Money Talks, LLC Newsletter              October 2010

In This Issue:


Retirement Income and Investment Planner


Marriage and Divorce

Conversations about personal financial security



Acts of kindness or the road to bankruptcy. 


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As the holiday season approaches it's very important to make a plan. Use this handy excel worksheet to  make a money plan for your holidays: Holiday Spending Plan. 

Susan Hammitt, AFC, CDFA


Susan Hammitt

Financial Counselor,  Divorce Mediator,


Life Planning Specialist


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Personal Financial Sustainability

Valuable lives may be grounded in generosity. Unplanned giving can be catastrophic in personal finance. Gifting and other forms of financial generosity are important to consider in financial planning.  Healthy generosity can be funded with reasonable allocations and through volunteerism and acts of simple kindness.

Make a Plan That Works For You!

Retirement Income and Investment Planner


I received a call from a woman asking how she could invest her portfolio and take an $8,000 monthly income distribution for life.  She wanted less stress in her investment strategy.  After considering her concerns I created a spreadsheet as the first step in developing a plan.  It's a terrific tool.  Use your own assumptions for monthly income distribution and number of years for which you are planning.  The spreadsheet will provide useful information for assumptions; asset requirements and target return on investments.  The model is based on dividing your portfolio in three equal parts. 


Click Here To Check It Out! 

Make a Plan!


Marriage and Divorce

Conversations about personal financial security


Recent reports of delayed divorces revolve around real estate values, healthcare concerns, and under-funded retirement plans. I add to that the general sense of security  provided by life partnership. 


Americans are particularly  resistant to conversations about the financial implications of personal relationships. We often avoid critical conversations as our parents age. We try to hide financial challenges from our children. We make financial decisions in the vacuum of privacy. And, we are easily offended talking about the financial partnership of marriage. 


It is my observation that most people who gravitate to life partnership are also attracted to the security of shared responsibilities and life experiences. Is exclusive emphasis on romantic love denial of the total package of life partnership and marriage?


Acknowledgement of the breadth and depth of relationships includes financial implications. It seems pretty naive to deny it.  When a long time friend shows up with a pizza knowing money is tight, a child waits patiently for new shoes, or a partner turns on a Wii game for shared low cost entertainment; the tangled web of connection buoys spirits and eases financial woes.


Some people are delaying divorce for financial reasons. Perhaps it is even reaching into the heart of marriage and curtailing the commitment to divorce.


Building strong financial skills in community fortifies life partnerships and marriage. 



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FinancialGenerosityFinancial Generosity

Acts of kindness or the road to bankruptcy?



Unplanned generosity can be a road to bankruptcy. The challenge is managing a spirit of generosity and preserving personal financial wellbeing.  For many people those two concepts are in direct conflict.  When personal finances are coded in messages that frugality is selfishness; saving is a luxury, and gifts are the ultimate expression of love; it is particularly important to monitor behaviors that may lead to financial devastation. 


Planned giving helps maintain consistency and priorities:

  • First, create an annual expense category for giving/generosity and make a list of everything included in the category. Include pledges to charitable organizations, all gifts, hosted events, and any type of spending for the benefit of others which is not included in your regular cash flow plan.

Here is a true case history of generosity that led to bankruptcy:

Sylvia was buried in debt. She explained to me, "I knew exactly how much I was giving my church and other charities; I pledged those amounts at the beginning of the year."  It was 10% of her $90,000 a year salary.  As we continued the interview it was obvious that her generosity went far beyond pledges.  It was the giving she had not planned that drove her to bankruptcy court.

Sylvia loves to purchase incidental gifts for friends and family.  When I asked how much a typical gift costs she said, "About $10."  Based on her $90,000 income that seemed pretty frugal to her.  I asked how many times she did that in an average month. She responded, "Two or three."

"What do you do for birthdays?" I asked.

She said, "I usually take people out to dinner and purchase a $25 gift. Except for my mom, sister and two best friends, I spend a little more, $50 to $75.

I asked if she entertains and she said, "We have Sunday dinner at my house. There's usually five or six of us."

"Is it a potluck?" I asked.

She chuckled seeing where I was headed. "No, I buy the groceries and my mom and sister help with the cooking."

"How much do you spend on Sunday dinner groceries?"

She replied defensively, "Probably $75 to $100. I refuse to buy alcoholic beverages."

"How about holidays?"

She visibly cringed and began to tear up, "It's going to be really hard this year.  My credit cards are maxed out and I won't be able to do what I have done in the past."

I prompted, "Describe what you have done in the past."

"Well, there are a few people who count on me to help them provide Christmas for their children.  Then, the church does a charity event and they count on me.  I buy a few gifts. Oh, and Mom and my sister and I go out for some kind of Christmas performance and dinner.  It's a tradition."

"How about extra groceries during the holidays?"

"We have Thanksgiving and Christmas at my house.  And, I buy all the makings for a cookie baking party.  I guess I end up spending $300 or $400 on those things."

The final blow was evident when we reviewed her credit report; $112,000 in consumer debt.  No wonder she couldn't make her $1,500 a month house payment!  Three people for whom she had co-signed loans had failed to keep up their payments, she was on the hook. She added, "I try not to use my credit cards to buy stuff, some of that was cash advances for money that I lent to other people."

For 15 years Sylvia has worked for an employer that provided healthcare insurance and matched up to 6% of employee 401k contributions.  At 47, Sylvia only had $3,000 in retirement savings. She had no other savings or reserves.

When we totaled all the gifting Sylvia had done during the previous 12 months we figured it was at least $30,000  not including the debt she absorbed in providing cash to others.

This case is the most extreme I have encountered. However, it illustrates many of the ways generosity can lead to financial disaster and unhealthy relationships.

Remember: Healthy generosity can be funded with reasonable allocations and  supplemented through volunteerism and acts of simple kindness.

Make a Plan for Sustainable Generosity!