Know Your Money Before Divorce To Avoid Financial Mistakes

[00:00:04] Welcome to the D Shift Podcast, where we provide inspiration, motivation, and education to help you transition from the challenges of divorce to discover the freedom and ability to live life on your own terms. Are you ready? Let's get this shift started.

[00:00:21] Hello and welcome to this episode of the D Shift Podcast. And I have the unique opportunity to interview my guest, Sabrina Alton. Sabrina is, like me, a Canadian living in Texas. So it's kind of interesting because not many people have that exact same lineage or travel history or citizenship history or whatever you want to call it.

[00:00:48] But Sabrina is a financial coach and founder of Insight Financial Coaching. She is now based in Austin and she helps women across the country who are navigating major financial decisions and transitions in divorce, widowhood, and stepping into their role as the family CFO, perhaps for the very first time.

[00:01:11] And I think that is such an important area because I think money is one of those areas where a lot of women are a little hesitant to maybe to take control. Because I think a lot of us have been kind of, especially in my generation and generations before, it's kind of like, well, you know, if it's not your thing, don't worry about it. Your spouse will take care of it.

[00:01:36] And so when you go through divorce or widowhood, all of a sudden you have a lot of responsibility. So Sabrina, so glad you're going to be here to talk with us about this today. Thank you, Mardi. Thank you for having me on your podcast. Well, it's absolutely wonderful to go a little bit deeper into some of the stuff that you do. And today we're going to really focus on that whole idea of what is a financial coach and where do they play into the whole divorce procedure?

[00:02:06] And especially, I think, not just divorce, but also post-divorce support as well. So before we get into all that good stuff, tell us a little bit about yourself, Sabrina, and how you, because I know this wasn't your very first, this isn't where you started out your career. Like most of us, you kind of evolved into this. So tell us a little bit about that. Yes. As I like to say, this is my third act.

[00:02:32] So my first act was as a public servant with the government of Canada. My second act was as a stay-at-home mom. And my third act is a financial coach. And the reason I decided to become a financial coach is because I've understood from a very young age that money is power and it is options. And people can use it as power over. They can use it to take options away from you. And I don't want that for women. I don't want that for myself.

[00:03:01] I don't want that for my teen daughters or any other women. So I really want women to understand their numbers. I want to help us move from stretching a dollar to growing a dollar. And I really want to get more wealth in the hands of women. I love that.

[00:03:19] And, you know, it's funny because I think when I grew up, my dad was pretty progressive because he wanted us to be able to change the oil in the car, change the tires, do all, you know, work on the farm, do all that stuff. And he thought we should be able to deal with money as well. So I can remember having big kitchen table conversations about money, investing, what you should and shouldn't do.

[00:03:44] But my parents grew up at a time where credit cards were like a dirty word and people didn't use credit. And it was like save until you could buy. So I still have that mentality sometimes stuck in my head that, well, I'll just have to keep putting everything off until I can buy cash, you know, and that's not realistic for most people.

[00:04:06] But let's talk about this whole idea of going through a divorce, because this is where those money stories like you have running in your head can really mess you over in making decisions. So the idea of a divorce team. Let's talk about that one first, Sabrina. Yes. So I love it when women can have a divorce team, specifically a financial team, because there are a lot of professionals out there that most people don't know about.

[00:04:35] That can help protect you financially during a divorce. And we all have our different areas, our different lanes. So, for example, a certified divorce financial analyst is going to help you run those numbers, help educate you on what is the growth rate of different assets that you own? What are the tax implications of the different assets you own?

[00:05:04] Not just now, but also like five, 10 years from now. How easily accessible is the money in different assets? So, for example, a lot of women want to keep the family home. But if they trade that off for the 401k, for example, and then all of a sudden you need money, it's much harder to get that money out of your home than it is just to sell some stocks.

[00:05:30] So that's what I mean by how easily you can access the money that's tied up in the asset. So a CDFA is going to help you do that so that you can negotiate a fair settlement both now and in the future. And then there's the certified divorce lending professional. And they're going to help you figure out, OK, if we do sell the house, will I qualify for a mortgage post-divorce? And most people don't think about that.

[00:06:00] And that's a very important question, especially if you think you want to buy another house in the future. And it can get more complicated if you're a stay-at-home mom and you didn't have your own income. So that's why it's very important to consult a lending professional to know, can I even get a mortgage post-divorce? I was going to say, I just want to jump in there. That's even if you want to take over the family home.

[00:06:24] Because that's where things like, are you taking a lump sum settlement or are you taking payments monthly? And have you had that monthly income for six months and is it guaranteed for at least three years? Like there's a whole bunch of things that go into that. So, you know, I've seen cases where people have fought and spent, you know, tens of thousands of dollars in legal fees wrangling over the house. And neither one of them could have qualified for the mortgage.

[00:06:52] And it's just, why didn't somebody say, check this out before we spend all this money? So, OK. Exactly. Yeah. And then there's two. The third one is the certified divorce real estate agent. And this person is like a neutral party in the divorce proceedings that represents the house and the sale of the house. And she's trying, he or she is trying to make sure that it's fair to both parties. OK.

[00:07:20] And so that's also important. And then there's the financial coach like myself. And I'm often the before and after person. So when you go and see a financial analyst or a financial planner, they want to know your numbers. So you need to know your assets and liabilities, your income and your expenses.

[00:07:42] I can help you get all those numbers together and have that full, complete picture of your finances before you go see the other professionals and even a lawyer who is also going to want you to have that number. Right. Right. So I just met with a potential client who didn't want to gather those numbers. She just wanted to start from, OK, post-divorce, what's my budget going to look like based on the savings that I had?

[00:08:07] And she thought, you know, all of her husband's income was going to pay all of the bills. And when I told her it's actually part of the legal process that, you know, the numbers right now, you know, surprise, surprise. It's not what she thought it was. Right.

[00:08:22] So I can help you gather the numbers and come to terms with them as well emotionally and then also help you post-divorce figure out what that budget is, what it's going to look like, run through different scenarios that way. And I also address some of those money narratives that you have. Like you said, like credit cards are bad or debt is bad or I have to be debt free or I have to own a home.

[00:08:50] Like I really dig into that and find out, well, where do those narratives come from? And is that what you really want? And do you still want it if I say the tradeoff that you're making is going to be this? Right. So I really help them know themselves, know their money, which is my tagline inside financial coaching, know yourself, know your money, because those are two of the most important pieces you need to have going into a divorce negotiation.

[00:09:19] Around your financial piece. Yeah. Thanks for clarifying that. I love the way that you explained each one of those, the divorce financial team's roles and how important that is. Because I think one of the things that I see, and it's funny you said about the client not wanting to do the numbers right now. I hear that all the time. Well, I took all of my financial records. I dropped it on my attorney's desk and that's what I'm paying them to do. They can sort it out.

[00:09:48] No, they can't because they don't live in your household. They don't know where you're spending money. And everything you spend should be accounted for because you can't ask for a fair number if you don't even know what that number is. Exactly. And a financial coach is much less expensive than a divorce attorney. So you don't want to pay them to sort out your numbers.

[00:10:15] Their job is the legal side of it, not necessarily the financial side of it. And then I can also help educate you about all these other professionals and give you some referrals to these other professionals. And of course, we also want to have a divorce coach on the team to help prepare you for the process and what you're going to go through and all the stuff that you do, Marty, which is another key part of the team. Yeah. And I'm very clear with my clients. I'm not going to do your numbers with you because I don't know your numbers.

[00:10:45] That's not that's a and this is the thing that I I really want to stress for anybody that's listening. If you don't know your numbers, if you're guessing at them, if you if you're ballparking things, if you fill in that budget and you're living at your mom's house right now. So you're not paying rent and you put zero rent in there for your future anticipated spending.

[00:11:12] The court doesn't say, oh, are you sure you wanted to put a zero in there or your attorney isn't necessarily going to catch that. And so you may be seriously, you know, shorting yourself maybe a thousand, maybe two thousand, maybe three thousand dollars a month in in what you actually need to live because you're not counting any kind of mortgage or rent or homeowner association fees or condo fees or all of those other things.

[00:11:41] And little mistakes like that can cost you hundreds of thousands of dollars post divorce. Mm hmm. Yep. And another thing that I see, I have a client right now who she's constantly flip flopping about what she wants and she's just doing it based on what she's thinking and feeling and not based on the actual numbers or the tradeoffs that she'll have to make.

[00:12:06] So one of the common things is like maybe I do want to keep the family home because then I can pass it down to my kids and and it is a form of family wealth. But have you even asked your kids if that's what they want? Because a family home is very expensive to maintain. Right. Right. And if you're already struggling to make ends meet, is that really what you want? Right. And you can be what's that saying? You can be house rich and cash poor. Oh, yeah. You can be.

[00:12:36] Yes. Yes. Yeah. You know, and I've talked to so many of my clients and I've said, like, when you walk into that house, how does it make you feel? And they're like, oh, I just I just remember all of the all of the crap that went on in this house. And I'm thinking and now you want to buy it? You want to stay there? And I so appreciate you said that about the kids, Sabrina, because you know what?

[00:13:00] I mean, I don't know very many kids that actually do want to move back into their family home because it's old. It's dated. It probably needs to be gutted and renovated. The electric, you know, the electrical might need to be replaced. The plumbing might need to be. The roof is probably got to be. It's a huge bill.

[00:13:21] And, you know, I know we think of it as this big thing we're passing down to our kids, but I don't know statistically how many how many people stay in the family home. I would think it's probably less than 20 percent. I don't know anybody. I don't know any of my friends that are living in their family home. Yeah. Same here. If they inherit it through a death or whatever, they just sell it. They just sell it. Yeah. Yeah.

[00:13:47] So what what do you think are maybe some mistakes? We talked about, you know, the big mistake of just kind of putting your head in the sand and saying, well, I'm not going to deal with these numbers. What are some other common mistakes you see women make when they don't have the right divorce professional, financial divorce professionals helping them out? Again, it's just missing some things.

[00:14:13] So, for example, I have a friend who got divorced when her kids were younger. And so they never negotiated college costs in the divorce decree because when your kids are that little, you're not always thinking about college costs. So, again, a potential client, I think her daughter is just three years old. And so that's that might be something that she's not thinking about unless you have a professional ask you that. Like, make sure you include this in the decree.

[00:14:41] And then there's all these little costs that add up, especially if you have kids or like school trips, teacher, you know, Thanksgiving gifts or whatever. You know, field trips, school lunches, donations to the school, like all that. Like, have you sorted out how you're going to handle all of those things? Right. Right.

[00:15:06] And I think this is something that people don't spend enough time thinking about. Even if you've got kids that are a little bit older. I mean, you and I are both now in the Texas, within Texas. Football is a huge thing here for most young men, young boys going through, you know, middle school through high school. Well, some of these football camps now in the summer are five thousand dollars and up to put your kids into them.

[00:15:36] So if you've got you know, if you want to support your child in this, you better start planning for this, you know, in your divorce decree, because if not, it's up to both parents to agree or not agree. And who wants to be the parent that doesn't have the money saved and has to say, sorry, I can't contribute half. So you can't go to football camp this year.

[00:15:59] When it could have been planned out and that money could have been set aside in some kind of a trust or, you know, some kind of a special account that that, you know, that that provided for what your kids want to do. Yeah. And you touched on a couple of key points, Marty. And that's that. Yes, we need to think about things like are they going to be on a traveling competitive like sports team or dance team or cheer team? Right. And maybe we don't know that because, again, if they're only three.

[00:16:29] Maybe we don't know that, but we at least have to think about the possibility. So I have teens and teens are like the second most expensive after the what's it called daycare age, because then you have driving like your insurance is going up. Are you going to buy them a car? Are you going to pay for their driving lessons? You have like things like prom and stuff like that. If they're in competitive sports and they travel, it just adds up really, really quickly.

[00:16:57] And another point that you said is sometimes the default is we split it 50 50. And that's not actually fair. Like it should be a percentage of the income each person makes. So if one person is a stay at home mom and the other person is the working spouse, it's not fair to split it 50 50. Right. Even if she goes back into the workforce, it's not going to be at the same level that the spouse has been able to get to because she has stayed home.

[00:17:23] Right. Right. And and this is where this is where I think having a financial coach that can work with you, not not like you have 30 days to get all this paperwork into my office so that I can file this. And that's what you know, your attorney, again, they're not financial people. They don't know. They're just going to take whatever you give them. Their paralegal is going to put it into the forms and run it through the software.

[00:17:47] And that's the number with with no consideration to your specific and unique situation. And we know that, you know, if you do know that you've got a health concern or your children have health concerns or if you're reaching, you know, if you're going through a great divorce and you're reaching retirement age,

[00:18:06] there's a whole there's a whole bunch of other things that start coming in there that, again, you can you can negotiate them if you're going through a mediation. The other side may say, no, I'm not willing to consider it, but you can at least put it on the table and see see what happens. Yeah. And I think that is a common thing I do see with women is you see a tendency to say, like, I just want this to be done and over with.

[00:18:35] Right. Or there's the tendency to not want to rock the boat, not want to push too hard. And it's it's not saying that the other person is a bad person or is out to get you or anything like that. Maybe they are, but maybe they're not. It's just saying that you have to protect your own financial life. It's not up to the other party. It's not up to the mediator or the lawyer. It's up to you. And don't settle for less because you're worth more. You are worth it.

[00:19:04] So I think it's tied a little bit into that also self-belief. And that's, again, something a coach can help with. Well, and I think it comes, you know, it comes back also to the whole idea, the devaluation of the role of the stay at home parent, whether it's mom or dad, it doesn't matter. That there's, you know, there's really limited value assigned. Like we know Social Security doesn't doesn't consider those as working years at all because there's no income.

[00:19:32] But you probably worked harder those years than you ever worked at a job. And so it's this it's this sense of, well, you know, I've actually had women say this. Well, my spouse supported me for the, you know, the 15 years I stayed at home and looked after the kids, depending on how many kids and what their ages are. Maybe it's 20 years, even if your kids are spread out over a lot of years in between them.

[00:19:54] And I'm like, what if you'd had to hire full time daycare, a live in nanny, a cook, a cleaning staff? Like what if you'd had to hire all of that? A driver? What would that? And I think. Yes. I think somebody did this on several years ago. There was a thing that went around a lot of like the social media platforms.

[00:20:17] But basically, if you had to hire somebody for all of those jobs and this was probably 10 years ago, it would have been over one hundred and fifty thousand dollars a year in expenses. If you'd had to hire everything that that the stay at home parent does. And I'm sure it's it's probably double that now with the you know, with the change in the economy and everything else. So it's important to think about. Yeah. And it can be really hard for a stay at home parent to fully know their worth. Right.

[00:20:47] Because, again, they think they're not contributing or they're not contributing financially. And so it's very easy for both parties to think that's his 401k because it has his name on it. And he's the one who went to work and his employer, you know, did the match or whatever. But again, under Texas law, when you're married, everything is joint. So even though it's his name on it, it's still half yours. Right.

[00:21:11] Right. And if you're a stay at home parent and you didn't have your own individual retirement account, it's most certainly partially yours. Right. Right. And I was going to say, like, yes. So Texas is what's called for people that don't know. Texas is what's called a community property state, which just assumes that everything is 50 50 from the date you got married to the date you get divorced. With a few exceptions. Right. Like insurance and lottery winnings and lawsuits, settlements. I think there's some things that are.

[00:21:42] But that's not 50 50 of everything. That's 50 percent of kind of the whole big picture of the finances. So, again, if the financial numbers aren't right, then that 50 percent isn't right either. And even in other states where it's fair and equitable, equitable distribution states or like most of Canada is equitable. Most most places are equitable distribution. Now, you've got to have the right numbers because you can't make an equitable distribution if you don't know what the numbers are.

[00:22:13] Yes. And there can be issues like financial infidelity. There can be issues of gambling or secret lives like a whole bunch of stuff can come up once you really uncover your numbers. And a certified divorce financial analyst can also do forensic account. And some of them can do the forensic account to uncover all that stuff to make sure that you actually do have the full, complete financial picture.

[00:22:40] Right. And another thing I want to flag is that, again, in Texas and in states where there's no legal separation, even if you go and open your own checking and savings account in your own name, that's not joint. As long as you're still married, it's both. That money belongs to both. Right. So just remember that. And also remember that the debts are split equally, too.

[00:23:05] And if you want to like revenge spend or revenge run up debt, that's part of the pie that you're dividing. So you don't want to shoot yourself in the foot. Yeah. And and I've seen that that's I think that that's also fairly common in most areas that that, you know, they kind of they protect that very thing that somebody can't just all of a sudden go and blow through one hundred thousand dollars buying frivolous stuff.

[00:23:31] I actually know I actually know of a person who was going through a divorce here in Texas, wasn't talking to anybody, hadn't even talked to an attorney yet and went and bought a piece of property to go live on. And I'm like, oh, my goodness, you realize that you have just, you know, you you've just created that another piece of community property that you now both own. And they were, you know, yeah, it was crazy. Just a really bad decision.

[00:24:00] But Sabrina, what else? Anything else that you think is is kind of a big red flag issue? I know we had we were kind of going to had an optimistic outlook of how much we were going to get through talking today. But I think that this highlighting the important parts of each one of the financial professionals and then some of these mistakes. I think this is a really good starting point. We may have to we may have to book another one and have you come back to talk about the other stuff.

[00:24:25] But anything else you see that's a big kind of flag or something that you see as a common error for women? Again, a lot around the marital home. So just really be clear if you sell the house while you're married versus if you sell the house while you're divorced, because that's a big difference. And just go into it with open eyes of how much does it really cost to own and maintain a home?

[00:24:50] Because I'm living through that right now where the expenses are just adding up so quickly that I don't again, I don't want you to make that decision just kind of based on feelings. Like I want you to really go into it eyes open and and maybe you'll still end up with the same decision of I want to keep the home. But just understand all the financial implications of that. Yeah. And you've got that awareness when you go in what you're looking at. So fantastic information.

[00:25:18] Sabrina, you have kindly provided a gift for all the listeners. Can you just tell us really quickly about that? Yes, it is 15 percent off my financial insight coaching session. And that's a two hour session where I go over your money history and personality and where some of these beliefs and narratives come from, as well as your overall financial picture.

[00:25:42] So, again, assets, debts, income expenses so that you can really clearly see where you're spending your money. Perfect. Perfect. And that's that's very generous of you. And thank you for doing that. And what in it what a benefit to have that kind of out front, no matter where you are pre divorce, during divorce, post divorce. It's all helpful to have that information. What do you think out of everything we've talked about is the one thing you want everybody to keep like front and center?

[00:26:11] I think it is the know yourself, know your money, because even at the very beginning when you were talking about what you learned from your dad. And it's really important to know where our thinking on money comes from and to ask, is that still serving us? Yeah. Right. So I think that's really super important. I agree. I couldn't agree more.

[00:26:40] Now, Sabrina, you are able to help people across the United States. Do you also work with clients in Canada or is it United States? No, just the United States. And I know I'm from Canada, but it's been over a decade and they have some financial products that are different and I just haven't kept up with it. That's OK. Yeah. Yeah. So across the United States. And if people want to reach out and find out more about what you do or contact you and work with you, what's the best way to do that?

[00:27:08] So you can check me out at my website, insightfinancialcoaching.com. And from there, you can book a free 20 minute call with me just to see like what's going on with you financially. What do my coaching services look like? And are we a good fit? And that's the best way to start working with me. Great. Sabrina, thank you so much for coming on here. And sharing this has been a really great conversation.

[00:27:33] And I definitely think we need to book another one and dive into some of this stuff a little bit deeper. Thank you, Marty. I've enjoyed our talk. Me too. And thank you, everyone, for listening to this episode of The D-Shift. I know you've got some insights because I know I've got some insights from talking to Sabrina. So take care, enjoy yourself and don't forget to tune in to the next episode. Thanks for listening and supporting The D-Shift Podcast.

[00:28:01] If you would like to attend live trainings by our amazing guests and have a chance to ask questions and get answers from our experts, join the D-Shift crew. For more details and to sign up, head on over to www.divorcecoachforwomen and click on the podcast page.