Money and Divorce: Which Problem comes First? Do money problems cause divorce or does divorce cause money problems?

Why is money so often cited as a primary reason for divorce? Is it the actual cause of divorce, or does it become an issue when couples decide to split?

I wish I could state unequivocally which it is, but what I can do is speak to the causes behind why couples argue and often split over money issues.

Many couples come from different backgrounds in terms of how they view and value money. Where one person in a relationship might feel like money should be used to buy things today that they believe enhances their life experiences, the other person might feel like money should be primarily used for basic life needs, with the rest, saved for the future.

To this day I find it shocking that so many couples get married without discussing not only their current financial situation, but how they think and feel about the purpose money plays in their lives. Where do they stand on debt? How about the importance of saving and investing. What about having children; public or private school? Pay for college? Buy them a car at 16? Should your children work and if so at what age?

So often when couples come to me for financial planning, it is clear that one person cares more about spending money on furniture, cars, kids or vacations. The other wants to live more modestly and save and invest. Typically, I find one person deferring to the one with the stronger, more dominant personality, instead of that couple finding a happy medium between their divergent views over the use of the family income. When compromise isn’t reached, couples create a hotbed for future grudges and blame.

Many couples don’t share in money decisions, but assign the one person who is more suitable or interested in money to make financial plans. Again, this seems like it works, during good financial times, but when the economy suffers, and jobs are cut back or lost, money suddenly becomes a point of contention for the couple. It’s just too easy to blame the person who manages the family finances for the current state of affairs.

What often goes unspoken is the burden of responsibility felt by the one person assigned to handle the money. Sometimes this is the one who earns the most, whereas other times it is the stay at home spouse who runs the household. I am regularly astounded at the lack of knowledge the not-financially involved spouse has around finances. They can’t answer the following questions:  How much does your spouse earn? How much life insurance do you have on each other? How much of your income is your family saving for retirement?

Alternatively, some couples simply keep their money separate and don’t act like a team around the family finances. Although many claim this works just fine for them, how can a couple really be on board with their future current plans and future dreams when they are in the dark about each other’s money behavior. I tend to think that couples choose this as a default to doing the hard work necessary to compromise and come together around money issues.

People decide to divorce for so many reasons from infidelity to abuse and addiction issues, from growing apart to not growing at all. Occasionally financial issues are at the center of the marital difficulties, but often money has not been a problem to couples in the past.  But mark my words, regardless of the cause of the decision to divorce, once a couple moves forward with divorce, money becomes one the biggest areas of contention.

After all, what is divorce really, but a legal separation of all that was shared in marriage, be it real estate, savings and investments, and sadly, children. Suddenly couples who in their past relationship openly shared money regardless of who earned what, now it’s mine is mine and some of yours is mine, too.

All sorts of financial wreckage is possible, as the reality of taking one family and their income and assets and splitting it between two households.  Generally there is simply never enough money to go around, and often both people in the marriage are basically starting over financially.

I can’t state that money is one of the top causes of divorce, but I can say without a doubt that divorce causes all sorts of money problems and that any financial problems that were quietly hidden during a marriage, come flying into focus when divorce happens.

For me, the end of a marriage is so sad on its own. Two people who at some point in the past loved each other enough to want to spend the rest of their lives together, have come to a point where they can’t work out their differences; that alone is simply tragic. But I find it ironic that much of that is lost in the process of divorce, and the ever powerful money, becomes the argument.


Financial Gut Check

In my last blog, I wrote about why some people aren’t able to keep their New Year’s resolutions or stick to a financial plan. It’s generally not that they lack discipline, or that the goal was too lofty. It is usually that they haven’t taken a hard look at the emotions behind their financial behavior. Without this knowledge it is impossible to move forward on financial goals and keep them going for the long term.

Just like when you start a diet or exercise plan at the beginning of a new year, and you find that by Jan 31st, you have already broken your plan; it’s rarely due to the excuses you tell yourself.  Although, “I’m just too busy to get to the gym” or “I don’t have time to cook healthy, nutritious meals for myself” are often true, there’s usually more underlying issues that contribute to our inability to honor our promises we make to ourselves.  I contend that there are emotional reasons we overeat or resist taking care of ourselves, both health wise or financially.

So, how honest are you with yourself about your finances? Do you hide behind the busyness of your life as an excuse to not look at your finances? Or perhaps you are simply scared to face reality! How would one go about doing a deeply honest Financial Gut Check?

Let’s start with adding a few things up. Now before you say, “I’m not good with numbers” or “Math was always my worst subject”, fear not! I’m talking addition and subtraction of long numbers only! This is 5th grade math, so those excuses don’t fly. If you are resistant to any of the following suggestions, go back to last week’s blog:

  • Total up all debt
    • Separate mortgage debt and car loans from credit card debt
    • Review the credit card amount due monthly and ask yourself, “Am I decreasing the overall amount of credit card debt on a monthly basis?”
  • Total up all assets
    • Separate Financial accounts (savings and investments) from Real Property (house, cars and collectibles)
    • Review the financial accounts monthly and ask yourself, “Am I increasing the overall amount of savings on a monthly basis?”

If the answers to both questions above are yes, then you are on the right track and should probably go to the next step on the road to financial honesty; meeting with a Financial Planning professional. The purpose of this meeting is to make sure that your savings rate is adequate to get you to the goals you have and to make sure your investments are in line with your investment time horizon and risk tolerance. A good financial planner will also help you review your insurance portfolio, making sure that crises won’t derail you from reaching your financial dreams.

There are many financial websites that can offer you similar help, but I always feel like people are more accountable when they work in tandem with another person, versus simply interacting with a software program.

If the answers to either of the two questions above were no, and you are not making any headway on reducing debt or increasing savings, it’s time for some more self honesty. I would tell you from my 25+ years of counseling people around their money goals, that there is probably some emotional resistance you might have towards paying down debt or increasing savings.

Most programs that lead to behavior change start in the same place. Identify what the problem is and how and why you ended up there. Reviewing your personal money story, how you were raised around money, what situations have happened in your adult life that impact how you view and value money, can often uncover the keys to awareness that can help you break free from debilitating money behavior.

Being honest with ourselves can be the toughest thing we ever do, but can also be the most revealing and freeing activity leading to changing our ways. Whether you eat or drink too much, gossip, gamble, overspend or hoard money, change begins with honesty.

Make this New Year of 2013 the year of true change by honestly looking at your finances and your money behavior. Here’s to a healthy and prosperous new year for all!

Why Can’t We Keep Our New Year’s Financial Resolutions?

Did you start out the year like many of us, saying “I’m going to lose weight, get to the
gym more, reduce my debt, spend less and save more”… and have you already fallen
off the wagon? Why do we make the same resolutions every year but are continually
not able to stick with our goals?

And please don’t say we don’t want it enough. There isn’t a person out there who
wants to be in debt or scared that they haven’t saved enough money. I’ve never met
a person who wants to end up as a bag lady or working until they die as a greeter at
Walmart (not that there’s anything wrong with that)! No more than anyone wants to
be overweight or unhealthy.

So why can’t we stick to our plans and goals? My belief after 25+ years of counseling
people around money issues, is that we all have deep seated emotions surrounding
and defining our money lives. And until we address those issues, we are destined to
repeat the same patterns over and over again.

So if your goal was to reduce, pay off debt or save more, and you haven’t been able
to achieve this, ask yourself, “What’s behind your over spending?” Perhaps you
were raised without much and now that you are working and making a good living,
you feel like you deserve to have what you want. Perhaps shopping is a way you
reward yourself for all your hard work. On the other hand, maybe you are married
to someone who overspends, and you feel like no matter what you do, you can’t get
ahead. So if you can’t beat them, join them!

Maybe you believe that overspending enhances your happiness, and what if you
died tomorrow, think of all the spending you’d miss out on! It’s different for every
person, but trust me on this; behind overspending and not being able to stick to a
budget, there exists some emotional feeling fueling the behavior.

Gratefully, I am not an over spender. Never have been, never could be. But I have
bordered on what I call being a compulsive saver. Most people think, “Well that’s a
good problem to have”, and in some ways I’d agree. I’d rather be an over-saver than
an over-spender. But my belief system holds true. Behind all compulsive savers,
there are emotional forces fueling the saving.

In addition, don’t think for a minute that being an obsessive saver can’t cause you
problems; especially if you are in a relationship with someone who doesn’t share
your same belief system around money. Many relationships have ended over
couples not being able to agree about money.

I’ve seen savers who are close to money hoarders, who lose friends over the fact
that they count pennies between each other. I’ve seen compulsive savers deny
themselves the enjoyment around the wealth that they have created. So what
emotions lie behind extreme savings? Usually, there is a deep fear of never having
enough money.

In my case, my father was an immigrant to this country and while we were growing
up, we never had some of the nicer things my friends had. In fact, I thought we were
poor, but it turns out we were middle class. But instead of going off in the direction
of over spending (which could have happened), I took on my parents’ fear of not
having enough money. In many ways I mirrored their behavior.

But here’s the difference; I’m not an immigrant. My husband and I earn a very nice
combined income, and I work hard. I’ve been focused on saving for the majority
of my life. Yet I’m married to a man who has pined for a lake house or mountain
house for as long as I’ve been married to him (and that is over 23 years)! Now in
all honesty, for the first 10 years of our marriage, we could barely afford our first
house, but after the first 10 years it was doable. Yet I resisted over fear of spending
the money.

I had to do some hard work on myself; to let go of the fears that my parents planted
deep in my psyche, that I should not spend, but save, save, save. It didn’t happen
overnight but I’m happy to report, that I really don’t worry about money (much!)
and we are embarking on the purchase of a lake house property.

I’ve chosen to BELIEVE the financial plan I update for myself annually, which says
we are OK. We are on track if not ahead of a decent retirement, not too far down the
road (if that be our choice).

You too can overcome your financial behavior if it needs to be fixed. Is it going to
be easy? Not likely! But start with looking deeper at your patterns and take a good
honest look at what drives your behavior. This self honesty is the starting point to
change! You can do it…I did!

Happy New year!

Holiday Spending Feels Empty

Being a long term saver and bargain shopper, there is something inherently stressful for me about the holidays.

I feel the need to “make it special” and somehow that gets interpreted into LOTS OF BOXES under the tree or for the 8 nights of Hanukkah. I feel forced to buy things that often aren’t needed. And I’ve spent a lifetime trying to only buy what is needed, with an occasional want as a bonus!

Early on, I felt a bit of competition in terms of living up to my Mother-In-Law’s spectacular Christmas mornings, where the opening of presents lasted hours and the pile of boxes were sky high! Once I started down that path, my kids got used to it. So, how do you change your ways?

When my kids were little, I’d make them clean out their room prior to Christmas morning and I’d find items that I gave them last holiday, still in the original package. I’d rationalize that it was only a $10 item, but I knew it went against my belief about spending just for spending sake.

And then I realize I’m conflicted. One year, we decided to not give gifts during some difficult financial times, and I know I felt like we were missing out or at least my children were.

Over the years, I’ve found myself pushing items my children or my husband and I needed, off until December so I can buy them, and give them out during the holidays. It sort of makes sense, but I’m always left feeling like I was coerced to spend for the holidays. And I didn’t take the time to find something really special that would surprise them; I simply put things they needed under the tree.

Then, there’s the awkward moment when a friend gets you a gift but you didn’t reciprocate. And how about tipping the newspaper deliverer, the waste management people, and the mailman? How do you know how far to go?

Does everyone go through the gambit of emotions around holiday spending; about how much to spend and for how many people? Or is it just me? Because of being in the financial industry, am I just hyper aware of spending?

And what about people who simply don’t have the money; do we expect them to give gifts anyways and go into debt? So… this is why I get stressed during the holidays!

Eventually It Gets Personal!

In keeping with the fact that November is National Hospice Awareness month, as well as our focus on caring for our aging parents, I decided to go personal with this blog and share my own experiences in each area.

Two years ago, my brother, sister and mother and I had to confront the reality that our 81 year old father/husband was terminally ill. He had liver damage from fatty liver disease and both his liver and kidneys were starting to shut down. The only treatment option would have been a liver transplant and at 81 that’s truly not an option.

Initially, we had to deal with the issue of whether or not Dad was a DNR (Do Not Resuscitate). Now, Dad was a really smart and incredibly practical man, so I was pretty certain that if his heart gave out at any point, he wouldn’t want to be brought back. But he was going in and out of consciousness due to drug interactions that a failing liver couldn’t process.  Therefore, my Mom was in charge. After 56 years of marriage, when the hospital asked us about a DNR, Mom’s only answer was that they needed to do whatever and go to any lengths to keep Dad alive. It took a lot of family meetings and then using moments of Dad’s lucidity to convince Mom that he was in fact by choice a DNR. This is a really tough conversation to have when someone is already ill. I urge you to have this conversation as a family far in advance of the potential need.

For the next two months, Dad would go into the hospital for a week, and then be too weak to go home, so he’d go to a rehab center for a week or two. Another drug interaction and then we’d repeat the process. After 8 weeks, I said to my family, “is this really how Dad wants to spend whatever time he has left or how we want to spend our time with him, going from hospital to rehab and back?” So we decided it was time to bring him home and call in hospice.

Hospice was incredible! They showed up in advance with a bed and everything we would need to take care of Dad at home. They took over medication dispensing, provided counseling and nursing assistance. They had 24 hour help available if we need to call someone. I was amazed at their service and even more so at their hearts. These people were incredible at helping the dying transition to the afterlife and help the living cope with the reality of their loved ones’ death.

The most amazing gift a hospice nurse gave to me was when I had been with my parents out of state for a week, missing the holidays with my husband and kids and really felt like I needed to go home. But Dad had been hanging in there and I didn’t know what to do. The hospice nurse told me to go home and be with my family, but make sure and say goodbye as if it was my final chance to speak with my Dad. I thought long and hard about what I would say to him. When I was about to leave, I asked for a moment alone and I told my Dad what he meant to me and what wonderful parts of me I felt like I inherited from him. What a blessing to have that chance! I went home and when he died a week later, I was totally at peace having said that final goodbye.

Fast forward one year… to early 2012, just one year after Dad died. I get the call from my sister, who lives near my parents, that my mom was having a stroke. It was a big one, but mainly affected her cognitive skills. She woke up not remembering that Dad had died, what year it was or much more than the names of her children and grandchildren. She also lost her ability to read. Immediately my mother lost her independence and we were looking at having to get her live in help so she could stay in her home. Over this year, many of Mom’s long term memories have come back, but the short term recall is shot. Her heart and blood work look great and she could continue to live a long time, but will always require care.

My sister and I started doing our research and called a variety of different care giving services that were recommended by the rehabilitation center. Interestingly, Medicare was done paying for Mom’s rehab after 2 weeks, and she was basically being kicked out. We were shocked to find out that the cost of care was $220 a day, which equals $80,300 a year (Holy crap!).  Now Mom and Dad had scrimped and saved their whole life so they could afford to pay for that for a while, but that’s a lot of cash! Gratefully, I had begged my parents around 12 years prior to buy Long Term Care insurance. The benefit I had sold them was only $100 a day, but with the cost of living adjustment, the daily benefit was now $165 a day, covering $60,226 of that $80,000 a year bill. Needless to say we breathed a big sigh of relief!

The total cost of the premiums they paid for that coverage over the 11 years was around $55,000. We have already recouped that cost. But the reality of insurance is you hope you waste those premium dollars! Who wants to have a car wreck, a house burn down, die prematurely or lose their independence in old age? Obviously no one, but the question is can you afford the cost if any of those things happen to you? If the answer is “No”, then insurance is the answer. If your parents can’t afford LTC insurance, consider paying for coverage on your own or with your siblings.

Next week kicks off the holiday season of Thanksgiving through New Year’s. This is a great opportunity to discuss all of these issues with your aging parents. Most people haven’t asked their parents these sensitive subjects. Don’t blow the chance to talk to them about their final wishes while they are healthy and can give you their input. You won’t regret it!

Ben Stein Says Kids Today are Lazy!

Last week I had the honor of seeing Ben Stein give the wrap up keynote speech at the Pacific Life Educational Symposium in Huntington Beach, CA, where I too was a guest speaker. He was phenomenal and had many good messages to impart on his audience.

My main take away was his concern for the younger generation of teenagers, of whom I have two of myself. Ben seemed very disturbed that the discipline of work ethic has seemingly been lost on the younger generation. He also felt like our education system is lacking at best.

I had to agree on a few points. I’ve noticed a big difference between my children and their friends and the generation I grew up in. For one thing, I had a summer job from age 13 on. I don’t recall my parents telling me I had to work; I simply wanted to. My first two summers were just jobs at the local swimming pool, but by age 15 I was working in restaurants doing odd jobs and grunt work. Again, I don’t recall wanting the money as much as wanting the independence and the excuse to get out of the house. Perhaps only having 13 channels and no Internet contributed to a level of boredom at home that doesn’t exist today.

As a parent, I didn’t want my children to work during high school or college for that matter. Parents in my generation tend to want our children to “focus on their studies”. We also encourage them to have so many extracurricular activities that they really don’t have time to work. Are we in some way missing the boat as parents?  Perhaps working, even at a young age, encourages the need to be more structured about getting your homework done? If nothing else, there is something incredibly valuable about working a minimum wage job and finding out that you have to work two weeks full time or over a month part time to buy an iPhone or an iPod touch. Today’s kids only see their parents swipe the magic plastic card and suddenly they have exactly what they want. Making the connection between working and spending is a valuable lesson that I fear is lost on today’s children.

Another thing I’ve noticed about my children and their friends is that they aren’t lining up at the DMV to get their driver’s license on their 16th birthday. They seem to not be in much of a rush. Is this because there are more stringent rules on a 16-year-old driver than when I was growing up? Or is it just that they don’t crave the independence like we did? Are our homes a more friendly and fun place to hang out than our parents homes were, and again, is that a good or a bad thing?

As for our education system, I think we’d all agree that something needs to change. Ben Stein actually quoted Adam Smith who said, “Between your ears and in your heart is where prosperity comes”. Ben was referring to intellectual capital, which he believes is disappearing. We need to get our youth excited about learning. We need to provide the opportunity within our schools where children believe that learning is fun and knowledge is priceless. Learning through reading is one of the greatest escapes from boredom that I know.

So, is the younger generation simply entitled?  Are students today just lazy? Is this a result of being born into one of the most prosperous times in our history? Or living in an age of technology where everything comes so easily and with the simple stroke of a keypad?

How do we bring the principles of discipline, hard work and dedication back to our children? And how as small business owners do we hire this generation knowing that they lack the work ethic that prior generations had?

I wish I knew the answers to these many important questions, but at least Ben got me thinking! I’d love to hear your thoughts on this subject, so feel free to comment back to me below or at

Windfalls and Excess Income

It seems like we get news on a fairly regular basis that some professional athlete, movie or rock star is going bankrupt or owes the government taxes.  I’m flabbergasted by how anyone could make that kind of money and blow it. I always say, “Give me a person who earns over a million dollars for even 2 years of their life, and I can show them how to set themselves up financially for the rest of their life!”

Last week I watched a documentary on ESPN’s 30 for 30 Series called Broke. They highlighted why such a large percentage of NFL and NBA athletes end up broke instead of set for life. The Documentary cited the following statistics:

The average length of an NFL opportunity is only 3.5 years. 65% of players leave the game with permanent injuries. By only 2 years into retirement, 78% of NFL players have gone bankrupt or are under financial stress. Similarly, within 5 years of retirement, an estimated 60% of former NBA players are broke. (Sports Illustrated 03/23/2009)

This really is not new information for me. Over the 25 years of my professional life as a financial planner, I’ve read many studies of what the documentary called The Sudden Wealth Effect. In the past I’ve seen a similar study of why a large percentage of lottery winners eventually go bankrupt, and I’m sure many of the same explanations apply to professional athletes.

In this ESPN special, they cited many reasons why players are ill equipped to handle the sudden wealth that occurs upon entry into professional athletics. Generally speaking, most come from the lower middle class on down to poverty level and don’t have the money skills to plan for their investments. They are naturally drawn to investments that are sexy versus safe. Many put their money in the hands of agents who are not financially savvy either. The best explanation I heard in the show was that the NFL or NBA (or for that matter a movie career, hit TV series, or bestselling album or book) is an opportunity, not a career. In each of those examples, people are given a limited amount of time to earn big bucks, but it’s unlikely that it will be forever.

People that experience sudden windfalls, can also succumb to similar downfalls. The chapter titled Windfalls and Excess Income in my book, It’s Just Money, So Why Does It Cause So Many Problems?; details stories about salespeople who had a banner year of earnings and people who came into an inheritance or business windfall that could have made a serious impact on their future financial success, but instead, frittered the money away.

There is a tendency for anyone who experiences a significant increase in earnings to believe that this is going to continue indefinitely. That is in essence, the big mistake. Perhaps you will be one of the lucky ones to experience a long-term run of significant financial success. But if you are more like a professional athlete, where it’s a short period of time, you might miss the opportunity to capitalize on those earnings for your future. The even bigger mistake is leveraging a future on the necessity of those increased earnings to maintain that lifestyle. This is where people tend to go broke.

In so many instances it comes down to the fact that as Americans, we simply like to spend. We feel entitled to nicer things, we feel compelled to “Keep up with the Joneses”, and quite frankly, spending is more fun than saving. This generation, unlike those of the past, is more about living in the moment, versus worrying about the future.

But as a Financial Planner, totally invested in helping my clients get to a point of financial independence, it’s been a bitter pill to swallow. One of my most challenging situations is watching people I know struggling financially, that could have made better financial decisions along the way to prevent the situation they are currently in.