Mindy:
Welcome to the Greater Pockets Cash podcast the place I interview Rachel Richards about divorce, splitting vital 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 occasion 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 in the course of the marriage, that’s a marital asset. So initially, 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:
Good day, hey, hey. 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 imagine 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 huge time investments in belongings like actual property or begin your individual enterprise, I’ll allow you to attain your monetary objectives and get cash out of the best way, so you possibly can launch your self in direction of your goals.
At present, I’m speaking with Rachel Richards. It’s possible you’ll know her from Greater Pocket’s Cash Episode 317 and from her books, Passive Earnings, Aggressive Retirement and Cash Honey. Earlier than we usher in Rachel, let’s take a fast break.
And we’re again. Prior to now, we now have talked to Rachel about her cash story, however at the moment, we’re going to go a little bit bit extra private. The truth is, we’re getting actually private with Rachel at the moment. We’re speaking about divorce and the most important monetary classes she realized whereas going via one lately. Rachel, welcome to the Greater Pockets Cash podcast.

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

Mindy:
Properly, I don’t actually chew, 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 stated, love doesn’t at all times conquer all and generally 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 simplest ways I can clarify it’s that we needed various things out of life and it didn’t begin that approach. 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 crew working in direction of that and I talked loads 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 ok. I do want he had figured that out sooner, however that’s not what occurred, so he kind 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 turned exhausting for me. And I felt that he was indignant with me that I needed to proceed to drive ahead and that I had these objectives. And there are lots of different huge vital the explanation why we didn’t work out. There have been household points, there have been issues we tried to work via in remedy, however for me, I actually assume that the misaligned imaginative and prescient is what it boils all the way down to.

Mindy:
Being on the identical web page could be actually, actually useful. And while you’re not on the identical web page, that doesn’t essentially imply that both of you is flawed. You’re simply completely different. And there’s lots of people who aren’t going to be on the identical web page as you, nevertheless it looks as if when one in every of you desires 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 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 tough to compromise on. One among you goes to have to surrender what you needed and that’s exhausting. How outdated are you now?

Rachel:
I simply turned 30 this yr.

Mindy:
Okay. That’s a very long time to compromise and quit the whole lot you need and be primarily 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 presupposed to determine it out. That’s what married {couples} do. You’re simply presupposed to discover a approach. And I stored pondering, I simply must strive 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 truth and to comprehend 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 needed it to go. What does actually? Who comes from their divorce that’s like, “Sure, I obtained the whole lot I needed.” That by no means actually occurs. However are you able to shed some gentle on what you didn’t assume went your approach?

Rachel:
For positive. 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 contented, enjoyable subject. And that’s okay, as a result of generally it’s important to focus on not comfortable, enjoyable issues.

Rachel:
I hoped for an amicable divorce, for positive 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 huge 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 tip, I really feel like we each tousled huge 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 advised 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 dad and mom greater than my mates now as a result of my pal’s dad and mom have been divorced. And I’m like, I’m so younger, so I’m speaking to my pal’s dad and mom. However my pal’s dad advised 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 may be very sadly correct.
So, I’ve needed to discover loads of empathy. I’m not bitter, I’m not resentful, I’m not indignant, 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 possibly it wasn’t anybody’s fault or that we by no means ought to have gotten married as a result of that may be a exhausting tablet to swallow.

Mindy:
With the good thing about hindsight, do you see clues that possibly it wasn’t going to work out now that you would be able to 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, “Properly, how might I’ve seen this coming?” And she or he advised me, I wager for those who assume actually exhausting, there have been indicators that have been there very early on, that one thing was flawed, that he would ended up treating you this manner. 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 methods to acknowledge these crimson flags early on in different relationships,” or if I do determine to begin relationship 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 a giant mistake that I made.

Mindy:
What’s one thing that you can have executed in another way or what’s one thing that somebody who’s listening to this present now can do to audit their very own relationship to really 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 crimson flag that comes up or the primary problematic conduct that comes up in a relationship would be the purpose 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. For those who 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 short lived 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 associate has addressed and that’s it, or if it comes up once more, it’s now a sample. And one thing my therapist advised me is that if it’s a sample, it’s going to preserve persevering with. It’s both been resolved as soon as and for all or it’s a sample and it’ll preserve 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 cope with it?” Or the one different resolution 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 while you’re within the love bubble and the whole lot else is ok 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.
For those who’re listening to this episode and also you’re serious about your individual relationship and pondering, “Ooh, I’m feeling seen,” it’s best to discover that a little bit bit extra. And I’m not saying that it’s essential break up. I’m saying it’s essential discover your relationship. Relationships could 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 could 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 obtained engaged and we went via remedy to resolve that difficulty. And I used to be like, “Nice, that’s been resolved.” After which the following time this difficulty got here up in a giant approach 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 she or he advised 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 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 discuss actual property. You might be identified on 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 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 below a courtroom injunction to do many issues. To not spend greater than we’d usually spend. We additionally can’t 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 are able to’t be making strikes on our belongings that’s going to impression 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 huge actual property investor and coach and I’ve applications after which I’m educating 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 conform to put new tenants in these properties. He pressured us to maintain them vacant for months and we misplaced hundreds and hundreds 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 stored the duplex in Kentucky and he stored the one household home in Denver.

Mindy:
After which while 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 mates as a result of as I gave that speech at BiggerPockets Convention methods to scale from zero to 38 doorways in below 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, “How you can downsize from 38 doorways to 2 in a single yr, break up. Comply with me for extra actual property investing recommendation.” Not likely. I imply, we bought most of them, however I do really feel a little bit 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 data and experience and assets and community. And I do wish to construct my portfolio again up a little bit bit extra subsequent yr, 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 assume, “Who’re you to show these things while 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 take heed to you anyway, in order that they’re going to search for causes to not take heed to you. There are many individuals on the market who will see that you just did at one level have 38 doorways. That’s loads 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 assume I might try this, but-

Mindy:
You may 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 way 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 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 undoubtedly 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 worrying elements of my divorce. It was June once I obtained an electronic mail from my legal professional 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 practically simply screamed. I simply felt this complete time I simply needed to do what was honest and affordable.
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 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 positive of that. I made positive 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 guide 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 couple of prenup or lack thereof.

Rachel:
Sure. And earlier than we get into that, I wish to simply say a little bit 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 we now have to divide our belongings, 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 we now have to divide our belongings, we now have to agree on a price for the whole lot. Except one thing belonged to us previous to marriage, making it a premarital asset, then the whole lot else will get cut up 50/50. Solely the premarital belongings are protected.
Him placing a price on my enterprise meant it will get cut up 50/50. It meant one other line merchandise on my aspect 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 possibly 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 one more time. Legally, my ex was entitled to 50% of my enterprise as a result of we have been married, interval. There’s nothing I might do about it. And I keep in mind telling a few of my shut mates about this and I keep in mind telling you about this, Mindy, at one level, and also you have been so indignant for me and also you have been like, “How is that doable? Can’t one thing be executed?” And I used to be like, “No, nothing could 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 are able to discuss prenups.

Mindy:
Earlier than we discuss concerning the prenup, let’s discuss concerning 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 info to a 3rd occasion they usually’ve evaluated. You may’t simply say, “Hey, it’s value a greenback.”

Rachel:
Proper. Yeah. We needed to rent a joint knowledgeable, someone that we each agreed on and that is usually a CPA. Any individual 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 obtained the valuation again on October seventh, 10 days earlier than our mediation and the valuation was really decrease than I believed it will be. It was so low that I cried comfortable tears. And I keep in mind pondering, I’ve cried day by day for six months and I’m really crying comfortable 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 comfortable. Can he protest it or is that simply, “Oh, I assume it’s value 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 really 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, “Really, no. It’s value approach decrease.” However I didn’t want that particular person to try 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 by which a decide would have checked out the whole lot 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 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 wish to proceed to be 50% proprietor.”

Rachel:
No, no, that will 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 obtained 50% of your corporation. Was the whole lot cut up 50/50?

Rachel:
Solely marital belongings are cut up 50/50. And once more, marital belongings are something which might 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 loads of errors and we’re going to speak about many of those errors. Once more, every occasion 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 in the course of 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 while 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 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 crew and I noticed us as a crew, while you’re married, that’s the wholesome mindset to have. There’s nothing flawed 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 in the course of 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 a little bit 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 many of the years we have been married, as an alternative of mine. So, his accounts grew a lot greater than mine did.
And now, in our divorce I might have stated, “Properly, the retirement must be divided up evenly.” I might have stated that, however as an alternative I selected to that I needed to stroll away with the syndications as an alternative of retirement belongings, so that’s the approach it was negotiated. However once more, I might 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 state of affairs 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 just isn’t as huge of a deal, nevertheless it’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 once we obtained married, and this was a pleasant Dodge Ram, like a $50,000 automotive. After we obtained married, I didn’t assume to place the title into each of our names. It was at all times in his identify. However I bought my automotive two years in the past and we turned 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 this stuff. It’s important to defend your self. That’s a few 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 consider?

Rachel:
Yeah.

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

Rachel:
Precisely.

Mindy:
If the whole lot had been stored separate, even in the course of the marriage, would your entire 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 in the course of 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 just 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 defend 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, “For those who carry 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 important episode. If you’re serious about getting married, for those who’re listening to this and serious about getting married, take heed to that episode. It’s not a plan for divorce. It’s a plan for the way your marriage goes to work. And he provides some actually nice ideas. He’s obtained a guide popping out about all of these ideas, however he’s not on this present at the moment. I simply wish to make certain 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 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 belongings and our internet value was not considerably completely 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 initially, that was simply the case once we obtained engaged.
By the point we obtained married, we had invested in leases collectively. Our wealth had considerably modified and I did not ever rethink the prenup state of affairs, 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 vital factor, you don’t know what companies you’re going to begin, what guide you’re going to put in writing. And besides I had already written my first guide by then, however once more, it didn’t cross my thoughts. You don’t know for those who’re going to begin an actual property empire throughout your marriage and that’s what a prenup can defend. 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’d not have been on this mess. And there may be actually a lot ache and stress and anxiousness that we’d have averted 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 now have 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 one million years, however that is purely danger administration, okay? Consider it as danger administration. Your odds are 50%.
So, for instance, Mindy, you might have 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 will 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 would be able to’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’s going to. So, why are we defending ourselves legally and financially in each circumstance in life apart from marriage? We can’t management different individuals.
Consider the issues which might be outdoors of our management in a wedding, and I’m not saying any of this is applicable to my state of affairs, 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 presupposed to do?
You may keep the identical particular person and uphold your vows until the day you die, however it’s important to handle the danger that somebody might change in your marriage and that’s outdoors your management. And yet one more 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 wager it’s not very favorable. I wager it’s not what you’ll need, so if you wish to defend your self, you higher write up the pre prenup that you really want and that you just conform to or else, you’re topic to the federal government’s wishes and whims.
And take it from me, It’s significantly better to come back to a loving settlement now than it’s to battle over funds when there are two indignant and damage individuals. It’s one thing you do out of affection for the particular person you’re marrying since you are good sufficient to acknowledge that there’s a degree of danger. And so, that’s all.

Mindy:
That could be a nice quote.

Rachel:
Thanks.

Mindy:
It’s significantly better to do it while you’re all nonetheless mates.

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 via and you’re right here at the moment to share with everybody who’s listening who could be serious 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 via. I simply obtained 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 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 loads of {dollars}.

Rachel:
Properly, I really feel that we might have simply mediated as an alternative of hiring attorneys and we might have achieved the identical consequence and that’s what I hoped for to start with. And we might have saved some huge cash. We in all probability might 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 undoubtedly simply tousled total. And from a monetary perspective, I failed to guard myself. I did not 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 methods 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 obtained me via was understanding possibly there’s a purpose 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, take heed to my errors and be taught from them.
One among 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 just isn’t placing belongings, titles into each of our names like his truck. After which the most important mistake just 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 permit you to try this, so cease.

Rachel:
Thanks.

Mindy:
I might additionally say, “Hey, I don’t know what you’re doing flawed. Every little thing I do is ideal. Have you ever seen my funds?” And all people, who has seen my funds 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 the whole lot, and by the best way you possibly can’t know the whole lot, will take heed to this story and say, “Hey, possibly I’m not such a large number up as a result of Rachel is meant to know the whole lot and she or he made errors, too.” So,, possibly 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 share 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 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 endlessly, so there’s no purpose 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 shocked if 10% of my listeners had prenups. I feel that they’re not that frequent, even on this specific state of affairs.

Rachel:
They’re frequent I wager 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 loads of issues proper. I used to be within the know relating to all of our funds. I used to be the one which stored monitor of our accounts, our logins, our balances. I stored 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 important legal professional. I selected someone logical who was not attempting to choose fights to choose fights or spend pointless cash. He did an important job advocating for me. One factor I’m happy with myself for doing is mediating and coming to an settlement at mediation, despite the fact that I felt it was far, removed from honest. I felt I walked away with far lower than what I ought to have. And I used to be indignant about that in the first place. However the different possibility, if we didn’t conform to one thing in mediation, that meant we needed to go to courtroom and go to primarily a trial, which might have been subsequent yr, that will 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 in a position to transfer on loads sooner and I’m ready to make more cash. And so, giving that up was the most effective monetary resolution 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 wish to dwell it. Coming to an settlement in mediation, despite the fact that 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 understand so quickly afterwards that sure, I might have gone to courtroom, I might have probably gotten extra money out of it, however then it will’ve value me extra time, extra psychological anguish, extra the whole lot on this extended, for what? How far more would you might have 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 understand 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 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 loads and he was simply attempting to construct me up going into mediation and he simply stored saying, “You’ve already received. He can take the whole lot and also you’ve already received.” And the factor I’m happy with reminding myself of is that that was true. He might have taken our total marital property, however what he might by no means take away is my potential 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} aware selection?

Rachel:
Not likely. I don’t assume it was unconscious or aware. It was simply one thing we had at all times executed. We had joint bank cards for the enterprise. I assume, I don’t know if it was even within the LLC identify or each of our names, however we each had separate bank cards, nevertheless it 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 the entire logins and the entire funds. However I don’t assume 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’s undoubtedly 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 via loads worse and I’m fortunate that I hadn’t gone via something worse. I’ve handled melancholy earlier than, however that is melancholy, anxiousness, and grief, all on the similar time. And people listening which have misplaced somebody or been via divorce will know you’re additionally grieving since you don’t simply lose the particular person you like, you lose all the 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 associate. 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 this present day, 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 towards 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 preserving it collectively and attempting to run my public dealing with enterprise as a result of I’ve a whole bunch 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 mates. It was clear to me that I made a huge impact that day and it was such a contented 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 dwelling 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 reduction, an enormous weight lifted off my shoulders. I’m nonetheless not emotionally okay as you possibly can see. There’s loads of therapeutic to do. I’m working with my therapist nonetheless. And even supposing I can proceed to realize loads and hit huge 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 elevate the crushing weight of melancholy or elevate the loneliness that I nonetheless really feel each evening, however I do know that I will probably 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 via it sucks.

Rachel:
It sucks.

Mindy:
And it’s the slog that it’s important to do. Properly, come again to Longmont. My ladies would like to be taught extra about monetary independence from you as a result of they don’t take heed to me in any respect. Critically, if you wish to really feel higher about your self, take heed to my ladies discuss how superb you’re.

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

Mindy:
Take them. However significantly, you’re doing loads of good. You might be educating individuals methods to change their monetary lives. You’re exhibiting individuals that you would be able to 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 take heed to Rachel.

Rachel:
Thanks.

Mindy:
Okay, Rachel, you’re incredible. I really like you. I’m so comfortable that you just got here on this present at the moment. Properly, I can’t actually say that. I’m so comfortable that you just shared this with me. It’s not a enjoyable subject, nevertheless it’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 can do to try to make it work. And it turned 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 while you break up and it’s not at all times fairly.
If you’re serious about getting married, take heed to Episode 301 and discuss to your associate a couple of 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 approach to defend 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.
Properly, I feel that may be a good place to finish this episode. Rachel, thanks a lot on your time at the moment.

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 guide, 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 wish to obtain my Passive Earnings Starter package without cost, I’ll give that without cost at the moment. You may go to moneyhoneyrachel.com/passiveincome to obtain that.

Mindy:
Thanks. Listeners, for those who 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 obtained to shake, rattlesnake.