Archive for the ‘Financial Management’ Category
Mediation: Two Views
July 9th, 2010 | Author: Pamela
This month I worked with two very different couples in two very different mediations, and it occurred to me that if you are in the divorce process, you know nothing of other clients’ experiences, which might be helpful in making a decision about mediation.
Here’s the back story: Couple A (let’s call them Anne and Arturo) and Couple B (Ben and Barb) have more than a few things in common. They are all working professionals, but at different levels of pay. Both couples have one young child (Abby and Boris). They both have moderate debt and assets. They are all Read the rest of this entry »
How to Choose A Divorce Attorney
May 19th, 2010 | Author: Pamela
My cousin (who is also an attorney, but not in Arizona and not in family law) sent me a message a few days ago, on behalf of her friend who is getting divorced. Jana’s question was, “how does Amy choose a divorce attorney and what questions should she be asking?”
By the time I was finished with the email, I realized that there are probably lots of “Amy” people in the world (both men and women) who are bewildered, confused, scared, and stressed, but still need to make a smart decision. Here’s what I told Amy ~ Read the rest of this entry »
Sell, Hold, Short Sell, Foreclose?
April 8th, 2010 | Author: Pamela
Oh my, we are in a pickle here in Arizona. Our real estate bubble burst with a bang and left many homeowners under water and holding real estate — and debt – without equity. We’re not alone in that dilemma, but we are one of the hardest hit areas of the country and are regularly featured in national news stories about the mortgage lending and foreclosure crisis.
If you are living in an upside down house, love it beyond reason, and intend to stay there the rest of your life, then it’s probably a good idea to hang onto it. However, if you’re in the midst of a divorce or break up and one salary won’t cover the carrying costs, you are probably having a very different conversation. And that conversation can be making you anxious, stressed, depressed, sad, angry, resentful, or all of the above!
While there are many opinions and theories about what you “should” do or “should not” do regarding underwater real estate, in the final analysis, it is a very personal financial decision. It is not (or should not be) an emotional decision. Houses are investments, in the form of real property, that you and/or your marital community made. The investment is neither good nor bad. The return on investment, however, has made millionaires of some and bankrupted many thousands more.
Clients ask me all the time, “Should we sell, hold, short sell, or foreclose?” While I don’t pretend to have all the answers to every issue that one simple question implies, I do have two answers.
One, please call on a professional to assist you in evaluating the issue. I recommend either Tim Mackey, Mackey Law Firm, or Mick Bernard of Credit Strategies. Tim can assist you in evaluating your specific case to determine whether you should be holding steady, foreclosing, considering a short sale or even bankruptcy. Mick can assist you with credit repair and mortgage modification.
Two, consider how much financial damage the debt on your house is causing. For many people, the stress of carrying too much debt is the straw that breaks the back of their marriage. Removing that stress may not result in a reconciliation, but it may pave the way for a more relaxed settlement of divorce terms and (if you have kids) a much less stressful co-parenting relationship. I recently met with a client who was very distraught over the fact that he was paying over $4,500 per month in mortgage payments, yet was not able to meet his small business payroll or pay for his youngest child’s daycare. Clearly, something has to give! Another client was amazed at how gracious her mortgage lender was when she applied for a loan modification — even in the midst of a divorce. Within a few weeks, her loan was modified, in her sole name, and the payments were reduced by almost half.
Your situation is unique, which is why it is important to seek expert advice; however, when you are in the midst of a divorce, hard financial decisions must be made and — always — best interests of your children, spouse, and business should be paramount.
Choose Peace ~ It’s a Good Investment!
Disclaimer: No matter what I write about, it’s not specifically about you — I’ve worked with literally hundreds of clients, most of them in very similar circumstances, so there may be a familiar ring to my stories. Also, I take poetic license with case stories, weaving in my own experiences with those of my colleagues, so each story will be an amalgamation of different people, situations, and outcomes. No matter what I write about, it’s not legal advice directed at you — in order to provide legal advice, I am ethically bound to determine conflicts, get background information, and gather the facts specific to your case. A blog is not legal advice, so please don’t construe it as such.
Flat Fees Are Finally Here!
March 22nd, 2010 | Author: Pamela
Billable Hours
Lawyers are taught at the outset of our careers that the Billable Hour rules the world. Coming from the business community, I always found the billing practices of law firms to be rather odd. In most other service industries, the customer obtains a quote or bid or scope of work that outlines what you will pay for the work you want done. Law firms (as well as accounting, and some other professions), on the other hand, almost always operate on an open-ended contract that often brings a frightful surprise to clients at the end of the month. A common analogy is taking your car to the garage for repair and the mechanic informs you that he might be able to fix your car, but he’s not sure how long it will take and can only tell you what it will cost when he’s finished fixing it. Another good comparison is hiring someone to paint your house by the hour. Either way, an open-ended hourly system of billing invites inefficiencies and does not serve our clients as well as we should.
Are You Above Average?
February 14th, 2010 | Author: Pamela
Are you Above Average? You might think so, but you’re probably not when it comes to divorce.
Becoming Above Average is not nearly as hard as it sounds. When it comes to family law matters, you don’t have to have a low percent of body fat, high IQ, big bank account or a lot of letters behind your name to be Above Average. All you need is a little bit of knowledge and the will to use it.
In this blog series, I’ve introduced you to Tim and Kathy, a fictional couple who represent the Average Divorce. They spent more than half their net worth and two and a half years of their lives litigating their divorce. They depleted their savings, their available credit, and their health. Their kids went through a traumatic custody evaluation and the family business is facing bankruptcy. They are the poster couple for the Average Divorce. If you don’t believe me, just ask around!
Are You Average?
September 28th, 2009 | Author: Pamela
How much is your case expected to contribute to a firm’s cash flow?
In a previous blog, Financial Bedlam, I introduced you to Tim and Kathy, an average couple with ordinary problems, who got an ordinary divorce. It was just “average.” It wasn’t the best divorce or the worst, not the cheapest nor most expensive, not the longest or shortest — just average. And that “average” divorce cost them over half of their net worth. They were “average” consumers of legal services. They went blindly into a lawyer’s office, wearing their emotional divorce on their sleeve and with no financial strategy in mind.
Avoiding Financial Bedlam
September 22nd, 2009 | Author: Pamela
In my last blog, I asked you to think about a question:
Am I willing to turn over a significant percentage of my net worth in order to be divorced?
Since you’re back to read more, I’m guessing you answered NO to that question and you’re ready to Avoid Financial Bedlam. Here are a few ways to keep more of your cash when you’re getting divorced.
Financial Bedlam
September 21st, 2009 | Author: Pamela
Financial Bedlam.
That’s how one client described his divorce.
Like many people seeking a divorce, “Tim” just wanted a short and simple divorce without a lot of fighting over “things.” (No, it’s not really Tim. See Disclaimer.) Tim, a small business owner, has the “entrepreneurial temperament,” which means that he is used to getting what he wants, when he wants it. Divorce was no different, so Tim did a lot of pushing. After all, he was being “fair” and his wife just needed to see his side of things.