The Greatest 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 belongings 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 celebration will get to maintain their very own premarital belongings, 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 development in these retirement accounts through the marriage, that’s a marital asset. So to start with, mistake primary is that, and I can’t even imagine 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, hi there, hi there. My title is Mindy Jensen and I’m internet hosting the present solo at present. I’m right here to make monetary independence much less scary, much less only for any person else, to introduce you to each cash story as a result of I actually imagine monetary freedom is attainable for everybody, regardless of when or the place you’re beginning. Whether or not you need to retire early and journey the world, go on to make massive time investments in belongings like actual property or begin your individual enterprise, I’ll provide help to attain your monetary objectives and get cash out of the best way, so you possibly can launch your self in the direction of your goals.
As we speak, I’m speaking with Rachel Richards. Chances are you’ll 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. Previously, we’ve got talked to Rachel about her cash story, however at present, we’re going to go just a little bit extra private. In reality, we’re getting actually private with Rachel at present. We’re speaking about divorce and the most important monetary classes she realized whereas going by means of one just lately. Rachel, welcome to the Larger Pockets Cash podcast.

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

Mindy:
Properly, 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 could 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 mentioned, love doesn’t at all times conquer all and generally the divorce is your best option for all concerned, so let’s speak about 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 wished various things out of life and it didn’t begin that means. Once we first met, I had this very sturdy 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 the direction of that and I talked quite a bit about that on my BiggerPockets actual property episode.
However sooner or later I feel he realized that that’s not what he wished. I feel he wished to pursue his profession, which is okay. I do want he had figured that out sooner, however that’s not what occurred, so he form 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 wished to proceed to drive ahead and that I had these objectives. And there are various different massive essential the reason why we didn’t work out. There have been household points, there have been issues we tried to work by means of in remedy, however for me, I actually assume that the misaligned imaginative and prescient is what it boils right down to.

Mindy:
Being on the identical web page may be actually, actually useful. And if you’re not on the identical web page, that doesn’t essentially imply that both of you is unsuitable. You’re simply totally different. And there’s lots of people who aren’t going to be on the identical web page as you, but it surely looks as if when one in every of you desires to journey the world and one in every of you positively doesn’t need to journey the world, these are big variations.
It’s not like one in every of you desires to journey the world on a regular basis and one in every of you solely desires to journey 10 months out of the yr. These are extra appropriate objectives or extra doable, extra, what’s the phrase, compromisable, however completely sure and completely no are going to be troublesome to compromise on. Considered one of you goes to have to surrender what you wished and that’s exhausting. How previous are you now?

Rachel:
I simply turned 30 this yr.

Mindy:
Okay. That’s a very long time to compromise and quit every part 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 considering you’re married and also you’re speculated to determine it out. That’s what married {couples} do. You’re simply speculated to discover a means. And I saved considering, I simply must strive more durable. And I did for a protracted, 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 simply accept that reality and to appreciate that there was an alternative choice and that possibility was getting a divorce.

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

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

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

Rachel:
Yeah.

Mindy:
This isn’t a cheerful, enjoyable subject. And that’s okay, as a result of generally you need to focus on not blissful, enjoyable issues.

Rachel:
I hoped for an amicable divorce, for certain and my divorce felt the furthest from amicable that I may think about. And that’s as a result of damage individuals need 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 the 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 carried out as much as that time that damage me, I simply wished 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 wished to maintain inflicting ache or get again at me or blame me or one thing.
My pal’s dad informed me, and one thing I laughed about virtually 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 informed me, individuals will at all times 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 could be very sadly correct.
So, I’ve needed to discover a whole lot 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 simply accept that we weren’t proper for one another or to simply 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 that you may 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 assumed, “Properly, how may I’ve seen this coming?” And he or she informed me, I guess in the event you assume actually exhausting, there have been indicators that have been there very early on, that one thing was unsuitable, that he would ended up treating you this manner. And I did. As soon as I actually began considering again about it, there have been clues early on that I neglected and that I ignored.
And so, one factor I’ve been engaged on now with my therapist is, “Hey, right here’s the best way to acknowledge these crimson flags early on in different relationships,” or if I do determine to begin courting once more or get into one other relationship. We’ve been engaged on that and that’s one thing that’s essential for me now as a result of that was an enormous mistake that I made.

Mindy:
What’s one thing that you may have carried out otherwise or what’s one thing that somebody who’s listening to this present now can do to audit their very own relationship to actually make it possible for they need 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 mentioned the primary crimson flag that comes up or the primary problematic habits that comes up in a relationship would be the motive you find yourself breaking apart later. And I feel that’s a really highly effective assertion. It’s not at all times true, however I feel it’s one thing value contemplating. Should 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 habits been adequately addressed? Is it a short lived resolution?”
After which take note of whether or not that habits comes again up. As a result of both that’s one thing that your companion has addressed and that’s it, or if it comes up once more, it’s now a sample. And one thing my therapist informed me is that if it’s a sample, it is going to 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 you need to ask your self, “Do you settle for this sample? Are you able to settle for that and cope with 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 you recognize 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 part else is okay or there’s a pair different issues, however “He’s largely nice,” or “She’s largely nice.” I need 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 positively one thing to consider.
Should you’re listening to this episode and also you’re excited about your individual relationship and considering, “Ooh, I’m feeling seen,” it is best to discover that just a little bit extra. And I’m not saying that you could break up. I’m saying you could discover your relationship. Relationships may be healed. They are often repaired generally, however generally 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 really like males and I feel there are good males on the market. The sample factor may be so exhausting as a result of I discussed there have been household points and the primary time this difficulty occurred was proper after we received engaged and we went by means of remedy to resolve that difficulty. And I used to be like, “Nice, that’s been resolved.” After which the subsequent time this difficulty got here up in an enormous means was years later, so I didn’t acknowledge it was a sample at the moment. I recognized it as a brand new difficulty.
And so when my therapist helped me acknowledge that it was a sample and he or she informed me, “Listed below are your solely two choices,” I used to be like, “That’s it or is there not one other? The place’s the third possibility? As a result of these choices suck, woman.” However yeah, you actually must 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:
Properly, let’s speak about 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 really solely began with 5 models that we needed to divide and that’s as a result of we bought most of our models final yr 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 models this yr. We had two single household homes in Kentucky, a duplex in Kentucky, after which an enormous 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’d usually spend. We additionally can not transfer, switch, promote, make investments any of our belongings or cash, so for seven months throughout my divorce… sure. For seven months, I used to be not legally allowed to put money into rental properties or syndications.

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

Rachel:
I do know. However the entire level is we will’t be making strikes on our belongings that’s going to influence how we cut up our belongings, 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 applications 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 pressured us to maintain them vacant for months and we misplaced 1000’s and 1000’s of {dollars} this yr 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 one household home in Denver.

Mindy:
After which if you bought 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 yr. I’ve joked about it with my pals as a result of as you recognize I gave that speech at BiggerPockets Convention the best 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 belongings have been going to be divided, I texted my pal group and I used to be like, “Tips on how to downsize from 38 doorways to 2 in a single yr, break up. Observe me for extra actual property investing recommendation.” Probably not. I imply, we bought most of them, however I do really feel just a little self-conscious as a result of I simply hope that my followers and college students don’t assume it takes away from my credibility. I imply, I don’t assume it does.
I nonetheless have achieved what I’ve achieved. I nonetheless have the information and experience and assets and community. And I do need to construct my portfolio again up just a little bit extra subsequent yr, to not show something, however as a result of I like actual property and the monetary advantages and I need to have extra properties. However some individuals will have a look at my trajectory and assume, “Who’re you to show these items 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 very 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 subsequently, don’t know what you’re speaking about, they’re not going to hearken to you anyway, in order 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 a whole lot 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 may do what different individuals do and say, “Oh, I personal 1,065 doorways as a result of I’m in 9 syndications.” I assume I may do this, but-

Mindy:
You possibly can do 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 what you are promoting? You had Cash Honey Rachel is… I imply I don’t have a look at Cash Honey Rachel and assume, “Oh, that’s Rachel and her husband.” I feel that’s Rachel solely, so was that impacted by the divorce?

Rachel:
My enterprise was positively impacted in a number of methods. It was impacted by way of revenue. I’m down about 60% in revenue yr over yr and this was some of the annoying components of my divorce. It was June once I received an e-mail from my lawyer and he notified me that my ex wished 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 complete time I simply wished 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 this stuff, 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 return 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 give up 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 may legally. He determined to get a enterprise valuation.

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

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

Mindy:
Yeah, yeah. Let’s speak about that.

Rachel:
Okay, so when we’ve got to divide our belongings, simply so everyone seems to be conscious of what that basically means. If anybody is listening and also you personal a enterprise, whether or not it’s a rental property enterprise, a facet hustle, you’re an creator, any form of enterprise, when we’ve got to divide our belongings, we’ve got to agree on a worth for every part. Except one thing belonged to us previous to marriage, making it a premarital asset, then every part else will get cut up 50/50. Solely the premarital belongings are protected.
Him placing a worth on my enterprise meant it will get cut up 50/50. It meant one other line merchandise on my facet of the stability 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 will come again as.
Let me simply say this yet 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 may 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 doable? Can’t one thing be carried out?” And I used to be like, “No, nothing may be carried out.” That’s once I mentioned the one factor that would have been carried out is that if I had a prenup and in order that’s the place we will speak about prenups.

Mindy:
Earlier than we discuss in regards to the prenup, let’s discuss in regards to the enterprise valuation. Now, this seems like a authorized course of or there’s a proper process for getting this carried out. You give your financials and what you are promoting info to a 3rd celebration they usually’ve evaluated. You may’t simply say, “Hey, it’s value a greenback.”

Rachel:
Proper. Yeah. We needed to rent a joint skilled, any person that we each agreed on and that is usually a CPA. Any individual that has carried out 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 really decrease than I assumed it will be. It was so low that I cried blissful tears. And I keep in mind considering, I’ve cried day-after-day for six months and I’m really crying blissful tears proper now. And I feel I used to be crying and laughing like a loopy particular person 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 blissful. Can he protest it or is that simply, “Oh, I assume it’s value a greenback now?”

Rachel:
He may. He may protest it. He may have had a person skilled. His personal skilled CPA have a rebuttal report, however we didn’t have sufficient time to do this earlier than the mediation. And I may have carried out the identical factor. I really did have a rebuttal skilled 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 any person are available and say, “Truly, no. It’s value means decrease.” However I didn’t want that particular person to do this.

Mindy:
Was it at all times a given that you’d have the ability to retain possession of this enterprise?

Rachel:
Just about. Sure, as a result of there’s actually no world through which a choose would have checked out every part I had contributed and brought my enterprise away from me. It was fairly clear reduce 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 need to make it possible for it was by no means on the desk that he may proceed that can assist 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 need to proceed to be 50% proprietor.”

Rachel:
No, no, that might not have occurred in my case. It may 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 what you are promoting. Was every part cut up 50/50?

Rachel:
Solely marital belongings are cut up 50/50. And once more, marital belongings 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 a whole lot of errors and we’re going to speak about many of those errors. Once more, every celebration will get to maintain their very own premarital belongings, 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 development in these retirement accounts through the marriage, that’s a marital asset.
To begin with, mistake primary is that, and I can’t even imagine 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 any person 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 belongings as a result of he was now a joint account proprietor on them. So, I took away my very own premarital belongings. And it wasn’t a lot, it wasn’t a lot. Thank goodness for that. However nonetheless, I took away my very own premarital belongings. 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 unsuitable with that, however what I did is that I didn’t assume 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 imagine 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 just a little bit bigger than mine after 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 infinite 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 may have mentioned, “Properly, the retirement must be divided up evenly.” I may have mentioned that, however as a substitute I selected to that I wished to stroll away with the syndications as a substitute of retirement belongings, so that’s the means it was negotiated. However once more, I may have began issues out and if I had simply had a unique outlook and been extra good 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 is just not 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 belongings was his truck. And after we received married, and this was a pleasant Dodge Ram, like a $50,000 automotive. Once we received married, I didn’t assume to place the title into each of our names. It was at all times in his title. However I bought 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 after 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 may do as a result of the title was in his title. Once more, simply you need to take into consideration this stuff. You must shield your self. That’s a number of the errors with the best way the marital belongings have been cut up and the best way 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 concentrate on?

Rachel:
Yeah.

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

Rachel:
Precisely.

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

Rachel:
No, positively 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 really a fairly large misunderstanding for most individuals. Once more, the cash you earn throughout your marriage is just not 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, regardless 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 greatest remorse.

Mindy:
I don’t have one both.

Rachel:
Properly, 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, “Should you carry this up once more, we’re not getting married.” And since I assumed 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 awesome episode. If you’re excited about getting married, in the event you’re listening to this and excited about getting married, hearken to that episode. It’s not a plan for divorce. It’s a plan for the way your marriage goes to work. And he offers some actually nice suggestions. He’s received a e book popping out about all of these suggestions, however he’s not on this present at present. I simply need to be certain that all people listens to that episode.
What was your stance on prenups earlier than you bought married?

Rachel:
Properly, clearly, I didn’t assume it was obligatory.

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 belongings and our internet value was not considerably totally different. So I actually, I didn’t assume it mattered. I didn’t assume it was related. I did give it some thought. I simply didn’t assume it was related. However to start with, that was simply the case after 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 begin, what e book you’re going to jot down. 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 begin an actual property empire throughout your marriage and that’s what a prenup can shield. If I had a prenup that mentioned any books I write or any enterprise I begin associated to that’s mine and mine alone, we’d not have been on this mess. And there may be actually a lot ache and stress and nervousness that we’d have prevented had we had a prenup. And that’s the greatest mistake, absolutely the greatest mistake I made. And now I firmly imagine that everybody ought to have one.

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

Rachel:
As a result of we’ve got to have 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 real looking. And I by no means thought I might be in that fifty%. None of us do, by no means in 1,000,000 years, however that is purely threat administration, okay? Consider it as threat administration. Your odds are 50%.
So, for instance, Mindy, you’ve automotive insurance coverage, proper? Okay. It’s not since you assume 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 danger of different individuals. It’s as a result of it’s good to guard your self simply in case one thing unhealthy occurs to you that you may’t management.
You wouldn’t enter right into a enterprise partnership and not using a authorized contract outlining what occurs if issues go unhealthy. You wouldn’t enter into an actual property deal and not using 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 is going to. 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 unique sexual orientation. Somebody desires one thing else out of life. Individuals change. You may’t management it. After which what are you speculated to do?
You may keep the identical particular person and uphold your vows until the day you die, however you need to handle the danger that somebody may change in your marriage and that’s outdoors your management. And yet another factor I’ve to say on this as a result of I do know I’m very keen about this. Right here’s the factor. You have already got a prenup. It’s the one which the state offers. You have already got a authorized settlement. It’s the one which the state offers you. And I guess it’s not very favorable. I guess it’s not what you’ll 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 might be topic to the federal government’s needs and whims.
And take it from me, It’s significantly better to return to a loving settlement now than it’s to battle over funds when there are two offended and damage individuals. It’s one thing you do out of affection for the particular person you might be marrying since you are good sufficient to acknowledge that there’s a stage of threat. And so, that’s all.

Mindy:
That may 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 very crappy factor that you just went by means of and you might be right here at present to share with everybody who’s listening who is perhaps excited about it or in a relationship the place they’re beginning to query what’s occurring or just simply inquisitive about what occurs in a relationship when it ends. You’re right here to share your story so individuals can be taught 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 fees are nonetheless coming by means of. 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 thus far has been $17,000. I imagine my ex’s have been dearer. 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 a whole lot of {dollars}.

Rachel:
Properly, I really feel that we may have simply mediated as a substitute of hiring attorneys and we may have achieved the identical end result and that’s what I hoped for at first. And we may have saved some huge cash. We most likely may have saved 35 to 40K, and I do assume that’s one other mistake. It’s not my mistake. I feel that’s my ex’s mistake, however that’s an possibility. 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 assume your greatest errors have been?

Rachel:
Properly, I positively 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 creator. I educate individuals the best way to advocate for his or her self. And if somebody as good 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 means of was realizing perhaps there’s a motive for my struggling. Possibly my errors will assist another person keep away from this ache sometime. Possibly I’ve this voice and platform for this causes, however nobody ever has to endure in a relationship or marriage or divorce after which really feel helpless the best way I did financially and legally. So, please, hearken to my errors and be taught from them.
Considered one 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 is just not placing belongings, titles into each of our names like his truck. After which the most important mistake is just not 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 mean you can do this, so cease.

Rachel:
Thanks.

Mindy:
I may additionally say, “Hey, I don’t know what you’re doing unsuitable. The whole lot I do is ideal. Have you ever seen my price range?” And all people, 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 any person who’s in the same place, who isn’t a finance professional, who is meant to know every part, and by the best way you possibly can’t know every part, will hearken to this story and say, “Hey, perhaps I’m not such a large number up as a result of Rachel is meant to know every part and he or she 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 will be very low. I feel that lots of people are like us. I’m not going to get a prenup. I’ve nothing to avoid wasting. 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 ceaselessly, so there’s no motive for me to get a prenup. And I feel that you just’re not even near alone on this state of affairs. I might be very stunned if 10% of my listeners had prenups. I feel that they’re not that frequent, even on this explicit state of affairs.

Rachel:
They’re frequent I guess amongst divorcees.

Mindy:
You understand what? I feel they’re. I completely assume they’re. However I feel that-

Rachel:
My enterprise coach, I used to be speaking to him earlier this yr 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 a whole lot of issues proper. I used to be within the know concerning all of our funds. I used to be the one which saved observe of our accounts, our logins, our balances. I saved observe 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 assumed was useful to simply have my very own private bank card that he didn’t have entry to.
I selected an awesome lawyer. I selected any person logical who was not attempting to select fights to select fights or spend pointless cash. He did an awesome job advocating for me. One factor I’m happy with myself for doing is mediating and coming to an settlement at mediation, although 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 possibility, 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 yr, that might have been 2023 and it will’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 capable of transfer on quite a bit quicker and I’m ready to earn more money. 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 residing my life the best way I need to dwell it. Coming to an settlement in mediation, although 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 appreciate. I imply, this was simply finalized. To comprehend so quickly afterwards that sure, I may have gone to courtroom, I may have doubtlessly gotten more cash out of it, however then it will’ve value me extra time, extra psychological anguish, extra every part on this extended, for what? How rather more would you’ve actually gotten? A whole bunch of 1000’s of {dollars} extra? You need 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 essentially stick it to him.
And that, the maturity to simply settle for the mediation that’s given to you, “You understand what? I’m simply going to do it and be carried out, as a result of then I can transfer on with my life.” That’s so profound and good and I don’t know that I might have been that profound or good, so that you’re higher than me.

Rachel:
My dad helped me quite a bit and he was simply attempting to construct me up going into mediation and he simply saved saying, “You’ve already received. He can take every part and also you’ve already received.” And the factor I’m happy with reminding myself of is that that was true. He may have taken our whole marital property, however what he may by no means take away is my potential to construct all of it again. He can’t take away my information, my drive, my ardour. None of that he can take away. He can’t contact me. He may 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 mentioned you had separate bank cards. Was {that a} aware selection?

Rachel:
Probably not. I don’t assume it was unconscious or aware. It was simply one thing we had at all times carried out. We had joint bank cards for the enterprise. I assume, I don’t know if it was even within the LLC title 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 may see one another or at the very least I had entry to his as a result of I managed the entire logins and the entire funds. However I don’t assume he ever may actually see mine or cared to. I might have given him my logins if he had wished them. However sure, we did have separate bank cards.

Mindy:
Emotionally, what was this course of like?

Rachel:
There may be positively no exaggerating that this was the darkest yr of my life. And I do acknowledge that. To say that’s privilege as a result of individuals have gone by means of quite a bit worse and I’m fortunate that I hadn’t gone by means of 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 means of divorce will know you’re additionally grieving since you don’t simply lose the particular person you like, you lose your entire life you thought you’ll 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 companion. 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 really unimaginable. After which including to that’s the absolute horror of somebody you like turning in opposition to you and hurting you, coming after you, attempting 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 particular person 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 holding it collectively and attempting to run my public dealing with enterprise as a result of I’ve a whole bunch of 1000’s 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 carried out. 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 you recognize, 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 possibly can see. There’s a whole lot of therapeutic to do. I’m working with my therapist nonetheless. And even though I can proceed to attain quite a bit and hit massive milestones in my enterprise, I’m nonetheless struggling. And that’s okay. I don’t count on to really feel higher in a single day. No achievement goes to carry the crushing weight of melancholy or carry 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 can be okay. You’ll thrive, and you’ll come out on the opposite facet even higher than earlier than.

Rachel:
Thanks.

Mindy:
However getting by means of it sucks.

Rachel:
It sucks.

Mindy:
And it’s the slog that you need to do. Properly, come again to Longmont. My women would like to be taught extra about monetary independence from you as a result of they don’t hearken to me in any respect. Severely, if you wish to really feel higher about your self, hearken to my women speak about how wonderful you might be.

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

Mindy:
Take them. However critically, you might be doing a whole lot of good. You might be instructing individuals the best way to change their monetary lives. You’re exhibiting individuals that you may 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 longer term. You may change your funds. All you need to do is hearken to Rachel.

Rachel:
Thanks.

Mindy:
Okay, Rachel, you might be implausible. I really like you. I’m so blissful that you just got here on this present at present. Properly, I can’t actually say that. I’m so blissful that you just shared this with me. It’s not a enjoyable subject, but it surely’s a subject that we have to speak about. 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 may do to try 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 at all times fairly.
If you’re excited about getting married, hearken to Episode 301 and discuss to your companion a few prenup. It isn’t a plan for a divorce. It’s a plan for the way you’re going to deal with your funds. And it’s additionally a technique to shield each of it is best to the wedding not work out, ought to any person change, ought to one thing occur. And like Rachel mentioned, 50% of marriages finish in divorce. You want a plan to guard your self.
Properly, I feel that could be a good place to finish this episode. Rachel, thanks a lot in your time at present.

Rachel:
Thanks.

Mindy:
Rachel, the place can individuals discover you? She is Rachel Richards and yow will discover 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 speak about passive revenue in any respect, however that’s what I’m identified for, so if anybody want to obtain my Passive Earnings Starter equipment without spending a dime, I’ll give that without spending a dime at present. 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.