Posts Tagged ‘DailyFinance’


Daily Finance Article: 10 Financial ‘Rules’ You Should Start Breaking Now

Friday, September 19th, 2014

10 Financial ‘Rules’ You Should Start Breaking Now

By: Robert Pagliarini from Daily Finance

You should always max out your 401(k) and save for your kid’s college education in a 529 plan, right? Maybe not. Most experts have long touted a number of practices that may actually be working against you. These are the top 10 money rules you should break – and what you should do instead.

  1. You need six months of living expense in cash

This is the granddaddy of them all. Start to type “emergency” into Google (GOOG), and the first suggestion is “emergency fund.” The rule is to make sure you have six months of living expenses tucked away in cash in case you lose your job or suffer a financial setback. Of course it’s important to have a financial safety net, but when you earn virtually nothing on your cash, this rule can cost you. For example, if six months of living expenses for you is $25,000, you’d be sacrificing close to $1,000 of income a year by keeping this money in a checking or money market account.

For years, I’ve broken the mold on this financial rule by telling clients they shouldn’t have their emergency fund in cash. Instead, choose a short-term bond fund that pays 3 percent or higher for your safety net. If you need the money quickly, you can easily sell the fund and get access to the cash. If you don’t need the cash – and these emergency fund accounts are rarely used – you can still make money on the assets.

  1. Max out your 401(k)

Not so fast. There are many good reasons to contribute to a 401(k), such as tax savings, tax-deferred growth and a possible employer match, but there are also good reasons not to contribute as well. Don’t blindly dump money into your 401(k) if you don’t have an emergency reserve of some sort and there is a chance you will be laid off. It is taking longer for most to find a job, so if you think you may be out of work, make sure you have the resources to pay rent and buy food until you land a new job.

​Also, if your employer doesn’t provide a match and you are in a low-income tax bracket, it may make more sense to pay the tax now (since you are in a low tax bracket) and invest in a Roth individual retirement account instead. Use this 401(k) vs. Roth IRA calculator to crunch the numbers.

  1. They key to financial success is cutting expenses

You cannot cut your way to wealth. Too many people and financial advisers focus on trimming expenses when they should be focused on the other half of the equation – income. I’m a proponent for living within one’s means, but too often that creates an artificial barrier or ceiling. “This is what I make, so I have to cut back to save more,” is often the thought process. Rather than living within your mean, work on increasing your means.

There are many ways you can make more money, including asking for a raise, boosting your skills – your human capital – and getting a promotion, starting a side project in the after-hours or going back to school and starting a new career. What you make today is not necessarily what you can make tomorrow. Cut unnecessary expenses and then use your energy to increase your income.

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Daily Finance Article: 10 Easy Ways To Hide Assets From Your Spouse

Wednesday, April 2nd, 2014


10 Easy Ways To Hide Assets From Your Spouse
By: Robert Pagliarini for Daily Finance

Financial infidelity and lies are all too common in marriages. One in three people admitted to financial infidelity against their partner, according to a January poll for the National Endowment for Financial Education. And that’s just the ones who admitted it. So can you imagine the deception that can occur during a divorce?

Unfortunately, I don’t have to imagine. As a divorce financial planner who often works with the “out spouse” –- the term for the partner in a marriage who was never plugged in to the finances, managed the cash flow, paid the bills or had relationships with the CPA, financial adviser, or attorney. I’ve seen financial deception firsthand as the more savvy and informed “in spouse” tries to cover up cash, hide investments and fabricate expenses and debts.

If you are considering a divorce or in the middle of one –- especially if you are the out spouse -– you need to look for financial deception because it can dramatically affect the assets you obtain and the marital and child support you receive. Although failing to fully and truthfully disclose all assets and liabilities is a crime, don’t count on that to deter your soon-to-be ex-spouse.

The best way to catch a criminal is to think like a criminal. So, to help you get into the mind of a soon-to-be ex with their mind on taking you to the cleaners, here are 10 ways I could hide assets and income from my spouse in a divorce:

1. Transfer assets to a separate account. This is simple and common. Here I would take money from our joint bank and brokerage accounts and transfer them to an account only in my name. Fraudulent? Yes. Effective? Absolutely.

2. Transfer assets to a friend. In a joint bank or brokerage account, both parties have full control over the assets. I could systematically transfer cash and/or investments to a buddy’s account, and then once the divorce is finalized, he or she could transfer it back to an account in only my name. The advantage in transferring the assets to a friend is that when I am legally obligated to report marital assets, these transferred assets are not technically part of our marital property.

3. Overpay the Internal Revenue Service. With a little planning, this is a terrific way to shield assets; and if caught, it’s easy to play the “aw shucks, I totally forgot about this” card. If I knew I was going to file for divorce next year, I could instruct the IRS to use this year’s refund for next year’s tax. Once the divorce is final, I’d have a fat overpayment with the IRS that I could use against future tax.

4. Take cash withdrawals on debit cards. This one starts with “Honey, I’m going to the store” and ends with “Yes, I would” when asked if I want cash back. Although I probably won’t get rich, given enough time I could amass a decent stockpile of cash by taking $60 or $80 every time I am at the grocery. The beauty is that the cash goes under the radar because the total charge shows as groceries.

5. Turn down promotions and raises. If I am friendly with the boss, I would tell him or of my forthcoming divorce and ask that they delay any promotions and set any raises/bonuses aside until after it was finalized.

6. Accrue commissions. If I closed a big deal and was anticipating a large commission payment, I would let my employer know that I wanted to delay receipt for… tax purposes.

7. Forget about employer retirement accounts or stock options. Memory is the first thing to go with age. How could I be blamed for forgetting about a defined benefit plan, ESOP or stock options I own through my employer? I mean, they hardly ever send statements.

The above tactics are child’s play compared to strategies available when you own your own business.

8. Not invoice clients. It wouldn’t be difficult to delay invoicing clients until after the divorce. Although accounts receivables would be accrued assets, this is easier to hide than cold hard cash.

9. Create fake expenses. “Yes dear, I’d love to give you more money but my business is struggling …” thanks to the fact that I’ve created fake expenses, pre-paid vendors, added my cousins to payroll and started paying friends for their “consulting” expertise.

10. Go on a shopping spree. Have you seen the new $100,000 piece of art in my office? Well you would. I’d buy all kinds of personal items and charge exotic vacations to my company, which would quickly soak up any profit that could be divided in the divorce.

I need a shower after dreaming up this list. People hiding assets in a divorce is a real and pervasive problem, but those who do it can only get away with it if their spouse stays in the dark. So if you are the out spouse, it’s time to get more plugged into your finances. If you are going through a divorce, don’t accept your soon-to-be ex’s financial disclosures at face value. Do some digging, and get your attorney and divorce financial adviser involved. If there are significant assets or a company, hire a forensic accountant.

One last thing: If you are disgusted by my criminal ideas and worried for my spouse, don’t be. She’s a certified fraud examiner. If I surreptitiously tossed a coin in a fountain, she’d discover it before it hit the water.
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Daily Finance’s article “10 Easy Ways To Hide Assets From Your Spouse” has a deceiving title.  If you are looking to hide assets from your spouse, you should really consider the legal ramifications in committing fraud.

Understanding your finances is essential in a marriage and, even more so, if you are going through a divorce.  When the stress of handling money, or lack of, becomes too much, it’s easy to hand over the reins and never look back.  But turning your back on your financial future can be highly destructive.  Always stay involved, no matter how stressful it can be.  You don’t want to be surprised in a divorce that your spouse has hidden all your assets or worse… used it all up!

People do strange things when faced with an impending divorce, including everything Daily Finance listed.  Keep yourself safe and informed!

If you need assistant with your divorce and have concerns that your assets are being drained, hidden or stolen, please call our office.

Law Offices of Steven B. Chroman, P. C. Santa Clarita Divorce
Call 661-255-1800 for your free initial consultation today!