Planning for the 'Unplanned'
What I didn’t expect to happen in my life following my decision to get divorced:
Father dying suddenly 2 months after the ‘divorce conversation’.
Company layoffs.
Highest increase in mortgage rates in 23 years resulting in a complete standstill of income.
Divorce settlement taking longer than expected further debilitating my financial stability.
Notary business also slowing down drastically as a result of the overall housing market coming to a standstill. This was supposed to help supplement my income.
Absolute standstill in income resulting in very limited opportunities to support myself.
Licensing delays to obtain a mortgage broker’s license to allow me to open my own business. It took 10 months for the state licensing agency to approve my application.
Continued downturn in mortgage industry that still hasn’t recovered in over 2 years.
No health insurance
Depletion of all liquid assets
Legal fees to file a Heggstad Petition to have the title of my father’s house transferred into my name.
Loan fees and mortgage payments once my father’s reverse mortgage was refinanced into my name.
Mentor and business partner suddenly passing away.
That’s a lot. It was a lot to type, let alone experience. And this all happened within a 2-year period - some events only within a few months of moving towards getting a divorce. The emotional stress led to depression. The financial stress triggered physical symptoms such as anxiety attacks, headaches, brain fog, severe stomach cramps, and loss of appetite. Everything I read online about how others navigated these moments of getting through a stressful divorce and grief was to throw themselves into work or personal interest activities. Unfortunately, nothing out there had advice on how to handle divorce, grief, and loss of income simultaneously. So I turned to the gym and that’s what saved me.
My financial training over the years as a loan officer taught me how to prepare for divorce. Being on the other side of the table talking to clients who were either in the process of getting divorced or were already divorced gave me the knowledge to avoid certain pitfalls like making sure to have the savings needed as a nest-egg now that I would be downshifting to only one income. Having been a certified divorce lending specialist, I knew that I was entitled to half of the equity in the marital home because I was not retaining the property. And I knew that paying my creditors on time was an absolute must in order to maintain my credit standing so I wouldn’t become a financial victim as a result of the divorce. This was vital when needing to refinance my father’s home out of the reverse mortgage.
As a result of experiencing this emotional and financial trifecta, any advanced planning I had in place was only able to cover one or two of these events. However, experiencing all three of them simultaneously ended up stretching and stressing me to lengths I could have never imagined were possible.
In hindsight, here are some things that could have better insulated me for this unprecedented moment:
Multiple streams of income. When the mortgage market turned I was actually in the process of researching another business opportunity which would have helped diversify my income. Instead, the funds that were earmarked for that endeavor had to be used for emergency savings. Had I been able to start this business before the market turned this could have provided another viable stream of income. By the time I attempted to register for sites like Taskrabbit, Uber Delivery, and InstaCart there were so many others already signed up that no work was available in my area.
Posses more than one profitable skill. Skilled tradespeople are always in need. This could be anywhere from becoming a handy person, to being a paralegal, to all the various opportunities in IT and digital services, to nursing. I attempted to expand my trade skills by becoming a notary but didn’t appreciate at the time how widespread the housing market would be impacted by the rapid increase in interest rates. Therefore, I paid for the certification but had no work available to help with my income challenges. So be sure to choose an in-demand skill or trade.
Save, save, save, and then save some more! I can’t emphasize this enough. The savings that I had in place, including stock accounts that were liquidated, were originally there to be a safeguard while I steadied my personal ship into the single life with only one household income. The plan always included a steady income flow but when that was stripped away I had to turn to my savings. It got me through the first 6 months. When my father’s property was refinanced I was able to cash out some of the equity but was only approved for half the amount expected and this further hampered the situation. If I had placed more importance on savings over the years, instead of relying on both my income and being in a two-income household for 20 years then that could have better insulated me from the prolonged financial hardship.
Medical leave of absence. At the time my company began laying off the sales team I had just moved into my own apartment. I was still grieving from the sudden loss of my father. The anxiety attacks were starting to occur. Looking back, I should have taken this opportunity to request a medical leave of absence. This would have delayed the layoff and given me the income reassurance needed at this uncertain time. It also would have slowed down the pressure to figure things out. I truly needed a mental time out. Afterwards, I should have allowed myself to be laid off and collect unemployment. But my pride and corporate mindset got the better of me. Instead, I chose to remain with my sales team and make a move together to another company. While I was still receiving a minimum income salary as required by law, I wasn’t earning the six-figure commission I had become accustomed to and was relying on as a part of my new independence plan. On top of that was the added stress to perform as a salesperson in an environment when sales were beyond hard to come by.
Remain on my ex’s health insurance. I was in such a hurry to separate from the relationship that I removed myself from his insurance policy and onto my company’s well before there was any news about upcoming layoffs. This was the first time since being married that I held my own insurance policy. It was always with my spouse previously. Once I was no longer employed - I was also no longer insured. Had I remained on my spouse’s health insurance I could have negotiated to remain covered after the divorce. Fortunately, I was able to obtain basic low-income coverage in the event of a medical emergency.
Hire an estate attorney to prepare by father’s trust. As a result of having worked with countless clients over the years whose family members passed away with the title in their personal name I knew the importance of having a trust. The mistake I made was trying to save money in the process. It seemed like a no-brainer choice: go with the well known online option and spend a couple hundred bucks vs. hiring an attorney to perform (what I thought at the time) the same service and pay several thousand dollars. But there is a difference and it ended up costing more. The online service prepared the trust properly but didn’t include a new grant deed with the name of the trust for my father to sign and be notarized. Instead, their service only included the trust documents. It wasn’t of grave concern at the time because one of my siblings was already in the process of refinancing the home into her name to make much needed renovations to the aging property. The plan was to record an updated grant deed with the refinance. Unfortunately, my father passed away two weeks after notarizing the trust documents before the refinance was completed. However, had the bargain service provided a grant deed in the name of the trust, this could have been included in the documents he signed and notarized. By doing so, the signed and notarized grant deed with the trust name could have still been recorded after his passing. What I later discovered was including a grant deed in the trust name is customary for estate attorneys because they know to plan for the unplanned. They are aware that someone could die after signing the documents and before they have been recorded which results in protecting the asset and avoiding probate proceedings. While having the trust signed and notarized did avoid a full probate, a limited probate or Heggstad Petition had to be filed to transfer the title into the trust and update the deed so I could take over the property. A Heggstad Petition is a legal action which requests the court to consider the intentions of the person prior to their passing. Although we avoided the estimated probate cost of $20,000 - $40,000 in legal fees, the Heggstad Petition still required a $5,000 legal retainer.
Maintaining previously earned licenses and certifications. Prior to facing layoffs and changing companies a few times I had no intention to manage my own mortgage company. When I obtained my real estate/mortgage broker’s license back in 2006 it was for the purposes of having options. Over the years it was rarely used and once moving into the corporate world of mortgage finance there no longer seemed a need to maintain the license so I let it lapse in 2021. A year later I would regret that decision. The upside to obtaining the license again almost 20 years later was there were a lot of changes to the real estate laws and regulations. But I would have gladly taken a refresher course as opposed to starting the process all over again - including retaking the grueling exam!
The overall theme here is you never know what’s lurking around the corner. The only constant in our lives is change. We change. Our circumstances change. Parents pass away. Companies lay people off. Life happens. The solution to not let the storms tip you over, is to know there will be a storm ahead on your life journey and the best plan is to be prepared for when you find yourself in challenging waters.
