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Trust Yourself to Change

Posted in Offbeat on January 18, 2017

A few weeks ago, I read this piece that advocates learning to trust your future self as a way to be effective in making life changes.

The premise is that our brains are wired to prioritize rewards in the near future versus those that take longer to obtain.  Good news:  It’s possible to circumvent this so that we’re not always slaves to immediate gratification.  Researcher George Ainslie identified that our brains can ‘bundle’ benefits that we expect to receive to help us hold out for the delayed rewards; we’re “mentally projecting [ourselves] into the future so [we] can experience the satisfaction of tomorrow’s rewards today”.

What’s tricky, however, is trusting that our future self will act the way we’d like him or her to in order to actually get the reward bundle.  For me, the “aha” moment of the piece was the recommendation to “establish a pattern of evidence for your own brain to observe” regarding following through on the incredibly simple, fail-proof rule you set for yourself.  In essence, you’re building credibility with yourself to become confident that the future you will do what you need him or her to in order to achieve that lovely bundle of long-term rewards.  Simple?  Seemingly.  Easy?  Time to give it a try.

What Makes a Mediator Effective?

Posted in Legal Separation/Divorce, Offbeat on September 6, 2016

This article went up last month on HBR.org.  The title says it all: “Antagonistic Mediators Can Make Resolving Disputes Easier”.  Huh?

Although we tend to think of mediators as “nice”, empathetic people, the article cites research that suggests that a different style could be more effective at times.  For the types of disputes studied, a “hostile” mediator generated greater willingness on the part of adversaries to reach agreement.  In a nutshell, a hostile mediator enabled the parties to ally against him/her to move forward to resolve their dispute.

What I think is important to note about these findings is that the dispute was a business dispute.  The relationship between disputants in that type of case is very different from one where spouses, former spouses, or family members are involved.  Emotional currents can run much deeper for folks who have been married, have kids, or are related; I find it harder to imagine that a “mean” mediator would be as effective with parties who are already in a difficult emotional place (or, perhaps the mediator doesn’t have to be “as” mean).

On a personal note, what struck me about the piece is that “hostile” is rarely how I relate to people.  Client feedback is that I’m calm, and helpful.  To act in a hostile manner would be inconsistent with my personality, something that would be apparent pretty quickly.  I think that the research results on the “Surprising Effectiveness of Hostile Mediators” will stay theoretically interesting.

 

Mind Your Beneficiary Designations

“Beneficiary designation” is a mouthful.  It’s the kind of phrase that registers mainly as something you’ve heard before but not as a readily discernible “thing”.  What it refers to is a choice you make for who will receive proceeds from an account when you die, and it’s something you’ll want to keep current.

Often, if folks are married, they’ll designate their spouse as the beneficiary of an account:  a bank account, a retirement account, a life insurance policy, etc.  Folks might even update their designation during marriage to make their spouse the beneficiary.  The advantage of a beneficiary designation is that it tells the financial institution who should get the account, and a court doesn’t have to be involved.  (This is why accounts that pass according to a beneficiary designation may be called “non-probate” assets.)

When folks divorce, they may think about updating their will.  But, accounts with beneficiary designations might not get the same attention.  For some folks, Washington law can keep a former spouse from receiving a benefit:  Washington law automatically provides that, if a marriage ends, a beneficiary designation of a former spouse is revoked unless there’s express provision otherwise or unless a court order requires a beneficiary designation to stay in place.

However, for benefits that come through an employer–such as a retirement account–Washington law doesn’t matter.  Federal employee benefit law controls the outcome and there isn’t an automatic revocation of a beneficiary designation upon divorce.  For accounts of this type, that can have a huge financial impact.  In the Estate of Lundy, the unchanged beneficiary designation made the difference between almost $500,000 going to the former spouse of the Decedent, rather than into his Decedent’s estate.  Take home lesson:  Mind–and update–your beneficiary designations.

Practical, Specific Divorce Information

Posted in Legal Separation/Divorce, Money on May 12, 2016

This recent article offers practical, specific information about important financial considerations in divorce.  Don’t let the “late-life divorce” angle deter you.  The factors addressed in the article affect more divorcing couples than just those over the age of 55.

  • Tip 1:  “Right-size” your expectations.  In short, there are more costs with a divorce than before and rarely more resources.  The piece quotes a wealth strategist named Chris Chen, who says it costs an average of 25% more for the couple to run two separate households.  I’ve not seen this precise figure before, however it sounds like a reasonable point of reckoning.  A realistic financial plan for post-divorce life will take such cost increases into account.
  • Tip 2:  Work longer, aka delay retirement.  Increasing your life-time income will help offset the financial impact of a divorce.
  • Tip 3:  Be open to selling the family home.  The advice here is not to keep the family home if it is a heavier financial burden than the party can afford.  However, the likely “best option” of selling the family home may not be a simple choice from a financial perspective, given Seattle’s real estate and rental costs.
  • Tip 4:  Choose assets that will provide income, such as a pension.
  • Tip 5:  If there’s spousal support (alimony), guarantee that income stream with life insurance or disability insurance.  Opting for insurance coverage helps ensure that the party receiving support will receive the resources to which they’re entitled, with a minimum of legal and administrative hassle.
  • Tip 6:  Be aware of all assets of the marriage.  For most folks, divorce is the biggest financial transaction in their lives.  It’s so important to fully understand the assets of the marriage and each party.  In Washington, the law of separate and community property can color divorce outcomes; unless you’re a family law attorney, you likely haven’t analyzed your estate along those lines.
  • Tip 7:  Be mindful of how you will ensure that your health care needs are covered, and also determine what that will cost.
  • Tip 8:  Minimize the debt that you’ll divide in the divorce.  If you need to carry debt forward, have each party “take” their separate portion of the debt and put it into a new account in that person’s name alone.  This will reduce future headaches that can arise if a creditor tries to collect on a portion of community debt that should be the responsibility of the other spouse.

Presence

Posted in Offbeat, Self-employed on March 2, 2016

Amy Cuddy’s TED talk “Your body language shapes who you are” has almost 32 million views as I write this.  The research she shares is fascinating:  That how you hold yourself physically–your posture, your presence–can affect not just how others see us but also how we see ourselves.

Late last year, her book was published.  Entitled “Presence:  Bringing Your Boldest Self to Your Biggest Challenges”, it’s prompted me to think about how I hold myself and how her work applies to clients.  Cuddy says that we can use our bodies as a tool, essentially, to help us get ourselves on track in terms of presence and personal power.  To quote her:  “The body is continuously and convincingly sending messages to your brain and you get to control the content of those messages.”  In that case, it pays to be aware of how you’re holding your body–tall or slumped, shoulders back or hunched up, body opened up or closed in–if it can influence your brain to make empowered decisions.

In my work with clients, I get the privilege being a part of decision-making around some very emotionally complicated issues:  money, marriage, and legacy.  Cuddy’s work is interesting to me as a technique–a “hack”, if you will–to help clients situate themselves in a way that supports making wise choices for those things.  Give it a try and see if it helps.

Post-script:  Amy Cuddy will be speaking in Seattle on March 16.  See her in person and–I imagine–watch her model what she describes.  Event information is here.

 

Year in Review

Posted in Money, Self-employed on December 7, 2015

A useful practice I’ve found for this time of year is to review what’s happened since January 1, and to think ahead to what I’d like to see for the next year.  I’m not sure when my own practice of this originated, however I recommend it enthusiastically.

With financial coaching clients, we we start by looking over their spending record for the year.  Clients will share what they’ve noticed, what went as expected, and what went differently than they’d expected or hoped.  We also talk about clients’ most significant accomplishments around money, what they’re proudest of.  And, for balance, we also talk about clients’ most significant disappointments.  These observations are all raw material for building a strong plan for the coming year.

When we look ahead to the coming year, we consider what one thing will be most effective in helping a client meet her/his financial goals and what one thing is most important to stop doing.  We talk about the financial goals that the client would like to achieve and what behaviors they want to shift.  And we talk about what internal, self-limiting beliefs a client might want to address.

This approach could work for many things in our lives, of course.  Money is a useful lens for me because so many choices tie into money.  Happy reviewing, and best wishes for your ideal 2016!

 

On Saving

Posted in Money on October 12, 2015

Based on financial projections in a current case, I’ve recently been wowed by the power of saving money.  Radical, cutting-edge stuff, right?  Truly, though, I’m understanding why financial tips on saving abound.  It’s invigorated my own efforts to spend less money–or to be smarter about how I’m spending my money–and it’s also prompted me to be more intentional about pushing money into savings (strategy: “out of sight, out of mind”).

In my financial coaching work, I often work with clients who are trying to figure out where their money is going and/or how they can pay down credit card debt.  With that work, focusing on just “saving money” is often too simplistic an approach.  There are many, many factors that go into our financial habits and really effecting change requires being attentive to them.  Also, just barking at folks to “save money” doesn’t work if that advice backfires and triggers feelings of deprivation or fear, both of which can lead to more spending.  Lastly, some folks really need to make more money, such that saving is not going to get them where they want to be financially.

But, I digress.  This post is really about how impressed I have been with what strategic saving can do.  If you can make lifestyle changes such that you can “sneak” money out of your budget to grow, the results really can be astounding.  Time is the magic, tricky ingredient that you’ll need on your side; please let me know if you’ve discovered how to generate more of it.

An advantage of saving is that you can start with what you have; in other words, you don’t have to “do” anything like get a job (or a raise), find a financial planner, etc.  If it will plausibly and objectively meet your needs, you can just opt for the smaller size, the store brand, to use a coupon, borrow, rent, buy used, buy a part and do-it-yourself, trade, or make.  If you do, you can keep a bit more of your money and it saves the trouble having to earn that money (and more, because of Federal tax rates of 10-40% plus any state income tax rates).  To paraphrase Benjamin Franklin, a penny saved is actually more than penny earned.

Based on the research I write about here, a precursor to effectively implementing a saving strategy may be to think of your dear self in the future.  Doing that will connect your short-term actions with your long-term goals.  Me?  I try to tell myself that my future self will have costs that I can’t even anticipate yet–some fun, some simply necessary–and although I can’t control them, I can control what I pick now.  It works at times, and even that helps keep more money for me/us.

Save on!

What’s Yours is Yours

One of the things that I find (incredibly) nerdily interesting about my work is the concept of the character of property.  In Washington, most property is either separate property or community property.  (I’ll spare you the “quasi-community” property and the legal nuances that arise when parties move to/from a community property state from another state.)

Legally, there’s a presumption that what you acquired before marriage (either as an asset or debt) is your separate property or obligation.  When you marry, or in certain cohabitation circumstances, the legal presumption changes and the law begins to think of folks as a financial team.  Property that’s acquired is assumed to be community property; debt that’s acquired is presumed to be community debt; and the name that something is in is not the “last word” as to the character of the property.  These ideas, “Community Property 101”, if you will are key concepts for my pre-nuptial, divorce, and estate planning clients, as the character of property determines where the financial focus is in a divorce and what you have control to give away in a will.

A line I’ll often throw out is this:  “What’s mine is yours” is the opposite of the concept of separate property.  If it’s “mine”–my separate property–then it’s likely going to stay mine unless there’s a clear indication that I wanted to change that.  While “what’s mine is yours” may be a romantic notion, it’s not how the law sees it.

To that end, I thought that this piece on CNN Money was both clear and helpful.  The piece is primarily a response to the question of “if I marry my boyfriend [will] his student loan debt [become] mine too”?  The short answer is “No”.  Debt acquired before marriage?  That’s separate debt.  The longer answer is very thoughtful, though, as there will be impacts on the marital community from the existence of the debt.  In other words, while the debt is a separate debt, they’ll share its impact.

Better Ways to Divorce

Posted in Legal Separation/Divorce on November 6, 2014

Just over a year ago, my husband and I were shopping for a car that would be a better fit for our expanded family.  A salesman at the dealership heard of our interest in a model with a particular set of features and he exclaimed “Ah! A Unicorn!”.  In other words, it was more common to hear about the combination we were looking for than to see it.

In my work as a divorce attorney, I sometimes get the sense that the idea of a divorce that’s not thoroughly rotten seems as elusive as a unicorn.  For that reason, I was happy to see this article in the October 2014 issue of Women’s Health.  The take home lesson?  Divorce/separation does not have to be ugly.

Based on my practice, I think the piece is one of the rare portrayals of divorce in popular literature that’s pretty darn accurate.  It acknowledges that amicable divorce is not easy and that communication is critical.  It points out the benefits and identifies some of the changes both parties must make when relating to each other.  And, it raises the idea of the value of hiring objective (non-adversarial) counsel to help you get the agreements you need; knowing that a divorce is often the biggest financial deal that a person will make, it’s smart to get input from someone who knows the ropes.

As Faye Brennan, the author of the piece points out, there are marriages where an amicable divorce is unlikely or may be inappropriate.  Brennan cites situations of cheating, lying, neglect, or betrayal.  To her list, I’d add situations of abuse.

One caution I have to offer is to not simply pursue the an amicable divorce “for the money”.  Certainly, it’s great to be able to save money in a divorce process, already a costly shift as you go from one household to two.  That said, it’s important to be mindful of the trade-offs that you make in a divorce and ensure that your bottom-line needs are met, both financial needs and others.

If you’re curious to learn more about the “Conscious Uncoupling” method highlighted in the piece, it turns out the pioneer of that approach is offering a free online class later this month.  Here’s where you can check it out:  http://evolvingwisdom.com/consciousuncoupling/free-online-class/.

 

Children and Money

Posted in Money on October 28, 2014

This post on BBC.com is an interesting little piece on children and money.  Not only is it good food for thought for parents, it’s also a good reminder to reflect on what we all learned as children from our family and caretakers.  I think that the advice of German author Barbara Kettl-Romer has for parents is good advice for all adults:  understand [your] relationship to money.

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