Divorce + 4 yrs Financial Recovery

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Topic Author
vas
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Joined: Thu Mar 06, 2014 12:51 pm

Divorce + 4 yrs Financial Recovery

Post by vas »

More than one person on this forum has suggested that selecting the right spouse and staying married are wise financial steps. So, "+1" as they say. Always the contrarian, I gave the other way a go and confirmed the negative.

After a large financial hit I've spent the last four years trying to get back on track. Hoping for a sanity check on the portfolio, goals, and risk assessment. Here's where things stand:

Trigger warning: This post contains Boglehead class problems that may be considered blessings in the real world.
_______________________________________________________________
Emergency funds: Yes

Debt: $235,000 2.75% Year 1 of 15 mortgage (2020 refinance) $800K appraised value

Tax Filing Status: Single, Head of Household

Tax Rate: 32% Federal, 7% State

Age: 56

Desired Asset allocation: 60% stocks / 40% bonds / 15% International (innovative, eh?)
_______________________________________________________________
Current retirement assets $1.5M 56%, 44%, 13% International

401k
27% Intermediate-Term Bond Fund BBgBarc US Agg Bond TR (0.01)
24% Large Company Equity Fund S&P 500 TR (0.01)
10% International Equity Fund MSCI ACWI Ex USA IMI NR (0.03)
7% Mid-Sized Company Equity Fund S&P MidCap 400 TR (0.01)
Company match? 4%

Roth IRA at Vanguard
6% Vanguard Target Retirement 2030 Fund (VTHRX) (0.14%)

Pension
22% (many funds, 37% stock, no employee control of investments, fully vested, no additional contributions, annuity and rollover options available upon retirement)

HSA
3% Vanguard Target Retirement 2030 Fund (VTHRX) (0.14%)
_______________________________________________________________
Non retirement assets $360K

CASH
$ 70,000 cash 0.6% "high interest" savings (emergency fund: 1 yr expenses including mortgage payment & COBRA)
$165,000 cash 0.6% "high interest" savings (earmarked for mortgage payoff)

RSU
$30K Tech Stock; variable annual grants, three year vesting cycle, sold when vested

529 Plan
$80K Vanguard Aggressive Age-Based Option (60% Stock/40% Bond) (0.15%)
_______________________________________________________________
Contributions

New annual Contributions
$26,000 401k (plus 4% employer matching contribution)
$ 8,200 HSA
$ 7,000 Roth IRA Annual backdoor Roth contribution
$50,000 Taxable (will start after paying off mortgage; former mortgage payment + ESPP)
$xx,000 Taxable (variable RSU, Bonus, ~$30K/yr but variable)
_______________________________________________________________
Available funds

Funds available in 401(k)
In addition to those above there is a Small Cap Index, and Cash

Funds available in Roth IRA and HSA
All Vanguard funds are available
_______________________________________________________________
Objectives:

1. Maintain two year cash reserve equal to minimum spend + COBRA. Current annual spend is $35K w/o mortgage, $60K with mortgage. Estimate health insurance at $15K.

2. Pay off house (again...) sometime in 2022.

3. (Re...) Start a taxable investment account once the debts are squared away.

4. Fund Child's education starting in 2026. Hard to say if we are heading towards Princeton's Center for Advanced Studies or the local Cosmetology Academy but I'm happy to go all out, Semester at Sea, meal plan, the works.

5. Plan A: "FIRE In Place". Continue working and saving at current level for six to nine years (62, 65). Use bonuses for interesting vacations / experiences while my child is still at home. Sell house and down size or rent at 62. Ensure basic cost of living is less than Social Security at 70.

6. Plan B: "Forced FIRE". At sixty the informative emails gushing with good tidings about the next VSP start arriving to inform you that your days in the tech world are numbered. Need to develop a plan to cover this scenario at any time over the next ten years. Toil at something in an attempt to cover basic costs. Down size house. Draw from retirement accounts if needed.
_______________________________________________________________
Questions:

1. I've been remiss in not establishing an Estate Plan owing to PTSD and an acquired aversion to making lawyer's Porcha payments. But, I have steeled myself to set up a meeting with a local law firm that specializes in the field. Any general advise about estate plans involving minor children or young adults? Thoughts on giving money to kids without ruining their lives?

2. Long term care insurance. I'd like to provide a solid start in life for my child and preserve any inheritance. Is Long Term Care insurance the right approach to preserve assets or is a trust more effective? How do you protect your child from your own decrepitude?

3. What am I missing? Not very interested in TIPS and tilts as I'm afraid I'll hurt my head but I'd like to dodge any big mistakes.

4. I'm struggling to assess risk. Anxiety is high and I don't know why. On the one hand I've passed 25x and plugging the numbers into Firecalc indicates a 100% chance of not out living my current savings w/o SS. Can anyone count the number of assumptions in that sentence? I like to think I can deal with market volatility; never checked balances in March so its not an asset allocation issue. Just a general sense of foreboding that my ability to produce a meaningful income is coming to an end. Have I lost all perspective?

Thanks for wading through all this tripe. It was cathartic to write if not to read. And thank you in advance for any responses. The expertise, depth of life experience, and generosity of the people on this forum is truly remarkable.
There is nothing you can't prove if your outlook is sufficiently limited
RevFran
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Re: Divorce + 4 yrs Financial Recovery

Post by RevFran »

Why the goal of paying off the quite-low-rate mortgage so quickly?
Topic Author
vas
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Re: Divorce + 4 yrs Financial Recovery

Post by vas »

The usual: Risk aversion, peace of mind, etc. This has been pretty well explored on the forum and I acknowledge the various perspectives, pros and cons, etc.
There is nothing you can't prove if your outlook is sufficiently limited
lgs88
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Re: Divorce + 4 yrs Financial Recovery

Post by lgs88 »

vas wrote: Sat Nov 07, 2020 10:41 am ...
4. Fund Child's education starting in 2026. Hard to say if we are heading towards Princeton's Center for Advanced Studies or the local Cosmetology Academy but I'm happy to go all out, Semester at Sea, meal plan, the works.
...
Any general advise about estate plans involving minor children or young adults? Thoughts on giving money to kids without ruining their lives?
...
Meal plan is great freshman/sophomore year. But I found moving off campus and living in a shared house with friends junior/senior year to be a valuable growing-up experience. Plus, you learn to cook that way!

As for the second part -- how your children will react to money depends on how they're raised. I am by no means self-made, but I had a few good mentors pointing me in the direction of the active life of contribution to one's community, rather than the passive life of dissipation. Just raise 'em up with a strong sense of duty, and they'll be just fine, money or no money.

EDIT: And thanks for leading with a recognition that your problems are, in fact, "Boglehead-class!" We lose sight of that around here sometimes.
merely an interested amateur
Topic Author
vas
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Re: Divorce + 4 yrs Financial Recovery

Post by vas »

Thanks Igs88. The meal plan comment was a bit tongue in cheek but your point is well taken. I'm trying to parent in a fashion that passes on values. My parents set a high bar with a quiet life of thrift, service, and compassion. I've lowered the standards quite a bit but do what I can.
There is nothing you can't prove if your outlook is sufficiently limited
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TomatoTomahto
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Re: Divorce + 4 yrs Financial Recovery

Post by TomatoTomahto »

OP, maybe I set the bar too low, but I consider the fact that I survived my marriage/divorce with a sense of humor one of my crowning achievements. You have done so also, and it will not only benefit you, but also positively affect your offspring. Well done!

I second Igs88 comment about the meal plan. DS has become a very good cook, much better than I am, and it has provided a hobby for him and his GF after their college days. And then there’s the other son, who can barely boil water :oops:
I get the FI part but not the RE part of FIRE.
Topic Author
vas
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Re: Divorce + 4 yrs Financial Recovery

Post by vas »

I survived my marriage/divorce with a sense of humor one of my crowning achievements.
Hats off sir. Pay the lawyers, carry on, and let our lives serve as an warning to others. :sharebeer
There is nothing you can't prove if your outlook is sufficiently limited
annu
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Re: Divorce + 4 yrs Financial Recovery

Post by annu »

For estate planning, since you mentioned tech stocks, if you are still in tech, your company may have a service like legal zoom, where you can work with a lawyer for setting up estate. Since it is open enrollment now, you can add that now as well, it will be ~$20 or less a month and worth it.

We did living trust(revocable), and made sure kids get money At 18, 25 and 35, as we were at different life stages at the time as well. They will have their educations paid for and will have enough money paid yearly after 25 that they do not worry about living costs, but still not too much that they dont work or not do anything in life. We do want them to have the option to pick and work on something that they will like doing and also if they change their minds, not to worry about not getting bills paid.

Also what you maybe be calling recovery, is probably because you lost a big chunk in divorce, but if you consider what you have, it still better then what many folks will have. It is easy to say, but tough to accept, but you also need to "invest" in your health and positivity, especially when you mentioned PTSD, if not already therapy is very helpful. I know it is stock forum, and you will get sound advise there, but don't forget yourself and your health in all this. You can start by doing a physical/annual check, make sure any tests/lab works that you may have skipped/missed with everythign going in your life more recently, that you are all caught up on those. If you have history of heart issues or any other health issues in family, focus on getting yourself checked for those.
Best of luck!!!
Topic Author
vas
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Re: Divorce + 4 yrs Financial Recovery

Post by vas »

annu wrote: Sat Nov 07, 2020 1:18 pm your company may have a service like legal zoom
Good idea. We do have that service but I never gave it a thought. I'll take a look at the range of services they offer.
They will have their educations paid for and will have enough money paid yearly after 25 that they do not worry about living costs, but still not too much that they don't work or not do anything in life.
That's just the kind of thing I had in mind. Are the payments determined solely by age or are there other conditions? Seems like a tricky thing to build in enough flexibility to meet real needs while spreading things out a bit. Common enough challenge that there are presumably boilerplate strategies with which to start.
still better then what many folks will have
Completely agree. Its always a good policy to focus on your sphere of control and count your blessings.
There is nothing you can't prove if your outlook is sufficiently limited
Outer Marker
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Re: Divorce + 4 yrs Financial Recovery

Post by Outer Marker »

This is all painfully familiar. Congratulations on surviving the hardest part. Having to rebuild your wealth and pay off your house for a 2nd time in a lifetime feels a bit like having to rewrite a novel after the only copy of the manuscript went missing.

You don't mention what are possibly the two biggest post divorce financial issues - alimony and child support. Are you on the hook for either of those? This is a major consideration that affects your desire to fund your kids' education. Does your spouse intend to contribute? To my disappointment, I have found that "child support" is a misnomer - there is no fiduciary obligation and funds I would have expected to go to my children have been spent on foolish extravagances by my ex on herself. Without involving the kids, I am going to try hard to hold her feet to the fire in paying for half of college. It's going to be an unnerving game of "chicken." The more you have in 529 plans and not in your own column, the less credible your chances of getting your ex to make a material contribution out of alimony and/or "child support." There really should be court oversight in multi-million dollar divorce cases, when child support exceeds what most families of four live on. But I digress . . .

Odd as it may seem having just refied, I'd look into refinancing the mortgage again at this week's rates. I was recently able to secure a 15 year at 2.125% with enough lender credits to turn a nice "profit" at closing. It was a larger loan amount, but you can probably do better than 2.75% with zero cost or better. I would keep it until just before you retire, and bank the security of knowing you can pay it off at any time. Its not quite the same thing as having no note, but close. If you really want to pay it off early, do it now, vs. waiting two years. Your cash will be earning you 2.75% vs 0.5% in high yield savings. You can take out a HELOC for emergencies.

Your investments would benefit from more effeceint tax placement. https://www.bogleheads.org/wiki/Tax-eff ... _placement Get rid of all of the bonds in your Roth and HSA (held via target date funds) and replace them with TSM. Increase the bond allocation in your 401K to maintain your desired asset allocation.

Faced with a situation very similar to yours, I increased my AA from 50/50 when I had once "won the game" with a paid off house and mid seven figure portfolio, to now 70/30 which I plan to maintain until my later than planned retirement date. I think I will remain 70/30 forever. My goals have shifted considerably with a new family situation and significant other who is younger.

Bond yields are terrible right now, and there is a significant risk to principal if rates rise. For the reasons discussed in this thread, I'm shifting most of my fixed income allocatoin from Total Bond to Stable Value. viewtopic.php?f=1&t=329379 Something you might want to consider if you've got a good stable value option in your 401K.

Rather than holding your emergency funds in cash paying 0.5% or thereabouts in taxable, if you chose to maintain a large cash reserve rather than paying off the mortgage, you could use this strategy to relocate your "safe" money into stable value paying 2.2% tax deferred in your 401K. https://www.bogleheads.org/wiki/Placing ... ed_account

Anyway, something to think about and congrats again on being a survivor. By far the most difficult thing I have ever done. The divorce industry needs a major overhaul.
Olemiss540
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Re: Divorce + 4 yrs Financial Recovery

Post by Olemiss540 »

So you have a NW of near $2.5M, expenses near $60k, and are still having anxiety/stress with regards to money?

You are FI RIGHT NOW!

I think you have an anxiety issue, not a financial one. Enjoy life while the kid is still around. Focus on them and then RE after their done with school. Try to spend a little time with the less fortunate or with a therapist to get over your PTSD from your split.

You are in killer shape! Personally I would sleep better with a huge chunk of money under my pillow than with a paid off house but you do you.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
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TomatoTomahto
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Re: Divorce + 4 yrs Financial Recovery

Post by TomatoTomahto »

Outer Marker wrote: Sat Nov 07, 2020 9:34 pm [snip...]
You don't mention what are possibly the two biggest post divorce financial issues - alimony and child support. Are you on the hook for either of those? This is a major consideration that affects your desire to fund your kids' education. Does your spouse intend to contribute? To my disappointment, I have found that "child support" is a misnomer - there is no fiduciary obligation and funds I would have expected to go to my children have been spent on foolish extravagances by my ex on herself. Without involving the kids, I am going to try hard to hold her feet to the fire in paying for half of college. It's going to be an unnerving game of "chicken." The more you have in 529 plans and not in your own column, the less credible your chances of getting your ex to make a material contribution out of alimony and/or "child support." There really should be court oversight in multi-million dollar divorce cases, when child support exceeds what most families of four live on. But I digress . . .
Yeah. What I discovered was that the rights of parents after divorce are dramatically different than what Bogleheads appear to think. The "give them skin in the game" and "I'll fund up to state flagship level" and such are off the table, at least in NJ. That said, I don't believe in those views, and would have happily paid my fair share of whatever schools my kids chose to attend. My divorce provided that the two parents fund college based on our incomes at the time of the divorce, roughly as I recall, 30% ex and 70% me. Ex paid some of her 30% for a year, and then stopped completely. I had to either leave our child out in the cold, or pay for it all myself (which I did). I often joke that I wish that I believed in an afterlife, because that's the only place I expect justice, definitely not in the courts.
I get the FI part but not the RE part of FIRE.
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Sandtrap
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Re: Divorce + 4 yrs Financial Recovery

Post by Sandtrap »

vas wrote: Sat Nov 07, 2020 12:44 pm
I survived my marriage/divorce with a sense of humor one of my crowning achievements.
Hats off sir. Pay the lawyers, carry on, and let our lives serve as an warning to others. :sharebeer
+1
Marriage > Divorce > Marriage > Divorce . . .Marriage. . . engage. . . disengage. . .break up. . .make up. . .

If not for these things there would be no:

Country Music
Blues Music
Soul
Disco
. . . . .

OP: Congratulations on financial recovery and retaining sensibility and relevance. . .

j :D
Wiki Bogleheads Wiki: Everything You Need to Know
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HMSVictory
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Re: Divorce + 4 yrs Financial Recovery

Post by HMSVictory »

I must admit you are doing much better than I anticipated when I saw the thread title....... financially.

You need to heal emotionally now. Numbers wise you are going to be fine.

Pay the house off. Silly to have a mortgage and once you do it (again) you will feel much better. You will cross that off the list! I know I did.
Stay the course!
AB609
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Re: Divorce + 4 yrs Financial Recovery

Post by AB609 »

Looks like you are doing great and on track for your goals. Don't let the PTSD get to you. Make sure you take care of yourself mentally and physically and let the past stay in the past to extent possible. You have a lot to be thankful for.
Topic Author
vas
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Re: Divorce + 4 yrs Financial Recovery

Post by vas »

Outer Marker wrote: Sat Nov 07, 2020 9:34 pm This is all painfully familiar.
Ah, a fellow traveler. Sorry you went through it but it seems you've come through ok.
Outer Marker wrote: Sat Nov 07, 2020 9:34 pm You don't mention what are possibly the two biggest post divorce financial issues - alimony and child support.
No alimony or support. I negotiated a one time settlement. Took a bit of a hair cut up front but not having to revisit finances on an ongoing basis is priceless. Alimony seems like something Dante dreamed up for the seventh level of hell. I happily take care of all the child's expenses and expect to continue through college.
Outer Marker wrote: Sat Nov 07, 2020 9:34 pm There really should be court oversight in multi-million dollar divorce cases, when child support exceeds what most families of four live on. But I digress . . .
It does seem there is room for improvement. Very difficult to arrive at a settlement that seems fair to all parties.
Outer Marker wrote: Sat Nov 07, 2020 9:34 pm I was recently able to secure a 15 year at 2.125% with enough lender credits to turn a nice "profit" at closing.
Nicely done. I think I'll go ahead with paying off the note but I understand that there are some differing opinions about this approach. White Coat Investor had a nice blog post on the topic.
Outer Marker wrote: Sat Nov 07, 2020 9:34 pm Your investments would benefit from more efficient tax placement.
I'll look into this. I was considering that vary thing but my rational was cost reduction as the target date funds are a little more expensive. Hadn't considered the future tax implications.
Outer Marker wrote: Sat Nov 07, 2020 9:34 pm
Anyway, something to think about and congrats again on being a survivor.
You as well sir.
There is nothing you can't prove if your outlook is sufficiently limited
Topic Author
vas
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Re: Divorce + 4 yrs Financial Recovery

Post by vas »

Olemiss540 wrote: Sun Nov 08, 2020 6:46 am So you have a NW of near $2.5M, expenses near $60k, and are still having anxiety/stress with regards to money?
Yes. Funny how that works. Note that I did get the budget down to fighting weight while sorting out all the nonsense. Wouldn't hurt my feelings to live a little higher on the hog long term.
Olemiss540 wrote: Sun Nov 08, 2020 6:46 am Enjoy life while the kid is still around.
Could not agree more.
There is nothing you can't prove if your outlook is sufficiently limited
Topic Author
vas
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Re: Divorce + 4 yrs Financial Recovery

Post by vas »

Sandtrap wrote: Sun Nov 08, 2020 9:08 am
Marriage > Divorce > Marriage > Divorce . . .Marriage. . . engage. . . disengage. . .break up. . .make up. . .

If not for these things there would be no:

Country Music
Blues Music
Soul
Disco
Ha! That's fantastic. Just goes to show, there is an upside to everything.
There is nothing you can't prove if your outlook is sufficiently limited
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celia
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Re: Divorce + 4 yrs Financial Recovery

Post by celia »

vas wrote: Sat Nov 07, 2020 10:41 am After a large financial hit I've spent the last four years trying to get back on track. Hoping for a sanity check on the portfolio, goals, and risk assessment.
I think there is a lot of anxiety showing through your post. Some of it is due to mis-preceptions, such as this one. I doubt you took a "financial hit" (except for legal costs). The assets you owned 4 years ago were not "yours". They belonged to your ex and you, right? If you currently own half that amount, there is no "hit", in my book.

This is like saying you have $1M in a tax-deferred account, then are surprised you can't spend $1M of it, due to the taxes that are still owed. That is because the tax-deferred account is really owned by you, Uncle Sam, and your state. You are just the "money manager" until the three of you get your shares.
Pension
22% (many funds, 37% stock, no employee control of investments, fully vested, no additional contributions, annuity and rollover options available upon retirement)
Don't count your pension system as an asset, unless you will take a lump sum when you retire. Instead, look at it as an income stream that will help reduce your living expense when you retire. Since you can't do anything about the investments, this is not worth worrying about. The only thing that you should worry about is if he plan is funded enough to pay out it's future benefits.
2. Pay off house (again...) sometime in 2022.

3. (Re...) Start a taxable investment account once the debts are squared away.

5. Plan A: "FIRE In Place". Continue working and saving at current level for six to nine years (62, 65). Use bonuses for interesting vacations / experiences while my child is still at home. Sell house and down size or rent at 62. Ensure basic cost of living is less than Social Security at 70.
I'm also one who questions why you want to pay off the mortgage so fast, especially if you will sell the house in a few years. I'd suggest saving up in taxable to be able to fund college choices without paying for everything from your current income at that time. What would you do if you lost your job or were disabled (couldn't work) before then?
1. I've been remiss in not establishing an Estate Plan owing to PTSD and an acquired aversion to making lawyer's Porcha payments. But, I have steeled myself to set up a meeting with a local law firm that specializes in the field. Any general advise about estate plans involving minor children or young adults? Thoughts on giving money to kids without ruining their lives?
Instead of looking at legal expenses as what the lawyer(s) will do with the money, look at the services you will get instead, for which you don't have the legal background to do yourself. Would you begrudge a brain surgeon who operates on you since you can't do it yourself? Do you begrudge paying a landscaper for caring for your plants since you don't have the time or willingness to do it yourself (an assumption, I know)?
4. I'm struggling to assess risk. Anxiety is high and I don't know why. On the one hand I've passed 25x and plugging the numbers into Firecalc indicates a 100% chance of not out living my current savings w/o SS. Can anyone count the number of assumptions in that sentence? I like to think I can deal with market volatility; never checked balances in March so its not an asset allocation issue. Just a general sense of foreboding that my ability to produce a meaningful income is coming to an end. Have I lost all perspective?
Welcome to the real world. Anxiety is high for most people these days. Your's may be even more elevated since you are alone in taking care of yourself and your child. Participate in daily exercise of some kind and even involve your child. (Bicycling, rock climbing, tennis, miniature golf) He/she may also still be anxious so listen to what they say too, and try to re-assure them that things will be ok. Be the best parent you can be since you only have a few years left to make an impact on them. Keep inquiring about school and friends without coming across as too nosy.
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LilyFleur
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Re: Divorce + 4 yrs Financial Recovery

Post by LilyFleur »

Celia makes some very good points.

Time gives perspective: I grew to understand that my attorney bill was an entrance ticket to a better life.

Despite being in several multi-year relationships after the divorce, I am extremely reluctant to ever remarry. Never remarrying is a 100% effective strategy to avoid another divorce. I don't ever want to disentangle assets again. I suppose I am becoming a bit of an entrenched female bachelor :mrgreen:
Topic Author
vas
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Re: Divorce + 4 yrs Financial Recovery

Post by vas »

celia wrote: Sun Nov 08, 2020 8:11 pm I doubt you took a "financial hit" (except for legal costs). The assets you owned 4 years ago were not "yours". They belonged to your ex and you, right? If you currently own half that amount, there is no "hit", in my book.
That might be over simplifying a bit. If a young couple with zero assets get married, works together responsibly towards a common goal using whatever balance of paid/unpaid labor that makes sense for them, and then gets a divorce, your Solomonic evaluation might be spot on. The real world is rarely so clear cut. People make horrible decisions, act irresponsibly, and squander vast sums in a twinkle. If they are married, they take their spouse down with the ship. About then a Judge carefully considers the wreckage and proclaims a 50/50 split plus a little extra for the teary eyed one. There's no sense worrying about it or being bitter; one must carry on. But let's not harbor any illusions about fairness.
celia wrote: Sun Nov 08, 2020 8:11 pm This is like saying you have $1M in a tax-deferred account, then are surprised you can't spend $1M of it, due to the taxes that are still owed.
Here is another analogy: you have a $1M in a taxable account, then are surprised you can't spend it because the bank manager ran off to Fiji with it.

Thank you for your thoughtful responses though, especially about the child. The little one is the light of my life and always come first. Also agree with your comment about the house. It makes sense to keep some cash on hand but I'd like to retire the loan before investing with taxable accounts.
Last edited by vas on Tue Nov 10, 2020 12:39 pm, edited 1 time in total.
There is nothing you can't prove if your outlook is sufficiently limited
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cchrissyy
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Re: Divorce + 4 yrs Financial Recovery

Post by cchrissyy »

vas wrote: Sat Nov 07, 2020 10:41 am
1. I've been remiss in not establishing an Estate Plan owing to PTSD and an acquired aversion to making lawyer's Porcha payments. But, I have steeled myself to set up a meeting with a local law firm that specializes in the field. Any general advise about estate plans involving minor children or young adults? Thoughts on giving money to kids without ruining their lives?

It's good you're seeing the lawyer. I am not one but I did do this after a divorce. And don't worry, the estate plan costs real money but it won't be more than a few car payments, it's not like sending the lawyers kids to college : )
- If you have an older version of your will with your ex in it, fix it urgently and check all accounts that they are not still the beneficiary, unless that's what you want or the court ordered.
- Designate a guardian for the child. You might assume it will be your ex but it is possible they pass away before you or are somehow not able and your documents should cover that case so you don't have to redo them later.
- Follow your lawyer's advice about setting up a trust and what ages/stages the kid gets distributions/control. You don't want to leave so much money outright to a minor and you also don't want a guardian (the ex?) to access the trust.
- Designate who you want to make your personal medical and legal decisions in case you are incapacitated. I don't know your state but it certainly has some legal assumptions about who has that power and in my case, it was no good. You probably want to name somebody, and a backup, as well as considering a future time when your kid is an adult and should they be in this position?
Outer Marker
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Re: Divorce + 4 yrs Financial Recovery

Post by Outer Marker »

celia wrote: Sun Nov 08, 2020 8:11 pm I think there is a lot of anxiety showing through your post. Some of it is due to mis-preceptions, such as this one. I doubt you took a "financial hit" (except for legal costs). The assets you owned 4 years ago were not "yours". They belonged to your ex and you, right? If you currently own half that amount, there is no "hit", in my book.
Respectfully, you've either not been through a nasty divorce, or been the victor. Marriage is a partnership, both in the personal and financial sense. If one partner decides to burn down the business, the other takes a financial hit. Once you're no longer part of the business, you just try to take what you can on the way out the door. I made up the slack for a low earning spouse for 20 plus years, who intentionally passed up opportunity and promotion to work in a "hobby job" she liked. Okay. I did that willingly for the person I loved. On the verge of our joint FIRE plan at 50, I took a "financial hit." I offered her half. That was not enough. A demand for alimony ensued for more than half of my net salary to work as an indentured servant to age 65. We blew through a half million dollars in legal fees to debate this nonsense. My "child support" gets spent on things like weekend trips to Vegas and Vespa scooters. Really. If I don't step up, my daughter can't afford the college she wants. Based on the private investigator photos, there was no debating "fault" in my case.

IMHO, alimony needs to be time-limited to no more than a few years to retain the skills to support one's self, and child support for amounts more than needed for groceries and a roof needs to be court supervised.

I lost a high paying job I loved in the midst of all the destruction, but have rebuilt and found a new life and a new partner. It took some doing. As they say, why is divorce so expensive? . . . Because its worth it. It just shouldn't be that expensive.

*corrected typos
Last edited by Outer Marker on Tue Nov 10, 2020 9:26 am, edited 1 time in total.
stoptothink
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Re: Divorce + 4 yrs Financial Recovery

Post by stoptothink »

Outer Marker wrote: Tue Nov 10, 2020 7:51 am
celia wrote: Sun Nov 08, 2020 8:11 pm I think there is a lot of anxiety showing through your post. Some of it is due to mis-preceptions, such as this one. I doubt you took a "financial hit" (except for legal costs). The assets you owned 4 years ago were not "yours". They belonged to your ex and you, right? If you currently own half that amount, there is no "hit", in my book.
Respectfully, you've either not been through a nasty divorce, or been the victor. Marriage is a partnership, both in the personal and financial sense. If one partner decides to burn down the business, the other takes a financial hit. Once you're no longer part of the business, you just try to take what you can on the way out the door. I made up the slack for a low earning spouse for 20 plus years, who intentionally passed up opportunity and promotion to work in a "hobby job" she liked. Okay. I did that willingly for the person I loved. On the verge of our joint FIRE plan at 50, I took a "financial hit." I offered her half. That was not enough. A demand for alimony ensued for more than half of my net salary to work as an indentured servant to age 65. We blew through a half million dollars in legal fees to debate this nonsense. My "child support" gets spent on things like weekend trips to Vegas and Vespa scooters. Really. If I don't step up, my daughter can't afford the college she wants. Based on the private investigator photos, there was no debating "fault" in my case.

IMHO, alimony needs to be time-limited to no more than a few years to retain the skills to support one's self, and child support for amounts more than needed for groceries and a roof needs to but court supervised.

I lost a high paying job I loved in the midst of all the destruction, but have rebuilt and found a new life and a new partner. It took some doing. As they say, why is divorce so expensive? . . . Because its worth it. I just shouldn't be that expensive.
Yes, everything you earn during your marriage is "yours", but the situation is almost never that cut-and-dry. I spent 5yrs and much of my pre-marriage savings putting my ex-wife through school. She had a negative net-worth and didn't earn a penny during our marriage, but left with all her undergrad loans paid off, a DDS with no debt, and half of "our" savings during that period (low-mid-5-figures if I remember correctly). I worked a part-time job along with my full-time job most of the marriage and left with a fraction of what I had coming in. I was a fool for paying off her debt and cash-flowing her education, but that's what you do in a partnership right? I was very fortunate that it didn't go on longer and that I was so young when it occurred (30), so it didn't have the long-term consequences like it did for you and many others.
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vas
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Re: Divorce + 4 yrs Financial Recovery

Post by vas »

cchrissyy wrote: Mon Nov 09, 2020 9:58 pm - Follow your lawyer's advice about setting up a trust and what ages/stages the kid gets distributions/control. You don't want to leave so much money outright to a minor and you also don't want a guardian (the ex?) to access the trust.
Will do. I'm sure this comes up routinely and they will have some general guidelines. No easy task to reduce parental judgement to a series of distributions but it is a backup plan after all. Not sure about who could serve as the administrator. On the one hand it would be nice to allow for some flexibility on the administrator's part to account for unforeseen situations but what an onerous thing to ask of a relative.
There is nothing you can't prove if your outlook is sufficiently limited
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FelixTheCat
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Re: Divorce + 4 yrs Financial Recovery

Post by FelixTheCat »

vas wrote: Sat Nov 07, 2020 10:41 am Objectives:

2. Pay off house (again...) sometime in 2022.

3. (Re...) Start a taxable investment account once the debts are squared away.
_______________________________________________________________
Questions:


4. I'm struggling to assess risk. Anxiety is high and I don't know why. On the one hand I've passed 25x and plugging the numbers into Firecalc indicates a 100% chance of not out living my current savings w/o SS. Can anyone count the number of assumptions in that sentence? I like to think I can deal with market volatility; never checked balances in March so its not an asset allocation issue. Just a general sense of foreboding that my ability to produce a meaningful income is coming to an end. Have I lost all perspective?
I am just ahead on the same road. Can you see me? Tech for 35 years, divorced, Alimony and child support paid off.

I saw the writing on the wall in my tech career. The 50+ crowd was getting laid off all of the time. I beefed up my emergency fund. I paid off my house. After I paid off my home, I sent the mortgage payment money to my investments.

I can retire today. I keep working because the longer I work the more I save. If I ever get laid off, oh well it's been a good ride.
Felix is a wonderful, wonderful cat.
WhiteMaxima
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Re: Divorce + 4 yrs Financial Recovery

Post by WhiteMaxima »

Excellent plan and result OP
Outer Marker
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Re: Divorce + 4 yrs Financial Recovery

Post by Outer Marker »

vas wrote: Tue Nov 10, 2020 1:10 pm No easy task to reduce parental judgement to a series of distributions but it is a backup plan after all. Not sure about who could serve as the administrator. On the one hand it would be nice to allow for some flexibility on the administrator's part to account for unforeseen situations but what an onerous thing to ask of a relative.
My administrator is a trusted friend and former law school classmate. Does not have to be a relative. Just someone you trust to act as a fiduciary. I would definately not want my ex to be guarding the cookie jar. You could pay the trusts and estate attorney to do it, but there's probably someone trustworthy that would be willing to do it for free. As you say, its a backup plan and the gap period between when they might inherit and when they are able to manage their own finances is probably not that great. I have it phased so the administrator has full control through college. A traunch at 21, and the balance at 30 with some carve outs for additional advances for weddings, first home purchase, and extroridnary needs/medical expenses and grad school if applicable. Also guidelines for how the money is to be invested, i.e. index funds, and acceptable range of asset allocation.
humbledinvestor
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Re: Divorce + 4 yrs Financial Recovery

Post by humbledinvestor »

You are doing great! I am just taking my financial hit now in my divorce. I hope to be in a good spot 4 years from now. But I hear you on the PTSD and anxiety. OP you are an inspiration for me that maybe there is a recovery for me also.
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vas
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Re: Divorce + 4 yrs Financial Recovery

Post by vas »

humbledinvestor wrote: Tue Nov 10, 2020 9:33 pm I am just taking my financial hit now in my divorce. I hope to be in a good spot 4 years from now. But I hear you on the PTSD and anxiety. OP you are an inspiration for me that maybe there is a recovery for me also.
Sorry you're going through a divorce especially if there are kids involved. If you are in the mood for a bit of unsolicited advice, (and who isn't?) here are a couple thoughts:

First, let yourself go through the stages of grief. Be mad, sad, whatever, just let that out. I hope you have someone to talk to that can just function as a sympathetic listener. Also, I've heard some positive reports about the therapeutic benefits of kickboxing.

Second, adjust to the "new normal" as fast as you can without skipping step one. Put the old balance, lifestyle, and goals out of your mind and reset. That's all gone now and the sooner you can wrap your head around that the better. I know that "welcome to the world" type advice isn't particularly helpful but embracing your fate is all you can do.

Third, take the high road. This is particularly important if your have kids. Divorce or not you still have a life long relationship of sorts that needs to be maintained. The better this relationship, the better the lives of everyone involved. Stay flexible on money and time. Regardless of any agreements cooked up during this process just assume that you are responsible for raising the children on your own and covering all expenses. If it goes another way, perhaps you find a quarter on the sidewalk for example, then call that a win. Be unfailingly positive about your ex with the children. It's their mom or dad your talking about after all.

Forth, set some clear short term financial goals. No idea what makes sense in your specific situation but make a plan with achievable short term objectives, prioritize, and start checking them off. In my case, I went full on rock soup.

Fifth, seek support on anxiety and new relationships from someone other than me. Even presented with a prime opportunity to spew sage advice I'm coming up dry.

[pithy humor] Oh, and don't forget to visit the local homeless shelter. That is supposed to help in some way. While you're there, remember to let them know that they should feel lucky that they aren't living in South Sudan. It's sure to brighten their day.[/pithy humor]
There is nothing you can't prove if your outlook is sufficiently limited
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