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Divorce and Your Money – An Interview with Certified Divorce Financial Analyst, Shawn Leamon

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adminMarch 7, 2019

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VIDEO TRANSCRIPT:

Chris: Hey everybody, it’s Chris Denmon with Denmon and Pearlman out of St. Petersburg, Florida and today I’m with Shawn Leamon. Did I pronounce that right Sean?

Shawn: You got it right.

Chris: All right. Shawn Leamon, who is a certified divorce financial analyst and the host of a podcast which is Divorce and Your Money. Which is how I found Shawn and we’re continuing our series today. We’re interviewing tangential professionals in other professions that can help our clients get through the divorce process in the best possible way and help them move onto their lives in the best possible way. And so Shawn, you’ll be talking to some of my future clients and my current clients. And take it away, what did I miss? What else about you should we let people know?

Shawn: No, I think that’s great. I’m a certified divorce financial analyst. I get to work with people all over the country. My podcast, Divorce and Your Money is probably the largest divorce podcast that’s out there. I like to help people as much as possible because you know, divorce in many aspects, financially, legally and emotionally as well, is a very complex process for someone. So I like to help at least in my small segment where I can.

Chris: Absolutely. And yeah, the same idea, right? So when I’m a lawyer and I do lawyer things, and my clients are going through the process, they’ll come to whether it’s for a figuring out a budgeting issue, or whether it’s a tax issue and I’m not an expert at that. That’s not what I know best, and I turn to people like you to help me answer those questions, and a lot of times, it’s easier for me to just introduce my clients to somebody like you, or you to you because then you can help them get the answers they need better than I can do it. And you and I were talking before we started, and I know you from your podcast. I also know you because I was looking up an answer to something that here I am, the divorce attorney, I didn’t know the answer, and you had answer it on a very detailed, excellent blog post that I was able to get the answer for me and then share it with my client. And you’re able to help that way.

Chris: So, thank you for taking some time to chat with me today. I appreciate it.

Shawn: Thanks for having me. I’m glad to be here.

Chris: With my clients, I have two different phases where I think they need help and I’m going to kind of just mention that and let you kind of help educate in any way that you can. But I know that I have clients that right at the very beginning of the process, in anticipation of a divorce, or in anticipation really of a separation where they have one household and they’re getting ready to potentially move into two households, and they have to figure out how to budge for it. Plan for it and make the right decisions with their finances. That’s kind of one bucket where my clients need help.

Chris: And then the other bucket is when it’s all said and done, you know as a divorce lawyer I think we’re good at getting things done and then we shake hands and then we release our clients into the wild, right? And sometimes we have clients like maybe a needy spouse who for the last 20 years, she hasn’t really done any of the budgeting and I don’t want to leave them … I don’t want to shake hands and let them go off and have them ill-prepared. And that’s another, that’s an area where I think that they need help. Is that kind of your experience?

Shawn: Yeah. You know I think the main focus for anyone who’s thinking about divorce is already in the process, really boils down almost to two things. The first is knowing what you have. The number of conversations where people don’t know they have a retirement account, or you need to know … I mean, if you have a house, you need to know what it’s worth and have a good sense of that. If you have a mortgage, or if you have other debts somewhere. If you have credit cards. Regardless of whether you were the spouse who took care of the finances, or has never seen them at all, your first step is just to figure out, “Well, what are we splitting up?” And from that comes the second question which is, or a second answer that one should know the answer to is, what do you want?

Shawn: The other problem or other area I see everyday is that, well you know you have a house that’s worth a certain amount, you know you have these retirement accounts, you know you have maybe a little credit card debt or whatever the case may be, but you don’t really have a clear sense of, “Well, what do I want when this process is over? What will I need to live?” Most of the people, at least that I deal with getting divorced, I like to say, “Look, you’re going to probably die these days at 100 years old. So if you’re 50, you’ve got 50 years of thinking and planning to do. What are you going to be thinking about over the next two or three or five decades? And are the decisions that you’re making right now, splitting up your family and your assets and everything else, are these really kind of what you want for the long-term and are they working for you?”

Chris: Sure. And I mean, how do you help people engage in that conversation when … Because divorce is so life-changing, right? People tend to identify with what they’ve been for an extended period of time, especially in a long-term marriage. And then now, sometimes, am I right, would you say that sometimes they don’t even know what it is they want yet?

Shawn: Yeah, it’s a great point. And one of the things that I try and tell everyone, which is very hard to do in practice, but actually makes a lot of sense is to depersonalize what you’re going through when it comes to making your decisions. Or the way I like to phrase it is, pretend like you’re the CEO of this process and you’re the businessman, businesswoman and what would just a rational person looking from 30,000 feet think about and would recommend for you and your situation? Meaning, if you’re going through a divorce, there’s any number of overwhelming emotions that make it hard to have any sort of clarity of thought. You know you have got a million questions, you’ve got to figure out this process, let’s forget all of that for a moment. Let’s just pretend that we take … Or the way I do it, or the way I speak about it with people, is let’s just take at least the asset part, the financial part. Let’s just put it all on a piece of paper. Your name doesn’t even have to be on it. It can John Doe or Jane Doe. What would you recommend Jane Doe for their future given what they have right now? And what do you think makes sense?

Shawn: and once you kind of remove the you from it, I know it sounds weird, is to take yourself out of this process, but when it comes to making decisions, if you make emotions kind of cloud your judgment, that’s where people can go very far astray or end up making pretty poor decisions. Once you kind of depersonalize it a bit, you can really sit there and just treat them as X’s and O’s or numbers on a sheet of paper and say, “Hey! This person that I’m looking at on this piece of paper should probably do X instead of Y. Or take more of one asset or ask for more support, or ask for less support. And would be better off if we did whatever.”

Shawn: And it becomes actually, for most people, a lot clearer pretty quickly once they take the me out of it.

Chris: Sure. You got me thinking of the scenario where a party, they’re emotional to a home, and maybe the home is too big for the party by themselves,. The kids may be out of the house, the home might be too big already. But then you may have a, one of the party’s who are really attached to the home and they want to stay in the home but maybe the numbers don’t make sense and maybe if they were to keep the home, not only would they be keeping assets that are not going to generate any money for them in the future, I mean not really, unless you sell the house, it’s not a liquid asset.

Chris: But they’re also, their standard of living is necessarily going down because they’re not going to have enough cash flow to do what they want to do. You know, so that’s a … Is that something, is that a problem that you … Is that a scenario –

Shawn: That’s one of the most common things that I have to deal with on a daily basis. And the way that I teach people to think about it is before you decide what you want, start with your expenses. And so, the divorce process for most people, as painful as it is for most, is really only going to be a year or two of their life. And as I said earlier, you have decades to think about. Well, let’s start with, what is your life going to cost after this divorce? What is your mortgage payment or rent going to be? How much are you spending on cars and telephone bills and everything else. Once you kind of know – or your kids as well. Once you know what your expenses are, then you can start to say, “Well, all right, now I know at least how much income I need to stay even.”

Shawn: And also you can say, “Well how much am I …”, and then you can start thinking about bigger questions like how much am I going to need for retirement or whatever else. But if you start with your expenses, things like that house that you have an emotional attachment to, you can see very quickly and very clearly that in many cases it’s not affordable. And you’ll see, like wow, you know if you’re spending … I’m just going to make up a number but if you’re spending 3,500 dollars a month on a house, and your income for a given year after a divorce is only going to be 5,000 dollars a month, it becomes very apparent that you don’t have much money for anything else.

Shawn: And, once you just kind of map out – and when I say map out, I do things very simply. I take a blank sheet of paper and a pen and I say, “Let’s just do some simple math. How much is the house? How much is the car? How much are you spending on kids, clothes, going out, travel, vacations, whatever?” I just take a pen and a paper, nothing fancy, and just start writing down these kinds of things. And then once you have that kind of rough number, doesn’t have to be precise, you can start to think about is, well what is that really look like for me and start making the right decisions based upon that.

Chris: Right, that’s a great way to do it, because … I think a lot about the stay at home mom because we represent a lot of stay at home moms and they just … Their responsibilities for the family have traditionally been kid-related stuff, maybe. Maybe the stay at home mom hasn’t traditionally had dollars and cents responsibilities. I mean, they’ll go out there and they’ll do the work and they’ll go do the shopping and all that stuff. But they may not be doing the budget and then it comes time, they have to now figure all of this out and they also have the great unknown of what their income is going to be when this is all said and done, and you know alimony will often play a big part in that.

Chris: But if you don’t know what your expenses are, how are you going to know what is the money that you need outside of just saying, “We’ll get you the most amount of money possible.” Which is great, but it’s not really a great way to solve the problem. You just gotta know what you need and then try to get that and maybe some more. And I like your idea of just putting pen to paper with it because sometimes there are lawyers will do things that become a little cumbersome. Spreadsheets and it doesn’t really work. Sometimes simpler is better to help people, especially with so much else that’s going on in a divorce. So many other things to worry about, you know?

Shawn: Yeah. There’s a lot to say about that point, particularly with the stay at home moms. I also work with many and there’s a variety of issues oftentimes with the stay at home moms. Sometimes a lack of confidence. I said you have to be the CEO of your divorce process. I’ll always say, because I talk to stay at home moms every day, everywhere, and I’ll say, “Hey, so, while your husband was working, who took care of the kids? Who took care of the house? Who took care of every other daily detail that happened?” And it was always them. And they have all of these skills in terms of managing a very complex life. They might not feel like they do, but they’ve been doing it for 10, or 20, or 30 years. And this is just one other challenge in that process. But they already have everything they need. They just need a little bit of guidance in terms of focusing that same energy they’ve had for a very, very long time.

Shawn: And, as part of that, sometimes it’s, you know when I think about things that you need to do when it comes for planning for the process. Well, one big question is, we talked about the house. Sometimes I’ll say, “Well, let’s take some action towards it and find out. If you want to stay in the same neighborhood, why don’t you contact a real estate agent. See what houses are available in your neighborhood. You know particularly if your kids need to stay in the same school district.” I’ll say, “Go check out some apartments in the area. Are any of them feasible? Find out what the rent is for something that you could live with.”

Shawn: It might not be the same, but sometimes just gathering some basic information that’s free, no cost to anyone, to call up a realtor and say, “Hey, I’m about to get divorced, or I’m in the divorce process, can you show me what some options are in the neighborhood?” Or, walking to the apartment building or driving over to the apartment building and say, “Hey, what’s a three bedroom in this area cost?” And those types of little steps, not very hard, and you can also start to crystallize, and you can say, “Hey, you know what? This three bedroom apartment actually could really work for me for the next few years while I get back on my feet.” Or you might say, “You know what? I’m priced out of my neighborhood. I need to think about what the right option for me in the long term.”

Shawn: And it gives you the ability to confront reality head-on. Good or bad or anywhere in between. But at least you come through, or you start the process with some solid information so that you can make the right decision when it comes to going to mediation or talking with you or whatever else. It’s just you have a real, clear picture of what the future might look like, instead of just guessing and hoping for the best.

Chris: a little bit of information goes a long way on the path. So that’s a great idea. And do you find yourself encouraging people to do that early in the process? In the middle of the process? When?

Shawn: Yeah, it’s a good question. The answer is as soon as you can. You know, divorce is challenging of course, to understate it. And, you know, it’s not an instantaneous process even to get to the point where the D word gets dropped, much less serving papers and everything else. So, you know, it really depends. What I say is, the sooner you can figure these things out, the better. But, I have people who, and I actually am talking to someone in just a few minutes, who has to, has their proposals, their settlement proposals on the table. Right? And so the question is, well, does this make sense or should I be trying to make some adjustments? And some of the things that we’ve already discussed are going to be exactly that.

Shawn: It’s like, “Hey, did you check to make sure that you’re going to be able to afford the house? Or be able to move to another place? Or be able to refinance? Or whatever the case may – or your spouse be able to refinance? If you go with this proposal, and if not, we gotta get these kind of details done now, so we make sure that we’re not walking you in to something that is not ideal for you.”

Shawn: You know, the sooner you can plan the better. For the people that I get to work with before even papers are filed, I’ll say, “This is awesome. You’re going to go into your consultation with an attorney, with almost everything prepared, and your attorney is going to be able to take this job and do everything for you and I won’t need to talk to you again.” Other people, if you’re kind of still in the middle of the process, figuring things out, it’s okay, if you’re in the middle, so long as you’re starting to formulate that picture of what it is that you’re really aiming for.

Shawn: I mean what I’m trying to say is that, if you don’t have a goal, you’re not shooting towards anything and you really need to have a clear sense of what your goal is for this process, otherwise your attorney, you aren’t as empowered as you could be to help them get to be where they need to be when this process is over.

Chris: An awesome way of framing it. And we, again as an attorney, we’re always, we’re goal oriented. We have a process from the very beginning of getting them to conceptualize our clients and focus on their goals. But it can be easy to focus on goals that are more related to the divorce process and maybe kids, and sometimes, for however, it works out, because maybe our clients when they’re coming in, some of the issues we’re addressing at the beginning are more emotional. Sometimes the financial goals outside of minimizing my alimony payment, or maximize my alimony award, which isn’t very concrete, it isn’t very helpful. But outside of some of that stuff, we tend to maybe miss some of those financial goals from the very beginning. Whereas, if we have them from the very beginning, makes it easier to get people to where we need to get them to.

Shawn: That’s exactly right. And you know the only thing that I would add to that is also if you have the goals, I say this all the time, is, once you have your goals written down, now’s a great time to talk to your attorney and make sure that your goals are reasonable. Because, you know, I see people who might say, “I don’t want to pay a dime of alimony and no child support and I want 100% custody.” And you’re like, “Your spouse is a decent human, even though the two of you don’t get along. That doesn’t seem like a reasonable case. You might want to think about those a little more.” But, you know, it’s having kind of a sense of what that is, so you know, my job, the way that I do view my job is to make them prepared for you.

Shawn: And to, so that whatever time you spend with the client is maximized and you can do your job more effectively. You as the attorney and as the people listening are the people in charge of this process. And you know I’m sort of a support person, but you know, I want to make sure that what you’re doing and what I’m doing can kind of help them get to the best position possible.

Chris: Absolutely. Before we go Shawn, do you have any like any tips to help somebody, whether it’s the husband or the wife, when they’re in the beginning of the process, maybe they’ve contacted me, maybe they haven’t, and they’re considering separation. And so, from a financial perspective, do you have any tips to help somebody who is thinking, “Hey, I think I need to get … I think for my own emotional wellbeing, I think I need to be in a separate household from my spouse. Obviously I’ll talk to a lawyer about things like custody and stuff like that. But what do I need to pull off from a financial perspective? And how do I get there?”

Shawn: Yeah. I think the two things when it comes to separation. Some of the things that we’ve already discussed, but one is your credit report. Knowing what’s on your credit report. I have clients who make 100,000 dollars a year. I have clients who make 100 million dollars a year. You’d be surprised what’s on a credit report, and there are always surprises. And so just kind of knowing what that is. And then also, knowing what your expenses are. I mean look, when you’re separating, we’ve talked about expenses before, but, your income is going to be the same more or less, whether you’re married or in the separation process. The income part is semi-fixed. The expenses part is now all of a sudden doubling. And so you need to really understand is can you afford that? And what that looks like. Do you have enough savings? Do you have enough income? Do you have enough whatever the case may be that you need to separate.

Shawn: And actually might add a third thing to that, is, separation can have other effects on the divorce process and so I always encourage my clients before taking that separation step, to talk to someone like you. You know, consultations are confidential. It’s not like, you know I have some clients who are afraid to step into an attorney’s office. I say, “Look, attorneys are confidential. No one’s going to know that you’re there. No one’s going to sign, put a billboard up in town that says, ‘They met with Christian’. It’s just so that you can understand your situation, the implications of what you’re doing and making sure that you ultimately protect yourself and don’t unintentionally run afoul of something that might come back to hurt you later.

Chris: Absolutely. That’s right. I can help them with the legal pros and cons of separating, but you can help them with the practical if you separate, can you do it, and how will you make it work? And what’s it going to cost? Shawn, thanks so much man. I had a great time. I really appreciate you taking a few minutes to chat with me and ultimately chat with my clients and some people that are watching this just for advice. If somebody needs to reach out to you, what do they do? How do they do that?

Shawn: Yeah you can visit me at divorceandyourmoney.com, and there’s a podcast by the same thing if you search any podcast player called Divorce and Your Money.

Chris: Sounds pretty simple. Shawn, thanks.

Shawn: Yeah.

Chris: I appreciate it.

Shawn: Thank you, Christian. Take care.

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