thing. I have different spots that if I lost one, I could fill it with other.
00:45:28:22 - 00:45:54:14
So might not be important to have all six months worth, right? I think I'm saying that. I'm saying everything you said. Back to you. Good. All right. Awesome. I'm listening. Listen, my chest feels lighter already. All right. I want to talk a little bit about some of the nitty gritty stuff that these big things that I think many of us don't really think about in day to day life.
00:45:54:14 - 00:46:19:08
But others are better at saving for retirement than I am. So that's one of them that I'd like to talk about. But I want to ask you about how what options do individuals have for managing their retirement accounts during their divorce. So a little bit more specific. I have to divide my retirement. Any money that I put in it during the time of my marriage, How what are my options for doing that?
00:46:19:10 - 00:46:46:12
Yeah, excellent question. It it comes down to buckets as well. So just keep in mind I said you said you said right now we're you said I'm probably going to have to divide my retirement. That may or may not be the case. So I want to be careful. Sure.
00:46:46:14 - 00:47:36:00
But because if you have two individuals and they both have accounts with the same amount and that agreement might be to adjust each contract. Okay. Yeah. So that's one option. You could end up keeping what you have in your own retirement account. Okay. If you feel if you have any inkling that your savings, whether that's in a work plan, your investments like a 420 403b, I.R.A. Roth IRA or anything like that, if you have any inkling that that's complicated that at all or there are any significant dollars in it, any accounts or any significant differences, you talk to a professional about it.
00:47:36:04 - 00:48:05:00
Yeah. To get some guidance on that and to help determine what's an equitable division of assets. Okay. And then Okay. And then you should you did mention and I know this from my own divorce, that there is some legality specifically around retirement, that if you do end up having to divide accounts or share accounts in different ways, that you should do that through your divorce because it could save you tax money and you can get it done at that time, is that right?
00:48:05:02 - 00:48:37:14
Yes. So if you said nitty gritty, so we're going to go for it. Yes. Please bring you take money out of an IRA before age 59 and a half. You're going to pay a penalty for it. So if you just say, oh and then a full $50,000 on my account and put it in your bank account, and then our assets are divided when you go to file taxes, if that was a traditional IRA, that you pull the money like it was pretax, you never pay taxes on that part.
00:48:37:15 - 00:48:58:13
That other person just walked away with 50 k cash. And when you go to file taxes, you're going to have another 50 K of income you pay taxes on and you're going to pay a 10% penalty that so that subject to whatever taxes our tax law is when this podcast you're listening to right right that you're going to pay a penalty you're going to pay income tax things.
00:48:58:17 - 00:49:25:18
So that's where I say every dollar is not equal. You want to be aware of that. That's why if you think that if you don't feel confident in what those markets are, bring in a professional because it can really be detrimental. Right? Then the divorce is finalized and you're filing taxes and it's way too late. You know, at that point you wouldn't want to do that.
00:49:25:20 - 00:49:54:19
So you to be really conscious of taking money out of an IRA or any type of retirement account, like a41k with a401k, a retirement plan, A through an employer plan. You do get one if that account you need a legal document called a qualified domestic relations order that lays out two that tells the plan how to divide that up.
00:49:54:19 - 00:50:20:02
So let's say there's one plan. You have this special tax documents that tells them how to divide it, and now you have a former partner in your account. And that document told them how to divide it. And if this goes in a retirement plan, you get one chance to take some money out without paying a penalty, but you do still pay income tax on it if it was pretax.
00:50:20:04 - 00:50:41:16
So that's if you're ever thinking about it. You know, when I'm getting a divorce, I can take it all out without a penalty. I can just take it $200,000 out. Oh, my gosh. That if you take $200,000 out of the pretax account, you're now at a minimum in the $200,000 tax bracket. You're right. Yeah. So it's a little things like that.
00:50:41:16 - 00:51:07:18
You want to be really careful with. It seems like the moral of the story for retirement's investment accounts, any of those letters and numbers you just mentioned is to talk to a financial adviser or your attorney about it, or both, because there could be tax implications based on where you live. There's federal tax implications based on the time that you're listening to this podcast, the time of getting divorced.
00:51:07:20 - 00:51:32:04
So specifically, talk to an expert about those, whether you use that expert for you to use or not pay for a financial advisor or whatever. Those specifically are important to make sure you understand all of the tax implications. I would say probably another type of asset that's that is your house or any type of like commercial buildings you own or other assets, other property that you own outside of your home.
00:51:32:06 - 00:51:58:21
That would be another one that I would specifically talk to an expert about. Is there other big categories like that that you think are taxes, professional? And I do want to so we said build out your team, and you're not alone. I want to remind folks that you don't have to keep working with who you've always worked with in the home.
00:51:58:23 - 00:52:23:10
In our business, it's not always the case, but a lot of times we're working with the non money person in the relationship, right? I don't think I don't know any of these budget numbers. I don't know what the cash that's going to give you. So we're we're often working with those individuals. And so at that point, you don't always know where those clients.
00:52:23:10 - 00:52:44:14
But until the attorney makes a connection or something like that, you don't have to keep working with who you're working with. That's if you were working with someone that never gave you the time of day, that never asked you how you feel that, or maybe just communicated in a way that made sense to your partner, but never made sense to you.
00:52:44:19 - 00:53:07:09
You don't have to keep working with them. You can say, I want to work with someone that I understand what they're saying. If all you hear is jargon, they're probably it doesn't make them a bad advisor or a bad professional in their field. It just means their communication style didn't really jive with. Yeah, you can hear so fine finance people that you say, Oh, I get it.
00:53:07:09 - 00:53:32:03
I feel comfortable asking questions, asking you questions. I understand your response and I feel like I can talk to you about what's important to me. You might understand someone, but if you don't feel comfortable saying, I know it may not look like a good financial choice, but I want to stay in the house. Yeah, Yeah. You want to be able to talk to people about those things that will at least hear you and say, Well, let's see what we can do.
00:53:32:03 - 00:53:58:23
It's not feasible. At least we tried or whatever it is. So I want you to know when you're building out that team, you get to choose that team. And if you try meeting with someone and they weren't the right fit, it's okay to go try to find someone else new again. Yeah, that's really good advice because this the divorce, you should be a little bit selfish and take the time because a lot of it's Yes, you get a lot of it selfish.
00:53:58:23 - 00:54:22:06
Okay. And you get to have the team that works for you because really, I was just thinking as you're saying, that if I didn't spend time in my divorce talking to my tax attorney and if I my financial advisor and my attorney, my legal attorney, my tax accountant, sorry, financial advisor in my attorney, I could have you know, I spent $200 talking to my attorney, but I also then spent $400 on getting my taxes done.
00:54:22:08 - 00:54:45:20
And when I spent that $400, I saved myself a ton of money because she was able to figure out some the way that my parenting time works versus how I put that in my taxes. And like all of these things, I wouldn't even thought of that. That $400 was so worth it in the moment that it feels like a lot ahead of time, but that it could be worth it if you have somebody that you trust can ask the right questions to that can help you through this time.
00:54:45:20 - 00:55:07:14
So you're not missing holes or losing money or, forgetting things that you need to have in there because you don't know, because a lot of times you just don't know when you're a lay person. Like. Like me. Mm hmm. Maybe. And you can even ask your mother if you have one person on your team, you say, Oh, I have a family law attorney everywhere.
00:55:07:18 - 00:55:28:15
Attorney? You can ask them, Hey, I want to be building in my team. Do you know any you know, any fill in the blank. Do you know anything advisors or who else should I be talking to? Yeah, maybe you have a tax person that you've been working with. Hey, should I go going through this? Who should I talk to?
00:55:28:17 - 00:55:50:07
You can get some guidance that way. You know, on the financial advising side, where like the hub of relationships, right? Yeah. You know, tax professional. I know enough to be very dangerous, but I do not claim to be and I do not get tax replaced. Yeah, but I know enough to say, oh, you got a lot going on.
00:55:50:09 - 00:56:11:19
You should have that in your filing your taxes. Yeah. Let's bring someone else. Yeah. Or go find someone. If you have someone that, you know, whatever it is. So don't be afraid to ask. Hey, my team. Yeah. Let's think you can help me figure out who could be possible team members. I already talked to a few financial advisors, actually, part of a divorce resource group, so.
00:56:11:22 - 00:56:36:09
Yes, yes, I need to have them all on my table. Okay, so I need to finish tax professional. Yeah, You probably want to have a real estate professional on. Yeah, but, you know, unless you live in a city where your only rent we and even then, I think you might. Yeah. And if you don't, you need to have probably a lender or mortgage loan person alongside your realtor because your realtor does not have that advice.
00:56:36:12 - 00:57:08:09
Okay. Mortgage and that if you if you really are struggling with cash flow maybe like a budget coach or something like that, someone does work specifically with cash flow or if you are working on credit repair, sometimes you to be able to partner with a credit repair specialist or and friends and family. Yeah, I'm just thinking about I buy my own health insurance.
00:57:08:09 - 00:57:34:11
I did for a long time. There's people actually that are health insurance professionals that could do that for you. That's another important one. Medical advocates say an estate well, attorney's legal. Yeah. The law. If you're not doing a contested divorce, like you said, it can be really expensive. You don't you can do it uncontested divorce and use a mediator.
00:57:34:14 - 00:58:00:02
You know, maybe you don't want to each get your own attorney and get a mediator or mediation to get the options. A therapist, membership or. Yeah, okay. These are all the options for team. Take it. No, but there is all these different parts in life that, you know, I, I feel like I'd always be like, I have to know everything.
00:58:00:02 - 00:58:15:09
I have to know everything because I'm an adult. I need to know how to run my finances. I need to know how legal aspects of my business and how to run my life and you know, how to do my own taxes. And I'm like, oh my gosh, I'm getting exhausted. That feeling on my chest is coming back again.
00:58:15:11 - 00:58:36:20
But having a team member and having somebody to go to to talk to about it really, really lifts that. And can often, even though, like we were saying before, it might cost some money up front, could save you a lot of time and stress in the future. It's important. It's why there we live in a world that you don't have to know everything.
00:58:36:20 - 00:58:59:20
You just have to be able to find it. Mm hmm. I do. And why? Why would you know all that? You know, nobody would want? You're right. They don't teach it in schools. There isn't just this out here. Here's what you need. Okay? Google. Here's exactly right. Mario, what's going on? Tell me what I need. Yeah, And and there's a reason why certifications exist.
00:58:59:20 - 00:59:24:05
Right? There is the reason why there's a certified public accountant, because there's a lot of information that you need. And you said, what's the certification that you said you have divorce from certified divorce Financial analyst Okay. So there's enough information and enough loopholes and enough options. There's a certification that is created not for no reason, not because it's too complicated and somebody needs to know how to do it.
00:59:24:07 - 00:59:54:13
Exactly. Okay. There's been so many good gems in here. But before I wrap up, I really want to know and ask everybody, what do you think is the most important thing that our listeners need to keep in mind as they're going through their divorce and rebuilding their new life? I say it Give your yourself a space or a safe space and be patient.
00:59:54:15 - 01:00:33:13
It's a lot of hurry up and wait. It's a lot of, like you said, pressure in your chest is a lot of stress. It's a lot of s. And and that's okay. So I say slow it down. And if you if you need to talk it out, you need to reach out to your counselor, Amy, to reach out to a team member, do it and give yourself grace, because it is the things that make us uncomfortable that help us grow to working through it is better than that.
01:00:33:15 - 01:01:01:22
And specifically, it's finance It, like you said, with your car, these little things keep coming through. And so even the day that you had your decree and that your judgment in hand, unfortunately on the finance side, it's not done. Yeah, that's the start of it. Okay. Now that this is in place, then we can divide things and it can take time and then that's okay.
01:01:01:24 - 01:01:30:08
Mm hmm. And that's okay. Take the time. Give yourself grace. I like that. I like that. Yes, I love it. So if our listeners are looking for more information about some of the stuff you talked about or maybe want to reach out to you or find you online, where should they look so you can I do have a website through Edward Jones.
01:01:30:10 - 01:01:58:02
So it's just Edward Jones dot com slash Rachel hyphen Kieras that's Rachel dash Kieras financial assistant and I do have a Facebook page. Not the best way to reach out to me, but I do have one, which is Edward Jones financial advisor Rachel Kieras. I would say if you go to that Edward Jones website, you can send me a message.
01:01:58:02 - 01:02:25:19
If you send a message through, there it goes, right? I get that right to my email, which you could also email me, which is just Rachel Kieras Edward Jones dot com. Okay awesome. And I'll make sure those are in the show notes and on the web page if people want to reach out and it's great thank you so much for being with us today and sharing all these nuggets of wisdom about our finances and de-stressing it and helping us get through it.
01:02:25:19 - 01:02:33:09
I really appreciate you. Thank you so much. I appreciate you too, Tera.