The Largest Marriage and Cash Errors to Keep away from

Mindy:
Welcome to the Larger Pockets Cash podcast the place I interview Rachel Richards about divorce, splitting important property with out the good thing about a prenup and what occurs afterwards.

Rachel:
However right here is the place I made errors. Once more, every social gathering will get to maintain their very own premarital property, so any financial savings I had earlier than the wedding, I get to maintain. Any retirement accounts, quantities that I had earlier than the wedding I get to maintain, however the progress in these retirement accounts through the marriage, that’s a marital asset. So initially, mistake primary is that, and I can’t even consider I’m like saying this out loud as a result of now it appears so apparent, I mixed our accounts previous to marriage.

Mindy:
Whats up, whats up, whats up. My identify is Mindy Jensen and I’m internet hosting the present solo at the moment. I’m right here to make monetary independence much less scary, much less only for someone else, to introduce you to each cash story as a result of I actually consider monetary freedom is attainable for everybody, irrespective of when or the place you’re beginning. Whether or not you wish to retire early and journey the world, go on to make massive time investments in property like actual property or begin your personal enterprise, I’ll enable you to attain your monetary targets and get cash out of the way in which, so you may launch your self in direction of your desires.
In the present day, I’m speaking with Rachel Richards. You might know her from Larger Pocket’s Cash Episode 317 and from her books, Passive Earnings, Aggressive Retirement and Cash Honey. Earlier than we herald Rachel, let’s take a fast break.
And we’re again. Prior to now, now we have talked to Rachel about her cash story, however at the moment, we’re going to go slightly bit extra private. In actual fact, we’re getting actually private with Rachel at the moment. We’re speaking about divorce and the most important monetary classes she discovered whereas going by one just lately. Rachel, welcome to the Larger Pockets Cash podcast.

Rachel:
Thanks, Mindy. I’m excited and nervous to be right here at the moment.

Mindy:
Nicely, I don’t actually chunk, so we’re going to simply have a dialog as a result of sadly, you aren’t alone on this journey. And I feel that there’s lots of people on the market who might really feel that, “Oh, I’ll simply keep as a result of I don’t know what to do,” or “Love conquers all. I’ll simply give it one other go.” And as you simply stated, love doesn’t all the time conquer all and typically the divorce is the only option for all concerned, so let’s discuss what occurred.
You and your ex have been collectively for what, seven years and also you talked about him in your BP podcast, you constructed your rental empire collectively. Why did you break up?

Rachel:
Sure, so this wasn’t sudden or sudden. I feel one of the best ways I can clarify it’s that we needed various things out of life and it didn’t begin that means. After we first met, I had this very robust imaginative and prescient of constructing an actual property portfolio and turning into financially impartial and quitting our jobs and touring the world. And my ex appeared to love that. He jumped on board. And we began out as a workforce working in direction of that and I talked so much about that on my BiggerPockets actual property episode.
However in some unspecified time in the future I feel he realized that that’s not what he needed. I feel he needed to pursue his profession, which is okay. I do want he had figured that out sooner, however that’s not what occurred, so he type of stepped again. And I used to be doing most of it alone. I used to be managing the leases. I used to be planning for our future. I used to be dealing with our funds and taxes and investments. I used to be constructing these passive revenue streams and this grew to become exhausting for me. And I felt that he was offended with me that I needed to proceed to drive ahead and that I had these targets. And there are various different massive essential the explanation why we didn’t work out. There have been household points, there have been issues we tried to work by in remedy, however for me, I actually suppose that the misaligned imaginative and prescient is what it boils all the way down to.

Mindy:
Being on the identical web page might be actually, actually useful. And if you’re not on the identical web page, that doesn’t essentially imply that both of you is incorrect. You’re simply completely different. And there’s lots of people who aren’t going to be on the identical web page as you, but it surely looks like when one in every of you needs to journey the world and one in every of you undoubtedly doesn’t wish to journey the world, these are large variations.
It’s not like one in every of you needs to journey the world on a regular basis and one in every of you solely needs to journey 10 months out of the 12 months. These are extra suitable targets or extra doable, extra, what’s the phrase, compromisable, however completely sure and completely no are going to be troublesome to compromise on. One in every of you goes to have to surrender what you needed and that’s exhausting. How outdated are you now?

Rachel:
I simply turned 30 this 12 months.

Mindy:
Okay. That’s a very long time to compromise and quit every little thing you need and be basically sad for the remainder of your life as a result of another person’s imaginative and prescient modified so dramatically.

Rachel:
Yeah, I feel that’s true and I actually beat myself up for a very long time pondering you’re married and also you’re purported to determine it out. That’s what married {couples} do. You’re simply purported to discover a means. And I saved pondering, I simply must attempt more durable. And I did for an extended, very long time, however the factor is there’s just a few issues that may’t be overcome. When two people need two various things out of life, that’s not one thing that may essentially be mounted. And it took me a very long time to just accept that reality and to comprehend that there was an alternative choice and that choice was getting a divorce.

Mindy:
I do know that the divorce didn’t go the way in which that you just needed it to go. What does actually? Who comes from their divorce that’s like, “Sure, I received every little thing I needed.” That by no means actually occurs. However are you able to shed some gentle on what you didn’t suppose went your means?

Rachel:
For certain. God, I’m going to get emotional already.

Mindy:
That is an emotional matter. I’m sorry. This isn’t like, “Yay.”

Rachel:
Yeah.

Mindy:
This isn’t a cheerful, enjoyable matter. And that’s okay, as a result of typically it’s important to talk about not glad, enjoyable issues.

Rachel:
I hoped for an amicable divorce, for certain and my divorce felt the furthest from amicable that I might think about. And that’s as a result of damage individuals wish to damage individuals. And I felt we had these massive looming issues that had been current for years, not simply the issues I touched on, however much more than that. And issues actually escalated the final six months of our marriage. Throughout that point in direction of the top, I really feel like we each tousled massive time. We each unintentionally damage one another in some ways and I come clean with my half in that. However I feel the distinction is that regardless of something he had executed as much as that time that damage me, I simply needed out of the wedding. Whereas he checked out my actions and from the second I requested for the divorce, it simply appeared to me like he needed to maintain inflicting ache or get again at me or blame me or one thing.
My pal’s dad instructed me, and one thing I laughed about nearly the entire time is I used to be 29, 30 at the moment and I used to be like, I can relate to my pal’s mother and father greater than my pals now as a result of my pal’s mother and father have been divorced. And I’m like, I’m so younger, so I’m speaking to my pal’s mother and father. However my pal’s dad instructed me, individuals will all the time say you don’t know somebody till you marry them. However that’s not true. You don’t know somebody till you divorce them. And I’ve discovered that that may be very sadly correct.
So, I’ve needed to discover plenty of empathy. I’m not bitter, I’m not resentful, I’m not offended, or if I do have moments of anger, it’s often because I’m damage nonetheless. However I’ve needed to discover empathy that that was his coping mechanism. It was simpler to harm me and blame me than to just accept that we weren’t proper for one another or to just accept that perhaps it wasn’t anybody’s fault or that we by no means ought to have gotten married as a result of that could be a exhausting capsule to swallow.

Mindy:
With the good thing about hindsight, do you see clues that perhaps it wasn’t going to work out now you could look backwards?

Rachel:
Sure. I’ve been in remedy since February, months earlier than I even requested for the divorce. And I struggled a lot as a result of I believed, “Nicely, how might I’ve seen this coming?” And he or she instructed me, I guess in the event you suppose actually exhausting, there have been indicators that have been there very early on, that one thing was incorrect, that he would ended up treating you this fashion. And I did. As soon as I actually began pondering again about it, there have been clues early on that I ignored and that I ignored.
And so, one factor I’ve been engaged on now with my therapist is, “Hey, right here’s the way to acknowledge these purple flags early on in different relationships,” or if I do determine to start out relationship once more or get into one other relationship. We’ve been engaged on that and that’s one thing that’s crucial for me now as a result of that was a giant mistake that I made.

Mindy:
What’s one thing that you would have executed in a different way or what’s one thing that somebody who’s listening to this present now can do to audit their very own relationship to actually guarantee that they wish to be within the relationship that they’re in?

Rachel:
I learn this quote or one thing on Instagram and I do know it’s such as you don’t take recommendation from quotes on Instagram and TikTok movies, however a few of these issues are actually useful, okay? What it was it stated the primary purple flag that comes up or the primary problematic conduct that comes up in a relationship would be the cause you find yourself breaking apart later. And I feel that’s a really highly effective assertion. It’s not all the time true, however I feel it’s one thing price contemplating. In the event you get into an argument or no matter, no matter it’s, the very first thing that comes up in your new relationship, the recommendation I might give to you and that my therapist has given to me is to pause, okay? Don’t simply resolve the issue and transfer on, however pause and actually perceive, “Why did that make me uncomfortable? Has that conduct been adequately addressed? Is it a brief answer?”
After which take note of whether or not that conduct comes again up. As a result of both that’s one thing that your accomplice has addressed and that’s it, or if it comes up once more, it’s now a sample. And one thing my therapist instructed me is that if it’s a sample, it should maintain persevering with. It’s both been resolved as soon as and for all or it’s a sample and it’ll maintain persevering with. And at that time it’s important to ask your self, “Do you settle for this sample? Are you able to settle for that and take care of it?” Or the one different choice is to interrupt it off and transfer on along with your life.

Mindy:
That’s exhausting to do. I’m going to let proper now that that’s extremely exhausting to do, particularly when, “It’s only one factor.” It’s “Oh, it solely occurred as soon as,” or “It solely occurred twice.” It’s really easy to miss it, particularly if you’re within the love bubble and every little thing else is okay or there’s a pair different issues, however “He’s largely nice,” or “She’s largely nice.” I wish to make this clear. This isn’t a man-bashing episode. It is a you have been in a relationship with a person, so it’s popping out as that is what his drawback was, however this isn’t a “I disagree with all males. I hate all males” episode. That is undoubtedly one thing to consider.
In the event you’re listening to this episode and also you’re eager about your personal relationship and pondering, “Ooh, I’m feeling seen,” it’s best to discover that slightly bit extra. And I’m not saying that it is advisable to break up. I’m saying it is advisable to discover your relationship. Relationships might be healed. They are often repaired typically, however typically they will’t and that’s the place we’re at now. And I’m sorry that that occurred.

Rachel:
Thanks. And sure, I agree. That is simply relationship recommendation. It’s not about hating males. I like males and I feel there are good males on the market. The sample factor might be so exhausting as a result of I discussed there have been household points and the primary time this subject occurred was proper after we received engaged and we went by remedy to resolve that subject. And I used to be like, “Nice, that’s been resolved.” After which the subsequent time this subject got here up in a giant means was years later, so I didn’t acknowledge it was a sample at the moment. I recognized it as a brand new subject.
And so when my therapist helped me acknowledge that it was a sample and she or he instructed me, “Listed here are your solely two choices,” I used to be like, “That’s it or is there not one other? The place’s the third choice? As a result of these choices suck, woman.” However yeah, you actually should pause. Don’t overlook issues. Don’t rush previous issues. Pause and really feel and perceive whether or not one thing is an actual drawback or not.

Mindy:
Nicely, let’s discuss actual property. You might be identified in your actual property and also you had at one level 38 doorways. How was your actual property impacted by the divorce?

Rachel:
Nice query. In our divorce, we truly solely began with 5 items that we needed to divide and that’s as a result of we offered most of our items final 12 months in 2021, and that was not divorce-related. I’ve defined why we did that on my Instagram, so anybody can go there. However we began with 5 items this 12 months. We had two single household homes in Kentucky, a duplex in Kentucky, after which a giant single household boarding home in Denver, in order that’s what we had.
Now, there have been three ways in which my actual property was impacted by the divorce. Primary, we have been each beneath a courtroom injunction to do many issues. To not spend greater than we might usually spend. We additionally can not transfer, switch, promote, make investments any of our property or cash, so for seven months throughout my divorce… sure. For seven months, I used to be not legally allowed to spend money on rental properties or syndications.

Mindy:
However that’s one thing you’d usually do.

Rachel:
I do know. However the entire level is we will’t be making strikes on our property that’s going to impression how we cut up our property, so I can’t tie up our funds and do one thing with out his being on board. Which was so annoying as a result of I’m this massive actual property investor and coach and I’ve packages after which I’m instructing individuals and within the meantime, I can’t even do it myself, so it was superb. It was simply extra of a nuisance.
After which quantity two, we had a tenant transfer out in April and one other one later in the summertime and each of those have been our single household leases. My ex refused to comply with put new tenants in these properties. He compelled us to maintain them vacant for months and we misplaced hundreds and hundreds of {dollars} this 12 months in our actual property portfolio due to that. After which quantity three, we ended up deciding to promote within the mediation. And on the finish of the divorce, right here’s the way it all performed out. We ended up deciding to promote the 2 single household homes that had been vacant. I saved the duplex in Kentucky and he saved the only household home in Denver.

Mindy:
After which if you offered the 2 single households, did you simply cut up these evenly?

Rachel:
Yeah, and that’s nonetheless occurring. And so, I went from 38 doorways to 2 in a span of a 12 months. I’ve joked about it with my pals as a result of as I gave that speech at BiggerPockets Convention the way to scale from zero to 38 doorways in beneath three years. And so as soon as this all performed out and I noticed how the property have been going to be divided, I texted my pal group and I used to be like, “ downsize from 38 doorways to 2 in a single 12 months, break up. Comply with me for extra actual property investing recommendation.” Not likely. I imply, we offered most of them, however I do really feel slightly self-conscious as a result of I simply hope that my followers and college students don’t suppose it takes away from my credibility. I imply, I don’t suppose it does.
I nonetheless have achieved what I’ve achieved. I nonetheless have the data and experience and assets and community. And I do wish to construct my portfolio again up slightly bit extra subsequent 12 months, to not show something, however as a result of I like actual property and the monetary advantages and I wish to have extra properties. However some individuals will have a look at my trajectory and suppose, “Who’re you to show these things if you now solely personal a duplex?” However that’s okay, they’re not my individuals, so I feel I simply mentally must let that go.

Mindy:
That’s a extremely good level. They aren’t your individuals. If they will have a look at your “present portfolio” and see that you just solely have two doorways and due to this fact, don’t know what you’re speaking about, they’re not going to hearken to you anyway, so that they’re going to search for causes to not hearken to you. There are many individuals on the market who will see that you just did at one level have 38 doorways. That’s plenty of doorways.

Rachel:
Yeah, and I like all of the syndications now, in any case. I’m in 9 syndications. I’m going to maintain investing in syndications. I might do what different individuals do and say, “Oh, I personal 1,065 doorways as a result of I’m in 9 syndications.” I suppose I might try this, but-

Mindy:
You possibly can try this. I feel that’s disingenuous to say that. I feel that-

Rachel:
I agree and that’s why I don’t. That’s so deceptive.

Mindy:
I feel that saying, “I’m a part of 9 syndications” is much extra trustworthy with the precise counting. We’ve had a dialog about that anyway. What about your corporation? You had Cash Honey Rachel is… I imply I don’t have a look at Cash Honey Rachel and suppose, “Oh, that’s Rachel and her husband.” I feel that’s Rachel solely, so was that impacted by the divorce?

Rachel:
My enterprise was undoubtedly impacted in a number of methods. It was impacted by way of revenue. I’m down about 60% in revenue 12 months over 12 months and this was some of the traumatic components of my divorce. It was June once I received an e mail from my lawyer and he notified me that my ex needed to have my enterprise valued. Now, there have been solely a few moments in my divorce that I simply felt just like the world was going to finish. I felt the world was collapsing round me and that was one in every of them. I imply, I almost simply screamed. I simply felt this entire time I simply needed to do what was truthful and cheap.
My ex-husband was making a big wage, over 200 grand at the moment in cybersecurity. He had full well being advantages, 401K, inventory choices, all these items, in order that was his factor. This was my enterprise, so I figured, “Let’s cut up the leases, let’s cut up all of our investments in cash 50/50, and that’s that.” When he selected to come back after my enterprise, I used to be shocked. He didn’t have something to do with it. He didn’t make any monetary contribution and I made certain of that. I made certain to not ever be financially depending on him once I stop my job in 2019.
I had already changed my very own revenue from our leases, from my half of the rental revenue and from my e book royalties, so I used to be not depending on his wage at any level and he made no mental contribution to my enterprise in any respect. However that’s what he did and he might legally. He determined to get a enterprise valuation.

Mindy:
You stated legally. That feels like we’re about to speak a few prenup or lack thereof.

Rachel:
Sure. And earlier than we get into that, I wish to simply say slightly bit extra about what the enterprise valuation means and the way that impacts the divorce.

Mindy:
Yeah, yeah. Let’s discuss that.

Rachel:
Okay, so when now we have to divide our property, simply so everyone seems to be conscious of what that actually means. If anybody is listening and also you personal a enterprise, whether or not it’s a rental property enterprise, a aspect hustle, you’re an writer, any type of enterprise, when now we have to divide our property, now we have to agree on a price for every little thing. Until one thing belonged to us previous to marriage, making it a premarital asset, then every little thing else will get cut up 50/50. Solely the premarital property are protected.
Him placing a price on my enterprise meant it could get cut up 50/50. It meant one other line merchandise on my aspect of the steadiness sheet, which meant I must purchase him out of it at 50% and so, he would get to offset it with extra. He would get to perhaps stroll away with one other rental property due to that or one other syndication or far more money, in order that’s the way it works. I used to be so scared about my enterprise valuation. I lived in worry for months and months what it could come again as.
Let me simply say this another time. Legally, my ex was entitled to 50% of my enterprise as a result of we have been married, interval. There may be nothing I might do about it. And I keep in mind telling a few of my shut pals about this and I keep in mind telling you about this, Mindy, at one level, and also you have been so offended for me and also you have been like, “How is that potential? Can’t one thing be executed?” And I used to be like, “No, nothing might be executed.” That’s once I stated the one factor that would have been executed is that if I had a prenup and in order that’s the place we will discuss prenups.

Mindy:
Earlier than we speak in regards to the prenup, let’s speak in regards to the enterprise valuation. Now, this feels like a authorized course of or there’s a proper process for getting this executed. You give your financials and your corporation data to a 3rd social gathering they usually’ve evaluated. You may’t simply say, “Hey, it’s price a greenback.”

Rachel:
Proper. Yeah. We needed to rent a joint knowledgeable, someone that we each agreed on and that is usually a CPA. Someone that has executed enterprise valuations earlier than, so that’s who we employed to do it. It was a really irritating and lengthy and tedious and costly course of that value us someplace between $5000 and $10,000. And sure, it was costly. And I’m clearly hoping that the enterprise valuations going to be low as a result of once more, I’m going to have to purchase him out at 50%.
I received the valuation again on October seventh, 10 days earlier than our mediation and the valuation was truly decrease than I believed it could be. It was so low that I cried glad tears. And I keep in mind pondering, I’ve cried day by day for six months and I’m truly crying glad tears proper now. And I feel I used to be crying and laughing like a loopy individual as a result of it was simply so ridiculous and absurd that we’d spent all this cash on this enterprise valuation, for what. It simply felt so pointless.

Mindy:
With the enterprise valuation, that’s an official factor, so when it is available in low, clearly, you’re glad. Can he protest it or is that simply, “Oh, I suppose it’s price a greenback now?”

Rachel:
He might. He might protest it. He might have had a person knowledgeable. His personal knowledgeable CPA have a rebuttal report, however we didn’t have sufficient time to try this earlier than the mediation. And I might have executed the identical factor. I truly did have a rebuttal knowledgeable employed that he didn’t know. However I had somebody ready and employed and able to take that report and simply rip it to shreds in case it got here in actually excessive, so I used to be ready to have someone are available in and say, “Truly, no. It’s price means decrease.” However I didn’t want that individual to try this.

Mindy:
Was it all the time a given that you’d be capable to retain possession of this enterprise?

Rachel:
Just about. Sure, as a result of there’s actually no world wherein a decide would have checked out every little thing I had contributed and brought my enterprise away from me. It was fairly clear minimize that I used to be going to be the proprietor of the enterprise. It’s simply that I had to purchase out my ex-husband. Does that make sense?

Mindy:
Yeah, no, that is sensible. I simply wish to guarantee that it was by no means on the desk that he might proceed that will help you run it by not doing something in any respect and proceed to get 50%. He didn’t have the choice to say, “No, I don’t need you to purchase me out. I wish to proceed to be 50% proprietor.”

Rachel:
No, no, that might not have occurred in my case. It might occur in a husband and spouse or husband and husband or spouse and spouse case the place they each did contribute to the enterprise, by way of mental contribution or monetary contribution. However as a result of that wasn’t the case for us, I used to be the rightful proprietor. I simply had to purchase him out of it.

Mindy:
He received 50% of your corporation. Was every little thing cut up 50/50?

Rachel:
Solely marital property are cut up 50/50. And once more, marital property are something which can be acquired throughout or gifted to the wedding. Something that both of us had earlier than the wedding that we introduced into the wedding that was protected. However right here is the place I made errors. I made plenty of errors and we’re going to speak about many of those errors. Once more, every social gathering will get to maintain their very own premarital property, so any financial savings I had earlier than the wedding, I get to maintain. Any retirement accounts, quantities that I had earlier than the wedding, I get to maintain. However the progress in these retirement accounts through the marriage, that’s a marital asset.
To begin with, mistake primary is that, and I can’t even consider I’m saying this out loud as a result of now it appears so apparent. I mixed our accounts previous to marriage and I really feel so silly ever doing that as a result of I didn’t perceive the repercussions on the time of doing that. And I didn’t have any doubt in my thoughts at the moment that we weren’t going to work out, as a result of who has a doubt of their thoughts if you marry someone that you just’re going to be the 50%? However so, that’s what I did. I added him to my accounts previous to marriage.
And since I did that, all of my banks and accounts have been not separate premarital property as a result of he was now a joint account proprietor on them. So, I took away my very own premarital property. And it wasn’t a lot, it wasn’t a lot. Thank goodness for that. However nonetheless, I took away my very own premarital property. After which he didn’t add me to his one funding account, so he had his protected premarital funding account. However I took that away for myself, in order that’s terrible. That’s mistake primary.
One other mistake is that this, as a result of we have been a workforce and I noticed us as a workforce, if you’re married, that’s the wholesome mindset to have. There’s nothing incorrect with that, however what I did is that I didn’t suppose it mattered whose retirement accounts we contributed to. I figured it’s all going to finish up on the similar pot on the finish of the day. We’re all going to withdraw from it. It doesn’t matter whose, so why did it matter. And once more, I can’t consider how naive I used to be. And this was each earlier than and through the marriage, for years, we have been maxing out his retirement accounts, his HSA accounts, and never mine.
And that’s one thing I did. It’s not like he was doing that or controlling that. That’s one thing I did. And now, his retirements have been already slightly bit bigger than mine once we met due to our age hole, however not considerably. However on the time of our divorce, he walked away with 250 grand in tax benefit retirement accounts and I had solely $53,000 in mine. So, that was an unlimited disparity and drawback that I did, that I created that mistake.

Mindy:
And that was as a result of they have been his accounts previous to marriage?

Rachel:
It’s as a result of I used to be contributing all of our mixed funds and ensuring we have been maxing out his retirement accounts and his HSA accounts for a lot of the years we have been married, as a substitute of mine. So, his accounts grew a lot greater than mine did.
And now, in our divorce I might have stated, “Nicely, the retirement must be divided up evenly.” I might have stated that, however as a substitute I selected to that I needed to stroll away with the syndications as a substitute of retirement property, so that’s the means it was negotiated. However once more, I might have began issues out and if I had simply had a special outlook and been extra sensible from the start, I might have had a far more even retirement scenario proper now. Does that make sense?

Mindy:
Mm-hmm.

Rachel:
I don’t know if I’m explaining that nicely. Okay, so then one other mistake, and this one isn’t as massive of a deal, but it surely’s simply one thing you don’t take into consideration. So, one other mistake, mistake quantity three is that one in every of my ex’s premarital property was his truck. And once we received married, and this was a pleasant Dodge Ram, like a $50,000 automotive. After we received married, I didn’t suppose to place the title into each of our names. It was all the time in his identify. However I offered my automotive two years in the past and we grew to become a one-car family, in order that truck was each of ours that we shared.
And once we first separated and he moved out, he took the truck and he left me stranded in Denver. And so, I had no automotive and no means to get round and there was nothing I might do as a result of the title was in his identify. Once more, simply it’s important to take into consideration these items. You need to shield your self. That’s a few of the errors with the way in which the marital property have been cut up and the way in which that issues performed out.

Mindy:
Wow. Yeah. That’s not one thing that you’d take into consideration as a result of it’s a truck, what do you consider?

Rachel:
Yeah.

Mindy:
You don’t give it some thought till it’s too late.

Rachel:
Precisely.

Mindy:
If every little thing had been saved separate, even through the marriage, would your whole cash and earnings have been protected?

Rachel:
No, undoubtedly not. And I’m glad you requested as a result of that’s not the way it works. Something earned through the marriage is a marital asset. It doesn’t matter if it’s put right into a separate account or not. And that’s truly a fairly large misunderstanding for most individuals. Once more, the cash you earn throughout your marriage isn’t protected simply because it’s put right into a separate account. When you get married legally, something earned from that time ahead is a marital asset, irrespective of which account it will get put into. The one factor that may shield you is a prenup.

Mindy:
Which I’m assuming you didn’t have?

Rachel:
No. My largest remorse.

Mindy:
I don’t have one both.

Rachel:
Nicely, I feel you’re doing nicely. And I’ve seen you and Carl and also you each are simply the loveliest couple.

Mindy:
I used to be so offended when he introduced up the subject. I used to be like, “In the event you convey this up once more, we’re not getting married.” And since I believed that it was a plan for a divorce and it wasn’t till Episode 301 of this podcast the place we interviewed Erin Thomas that my ideas on prenups modified. It’s such an ideal episode. If you’re eager about getting married, in the event you’re listening to this and eager about getting married, hearken to that episode. It isn’t a plan for divorce. It’s a plan for a way your marriage goes to work. And he provides some actually nice ideas. He’s received a e book popping out about all of these ideas, however he’s not on this present at the moment. I simply wish to be sure that everyone listens to that episode.
What was your stance on prenups earlier than you bought married?

Rachel:
Nicely, clearly, I didn’t suppose it was mandatory.

Mindy:
Who wants one? We’re in love.

Rachel:
We’re in love. We’re going to be those that work out. We’re particular. And at the moment we have been engaged, neither of us had substantial property and our web price was not considerably completely different. So I actually, I didn’t suppose it mattered. I didn’t suppose it was related. I did give it some thought. I simply didn’t suppose it was related. However initially, that was simply the case once we received engaged.
By the point we received married, we had invested in leases collectively. Our wealth had considerably modified and I didn’t ever rethink the prenup scenario, in order that’s on me, that’s my unhealthy. We had mixed our accounts, so I don’t know why it didn’t cross my thoughts once more to rethink a prenup at that time.
Secondly, that is actually the extra essential factor, you don’t know what companies you’re going to start out, what e book you’re going to put in writing. And besides I had already written my first e book by then, however once more, it didn’t cross my thoughts. You don’t know in the event you’re going to start out an actual property empire throughout your marriage and that’s what a prenup can shield. If I had a prenup that stated any books I write or any enterprise I begin associated to that’s mine and mine alone, we might not have been on this mess. And there may be actually a lot ache and stress and nervousness that we might have averted had we had a prenup. And that’s the largest mistake, absolutely the largest mistake I made. And now I firmly consider that everybody ought to have one.

Mindy:
Why do you say that everybody ought to have a prenup?

Rachel:
As a result of now we have to take a look at this unemotionally for a second. Pure logic and arithmetic right here, okay? Which I do know isn’t good. However 50% of marriages finish. And I’m not saying that from a bitter perspective, I’m saying that as a result of these are the statistics, so let’s simply be sensible. And I by no means thought I might be in that fifty%. None of us do, by no means in one million years, however that is purely threat administration, okay? Consider it as threat administration. Your odds are 50%.
So, for instance, Mindy, you have got automotive insurance coverage, proper? Okay. It’s not since you suppose you’re going to trigger an accident or that you just’re going to do one thing dumb. You’re not going to drink and drive or textual content and drive, that might be silly. It’s to handle the chance of different individuals. It’s as a result of it’s sensible to guard your self simply in case one thing unhealthy occurs to you you could’t management.
You wouldn’t enter right into a enterprise partnership with out a authorized contract outlining what occurs if issues go unhealthy. You wouldn’t enter into an actual property deal with out a authorized settlement in place with an exit plan. And now, you’re telling me you’re going to signal a lifelong dedication with out an exit technique if issues go south, which 50% of the time it should. So, why are we defending ourselves legally and financially in each circumstance in life aside from marriage? We can not management different individuals.
Consider the issues which can be outdoors of our management in a wedding, and I’m not saying any of this is applicable to my scenario, however listed here are some examples. Somebody turns into emotionally or bodily abusive. Somebody turns into an alcoholic or drug addict. Somebody cheats. Somebody realizes they’ve a special sexual orientation. Somebody needs one thing else out of life. Individuals change. You may’t management it. After which what are you purported to do?
You may keep the identical individual and uphold your vows until the day you die, however it’s important to handle the chance that somebody might change in your marriage and that’s outdoors your management. And another factor I’ve to say on this as a result of I do know I’m very enthusiastic about this. Right here’s the factor. You have already got a prenup. It’s the one which the state provides. You have already got a authorized settlement. It’s the one which the state provides you. And I guess it’s not very favorable. I guess it’s not what you’d need, so if you wish to shield your self, you higher write up the pre prenup that you really want and that you just comply with or else, you’re topic to the federal government’s needs and whims.
And take it from me, It’s significantly better to come back to a loving settlement now than it’s to combat over funds when there are two offended and damage individuals. It’s one thing you do out of affection for the individual you’re marrying since you are sensible sufficient to acknowledge that there’s a stage of threat. And so, that’s all.

Mindy:
That could be a nice quote.

Rachel:
Thanks.

Mindy:
It’s significantly better to do it if you’re all nonetheless pals.

Rachel:
I feel I’ll get off my soapbox now, however sure.

Mindy:
No, no, no. You might be right here to share your experiences. This was a extremely crappy factor that you just went by and you’re right here at the moment to share with everybody who’s listening who is likely to be eager about it or in a relationship the place they’re beginning to query what’s happening or just simply interested in what occurs in a relationship when it ends. You’re right here to share your story so individuals can study from you and I admire that.

Rachel:
Thanks.

Mindy:
Now, let’s get into some nitty gritty. How a lot did this divorce value you?

Rachel:
I simply regarded on the complete the opposite day, however the factor is costs are nonetheless coming by. I simply received one other $1,800 invoice, however the different day, yesterday, my estimate that I got here up with was $49,800 and that was totally on attorneys. Mine to date has been $17,000. I consider my ex’s have been costlier. There are issues that we needed to pay for value determinations, enterprise valuations and once more, there’s nonetheless prices coming in. It’s been a month, however we’re nonetheless paying for issues. However sure, $49,800.

Mindy:
That’s plenty of {dollars}.

Rachel:
Nicely, I really feel that we might have simply mediated as a substitute of hiring attorneys and we might have achieved the identical consequence and that’s what I hoped for at first. And we might have saved some huge cash. We most likely might have saved 35 to 40K, and I do suppose that’s one other mistake. It’s not my mistake. I feel that’s my ex’s mistake, however that’s an choice. You may mediate with out having to rent attorneys in any respect.

Mindy:
The attorneys are those that win in a contested divorce. Okay, let’s recap. What do you suppose your largest errors have been?

Rachel:
Nicely, I undoubtedly simply tousled total. And from a monetary perspective, I failed to guard myself. I didn’t advocate for myself, and it’s exhausting to say that with my background. It’s simply exhausting to confess that. I’ve a level in finance. I’m a former monetary advisor. I’m a bestselling writer. I train individuals the way to advocate for his or her self. And if somebody as sensible and competent as I’m screwed up this badly, what does that imply for everybody else? It scares me to consider. And that’s why I’m on right here sharing this.
The one silver lining they received me by was figuring out perhaps there’s a cause for my struggling. Perhaps my errors will assist another person keep away from this ache sometime. Perhaps I’ve this voice and platform for this causes, however nobody ever has to undergo in a relationship or marriage or divorce after which really feel helpless the way in which I did financially and legally. So, please, hearken to my errors and study from them.
One in every of my errors combining accounts earlier than marriage. One other one, contributing to his retirement accounts and HSAs and neglecting my very own. One other one isn’t placing property, titles into each of our names like his truck. After which the most important mistake isn’t getting a prenup, which might have protected my books and my enterprise.

Mindy:
Okay. I’m going to cease you proper there and say that no one is ideal and also you’re not allowed to beat your self up as a result of that is my podcast and I don’t let you try this, so cease.

Rachel:
Thanks.

Mindy:
I might additionally say, “Hey, I don’t know what you’re doing incorrect. All the things I do is ideal. Have you ever seen my price range?” And everyone, who has seen my price range is laughing hysterically as a result of I mess it up on a regular basis. I feel it makes it actually human. I feel it makes you actually human. And that someone who’s in an analogous place, who isn’t a finance professional, who is meant to know every little thing, and by the way in which you may’t know every little thing, will hearken to this story and say, “Hey, perhaps I’m not such a multitude up as a result of Rachel is meant to know every little thing and she or he made errors, too.” So,, perhaps I ought to cease beating myself up for these similar errors that I made or for comparable errors.”
I imply, how many individuals have a prenup? I might like to know what proportion of my listeners have a prenup. I feel it could be very low. I feel that lots of people are like us. I’m not going to get a prenup. I’ve nothing to save lots of. I’m not going to get a prenup, that’s only a recipe for divorce or that’s simply planning for divorce and we’re going to remain collectively without end, so there’s no cause for me to get a prenup. And I feel that you just’re not even near alone on this situation. I might be very shocked if 10% of my listeners had prenups. I feel that they’re not that widespread, even on this specific situation.

Rachel:
They’re widespread I guess amongst divorcees.

Mindy:
You realize what? I feel they’re. I completely suppose they’re. However I feel that-

Rachel:
My enterprise coach, I used to be speaking to him earlier this 12 months and I used to be like, “Yeah, I’m by no means getting married once more,” throughout one in every of my moments. And he was like, “Oh, you’ll get married once more, simply with a prenup subsequent time.” And he’s proper.

Mindy:
Okay, so on that very same vein of not beating your self up, what did you do proper?

Rachel:
I did plenty of issues proper. I used to be within the know concerning all of our funds. I used to be the one which saved monitor of our accounts, our logins, our balances. I saved monitor of all of our month-to-month bills and people have been in my possession, in order that was actually nice for me. We had separate and never joint bank cards, which I believed was useful to simply have my very own private bank card that he didn’t have entry to.
I selected an ideal lawyer. I selected someone logical who was not making an attempt to choose fights to choose fights or spend pointless cash. He did an ideal job advocating for me. One factor I’m pleased with myself for doing is mediating and coming to an settlement at mediation, though I felt it was far, removed from truthful. I felt I walked away with far lower than what I ought to have. And I used to be offended about that initially. However the different choice, if we didn’t comply with one thing in mediation, that meant we needed to go to courtroom and go to basically a trial, which might have been subsequent 12 months, that might have been 2023 and it could’ve been months and months. Extra delays, extra prices.
I might have continued to lack management over my funds, my actual property, my companies. And now, I’m in a position to transfer on so much quicker and I’m ready to make more cash. And so, giving that up was the very best monetary choice that I made. And I didn’t see it at the moment, however I see it now as a result of I’m making extra now. I’m investing in actual property. I’m dwelling my life the way in which I wish to stay it. Coming to an settlement in mediation, though I felt it was completely unfair, I’m glad I did that.

Mindy:
Yeah, that… let’s see. Let me collect my ideas for a second as a result of that’s fairly profound to comprehend. I imply, this was simply finalized. To appreciate so quickly afterwards that sure, I might have gone to courtroom, I might have doubtlessly gotten extra money out of it, however then it could’ve value me extra time, extra psychological anguish, extra every little thing on this extended, for what? How far more would you have got actually gotten? Tons of of hundreds of {dollars} extra? You wish to win. I’m not going to let him win. I’m going to win. I’m going to go there and I’m going to actually stick it to him.
And that, the maturity to simply settle for the mediation that’s given to you, “You realize what? I’m simply going to do it and be executed, as a result of then I can transfer on with my life.” That’s so profound and sensible and I don’t know that I might have been that profound or sensible, so that you’re higher than me.

Rachel:
My dad helped me so much and he was simply making an attempt to construct me up going into mediation and he simply saved saying, “You’ve already received. He can take every little thing and also you’ve already received.” And the factor I’m pleased with reminding myself of is that that was true. He might have taken our whole marital property, however what he might by no means take away is my skill to construct all of it again. He can’t take away my data, my drive, my ardour. None of that he can take away. He can’t contact me. He might have taken away much more, however on the finish of the day, I nonetheless win. I can construct all of it again and that can by no means be taken from me.

Mindy:
Precisely. Now, you have been speaking and also you stated you had separate bank cards. Was {that a} acutely aware selection?

Rachel:
Not likely. I don’t suppose it was unconscious or acutely aware. It was simply one thing we had all the time executed. We had joint bank cards for the enterprise. I suppose, I don’t know if it was even within the LLC identify or each of our names, however we each had separate bank cards, but it surely was all paid out of our joint accounts. And we might see one another or no less than I had entry to his as a result of I managed all the logins and all the funds. However I don’t suppose he ever might actually see mine or cared to. I might have given him my logins if he had needed them. However sure, we did have separate bank cards.

Mindy:
Emotionally, what was this course of like?

Rachel:
There may be undoubtedly no exaggerating that this was the darkest 12 months of my life. And I do acknowledge that. To say that’s privilege as a result of individuals have gone by so much worse and I’m fortunate that I hadn’t gone by something worse. I’ve handled melancholy earlier than, however that is melancholy, nervousness, and grief, all on the similar time. And people listening which have misplaced somebody or been by divorce will know you’re additionally grieving since you don’t simply lose the individual you’re keen on, you lose your complete life you thought you’d have. And it’s not only a regular breakup.
I misplaced my future , the entire life that I envisioned and I misplaced my roommate, my finest pal, my journey accomplice. And the worst freaking half is that I misplaced my canine. I haven’t seen an image or video of my canine Chloe in seven months and I nonetheless cry about her to today, so it’s a super quantity of loss and coping that’s actually unimaginable. After which including to that’s the absolute horror of somebody you’re keen on turning in opposition to you and hurting you, coming after you, making an attempt to inflict ache month after month. And I nonetheless can’t reconcile that.
The truth that I really feel like I don’t know the individual I married and what he was able to. It was simply surprising and bewildering and I’ve by no means felt so helpless in my life. After which preserving it collectively and making an attempt to run my public going through enterprise as a result of I’ve tons of of hundreds of followers. I gave that BiggerPocket speech on October 4th, that was lower than two months in the past in San Diego and it’s one in every of my proudest issues I’ve executed. I had a lot enjoyable. I used to be surrounded by pals. It was clear to me that I made a big effect that day and it was such a cheerful week throughout such a darkish time in my life. And what individuals would by no means know is that two days later I got here again house and I keep in mind crying in my mattress, on and off for 11 hours straight. And I cried a lot that my left eye received’t shut as a result of I used to be so depressed. That was the toughest month, however I survived.
And as , my divorce was finalized about 5 weeks in the past on October twenty first. And that has been an enormous aid, an enormous weight lifted off my shoulders. I’m nonetheless not emotionally okay as you may see. There’s plenty of therapeutic to do. I’m working with my therapist nonetheless. And even though I can proceed to attain so much and hit massive milestones in my enterprise, I’m nonetheless struggling. And that’s okay. I don’t anticipate to really feel higher in a single day. No achievement goes to elevate the crushing weight of melancholy or elevate the loneliness that I nonetheless really feel each evening, however I do know that I will likely be okay. And that’s sufficient for me proper now.

Mindy:
You may be okay. You’ll thrive, and you’ll come out on the opposite aspect even higher than earlier than.

Rachel:
Thanks.

Mindy:
However getting by it sucks.

Rachel:
It sucks.

Mindy:
And it’s the slog that it’s important to do. Nicely, come again to Longmont. My women would like to study extra about monetary independence from you as a result of they don’t hearken to me in any respect. Significantly, if you wish to really feel higher about your self, hearken to my women discuss how wonderful you’re.

Rachel:
You’re so candy. I like your women.

Mindy:
Take them. However severely, you’re doing plenty of good. You might be instructing individuals the way to change their monetary lives. You’re exhibiting individuals you could be an actual property investor. You may change your monetary future. You’re not caught in no matter circumstances you’re in proper now. You may change the long run. You may change your funds. All it’s important to do is hearken to Rachel.

Rachel:
Thanks.

Mindy:
Okay, Rachel, you’re implausible. I like you. I’m so glad that you just got here on this present at the moment. Nicely, I can’t actually say that. I’m so glad that you just shared this with me. It’s not a enjoyable matter, but it surely’s a subject that we have to discuss. And we haven’t lined this on this present earlier than. There are people who find themselves in a relationship questioning what they need to do. And I like that you just tried to repair it. I like that you just went to remedy and did what you would do to attempt to make it work. And it grew to become obvious that it wasn’t going to work. So, “Okay, then we have to separate, we have to break up.” And that is what occurs if you break up and it’s not all the time fairly.
If you’re eager about getting married, hearken to Episode 301 and speak to your accomplice a few prenup. It isn’t a plan for a divorce. It’s a plan for a way you’re going to deal with your funds. And it’s additionally a technique to shield each of it’s best to the wedding not work out, ought to someone change, ought to one thing occur. And like Rachel stated, 50% of marriages finish in divorce. You want a plan to guard your self.
Nicely, I feel that could be a good place to finish this episode. Rachel, thanks a lot in your time at the moment.

Rachel:
Thanks.

Mindy:
Rachel, the place can individuals discover you? She is Rachel Richards and you’ll find her at-

Rachel:
Okay, so my Instagram is Cash Honey, Rachel. And each of my books, Passive Earnings, Aggressive Retirement and Cash Honey, are on paper e book, audio and E-book on Amazon. After which lastly, we didn’t discuss passive revenue in any respect, however that’s what I’m identified for, so if anybody want to obtain my Passive Earnings Starter package totally free, I’ll give that totally free at the moment. You may go to moneyhoneyrachel.com/passiveincome to obtain that.

Mindy:
Thanks. Listeners, in the event you want some passive revenue, Rachel is the queen. All proper, now, that wraps up this episode of the BiggerPockets Cash podcast. She is Rachel Richards. I’m Mindy Jensen, saying we received to shake, rattlesnake.