A Man Is Not a Plan… or is it?

By Jackie Ramler, Financial Specialist.

I had a recently divorced client move their account to me because the prior broker said to them, “Don’t worry about the money, you’ll get married again and your new man can take care of you”.  The suggestion was that ‘A Man is a Plan’.  Needless to say, the message that the client received was that they couldn’t figure it out on their own.

For those of you that gladly let their spouses handle the finances, it is time to take hold of the financial reigns.  Managing your finances does not require advanced math- basic addition and subtraction is all you need.  The fundamental law of managing your finances is that you can’t have more expenses than income- otherwise you go into debt and risk losing what you have.

You need to have a realistic idea of what you have to spend.  Take a close look at your paycheque and see what you really make, after taxes and expenses.  If you receive spousal support then you need to set aside a portion of that payment for taxes.  If you disregard this advice, and you spend it all, then you may have a tax bill.  Nothing is worse than owing money to Revenue Canada.

The next step is to take a look at all of your expenses and break them into 2 categories- Needs and Wants.  Your needs are food, shelter and necessities to survive.  The wants are all of the extras that you could survive without.  Be clear about what you have to have to survive and what you can live without.  I once met with a couple that were having debt challenges and I noticed about 6 magazine stacks of current magazines.  When I suggested that they consider letting go of those subscriptions, the one spouse reacted as if they were a necessity.   This unrealistic ‘need’ was contributing to their debt problems.

Only you can make the value decisions around what expenses you maintain or let go of.  If you find this a real challenge, then look for a financial professional that can assist you. Either way, invest a bit of time and you can manage your finances so that you aren’t dependent on another to take care of for you.

Jackie Ramler, Financial Specialist, Divorce Choices Inc. www.divorcechoices.ca

While separation and divorce are emotionally painful, the real challenge often sets in when you experience the financial reality check- realizing that what you could afford as one family is no longer an option now that the family income has to support two separate households. Simple math tells us
that 1 total income divided by 2 households equals ½ of the money.

Most people want to continue to live in the same kind of neighborhood, take the same kind of vacations, and have the same lifestyle as before. This is possible, but it means that you need to either make more money, sacrifice on other items, or go into debt. Debt is just spending tomorrow’s income, and can only go on so long before debt becomes a burden that can take you even lower in your lifestyle.

So, how do you make this transition? The first step is to acknowledge the financial reality that your lifestyle will change. Denying this reality just delays the inevitable. Next you want to take a realistic view of the resources you have. Once you know what kind of after tax income you will have, then you want to start putting together your ‘spending plan’. How you are going to prioritize spending the income you have is a reflection of your values. You want to start with listing your needs, and then start filling in your wants.
Needs are the basic expenses- food, shelter, transportation, and clothing. Wants are the extras – entertainment, gifts, vacations, etc. Only you can make the tough decisions about what to cut, if you are spending more than what is coming in. You can either scale back on the expense of the needs, or you can cut back or eliminate some of the wants.

You can approach this as a challenge, or you can embrace it as an opportunity. Your attitude drives how you will make this transition. Here are some ideas that you can use:
1) Get your children involved, this can help them understand how to manage money.
2) Make a list of all the fun things you can do as a family that are free or cost very little.
3) Create family ‘money rules’ and prioritize your family’s values around money.
4) Brainstorm all the ways that everyone in the family can cut costs, such as turn off the lights when not needed.
5) If you have young children, consider buying their clothes at the second hand stores, such as Value Village.
6) Need a new TV or other item, consider buying used.

You can make this financial transition, but it may mean some tough decisions. If you are still having trouble making your spending plan work, consider consulting a financial planner or money coach for assistance.
Jackie Ramler, Divorce Financial Specialist www.divorcechoices.com

There are so many emotions involved with divorce and negotiation. Fear, sorrow, guilt, anguish, hurt, anger and so much more. In collaborative divorce you will need to sit at the table with your spouse and your collaborative team to negotiate. If you are too emotional then it is highly likely that the emotions will interfere with the negotiations. If the emotions are so big and unresolved you may cry and not be able to speak, you may yell and not be able to see solutions, you may feel so guilty you want to give everything away.

So what can you do to get ready?

1. Before entering into negotiations you want to acknowledge what emotions are big for you.
2. Ask yourself three questions; How am I feeling about the marriage ending? How am I feeling about splitting everything? How am I feeling about all the changes in my family’s lives?
3. Write a list of the emotions that come up and rate them are they positive or negative.
Positive emotions make you feel light. Negative emotions make you feel heavy.
4. Next rate the emotions on a scale of one to ten. Any negative emotions that you rate five or higher, you need to be worked through before you go into negations. Any positive emotions that are five or lower you need to increase before you negotiate.
5. Create a strategy to increase or decrease the emotion.

So a list may look like this
Relief + 4 Think about the stress I do not have to live with anymore
Guilty - 8 Write a letter to myself that helps me forgive myself
Sad - 7 Remember this is normal and dedicate sometime to just be sad
Afraid - 5 Write a list of how the Collaborative team members will help
Angry - 7 Work with the Family Coach to decrease this
Hopeful - 4 Create some new rituals and new ideas for our futures.

It is important to remember that you are going to be emotional, that is normal. The emotions have to be manageable to the point where you are able to think during negotiations and come up with viable solutions. This process is generally hard but definitely important.

Written by Sue Cook MEd Counselling, BAFN, CYC RSW, CCC
www.familytlc.ca

As a self-employed business owner we all know that there is grey area around putting personal expenses through the business.  In addition, business owners are often encouraged to add their spouse as an employee to gain tax advantage on lower taxed income to the family.  While these approaches are common practice, it is fair to acknowledge these tax planning approaches for what they are and to account for it in the income equalization process calculations.  

It is important that accurate income is determined as this is used to properly calculate both child support and spousal support.  In addition, accurate income figures are important when calculating the proportionate sharing of your children’s extraordinary costs, such as daycare, extracurricular activities, uninsured health care costs and post-secondary education costs.

In an effort to acknowledge and account for these personal expenses you will want to go through your business return and identify what items are for personal use, or may also be used for personal benefit.  Taking this approach is fair and expected in the separation process.

For example:

You may have a vehicle that you use for business, but unless you always leave it at the business and do not use if for personal trips, you more than likely also use it for personal trips.  You will want to look at what proportion of the week’s travel that you use the vehicle for personal use.  You would then look at vehicle expenses and take that proportion of personal use and add it back into your net income.

Here are some common items that I look for when evaluating these expenses:

-          Cell Phone

-          Vehicle

-          Family vacations and trips taken though the business

-          Personal property owned within the business

-          Family meals put through the business

The other advantage business owners have is that you can often Income Split with your spouse, even if they are contributing very little to the business.  In this case you would acknowledge that and add that income back into your income for family income calculations.

It may be important that you understand that the professionals you work with do not report any of this information to Revenue Canada and it is kept private.  Privacy is yet another advantage of the Collaborative approach to separation/divorce where you agree to not go to court to settle the issues of your family’s separation.

Please note that there is no obligation to equalize your and your spouse’s incomes.  Only in longer term marriages is income equalized- and this does not necessarily mean equal.  The spousal support advisory guidelines provide for taking into account taxes paid and benefits received.  Even if spousal support is paid, the person paying the funds out usually ends up with more income due to tax savings. 

Taking a fair approach to the finances and all family issues is a cornerstone to the Collaborative divorce process. 

Jackie Ramler, DFS, CDFA, CFP, FMA, MBA

Divorce Financial Specialist

Divorce Choices Inc.

www.divorcechoices.com

Written by Sue Cook

Perhaps you are separating or already split up and you have children. You and your child’s other parent both want to be actively involved in raising your kids.  Each of you wants to continue to see your children regularly, help them with the day to day aspects of life, keep your kids safe and contribute to their wellbeing. When both parents want this kind of regular involvement in their children’s lives we call that co-parenting.

 Co-parenting means that you and your ex are going to have to work together while living apart. For some this is simple and smooth but unfortunately for many this is extremely difficult. Some of the reason why this is so difficult is because one or both of you are:

• Angry at the other parent
• Afraid of being devalued in the children’s lives
• Coming from a place of unhealthy co-parenting in the marriage
• Worried about the parent child relationship breaking down
• Lacking trust in the other parent
• Adamant about how the children should be raised
• Controlling

These concerns generally feel very real and very important so it is quite common for you and/or your ex to become non cooperative and inflexible. The co-parenting becomes a chess game of strategy and a power struggle. The sad thing about this is when two parents cannot work together but both want to be involved the children suffer. Ongoing conflict between parents is a big stressor for children. It causes anxiety, loyalty bind, and other distress signs and symptoms in children.

Co-parenting that works well and does not cause stress for the children occurs when parents:

• Feel secure in their relationship with their child,
• Value the other parent role in their child’s life
• Are flexible and cooperative
• See the benefit of different parenting styles
• Understand and respect the parenting boundaries from one household to the other
• Respect the rights of the children and know the responsibilities of parenting.

This list may seem impossible when you think of your ex as your ex. However if you are able to shift and see your ex as the children’s other parent who not only loves the children but values you then co-parenting can work.