Harmonizing Finances in Divorce: A Conversation with Karen McNenny | Pennywise Coaching

Hey everybody, it's Penny Kidd with Penny Wise Coaching. I'm so excited to be with you today, and I wanted to interview Karen McNenny, um, with The Good Divorce Coach. And she actually was so sweet and had me on her podcast. So we wanna hear a little bit more about that, that you can follow more around her. But we had such a great conversation. We thought it would be fun for me to kind of turn the tables and get to ask her a few questions. So I'm excited to have you, Karen. Thanks for coming and for wearing polka dots because apparently it's a polka dot kind of day.

It's a polka dot kind of day. Thanks for having me. And hello to all of your followers and those who are getting PennyWise. Great, great tools to pass on to my coaching clients as well. Really nice to connect. Thank you.

Yeah, we've had an interesting conversation just in the overlap of our lives. Our services. And so while I don't necessarily focus on divorced people, I've worked with a lot of them because that impacts their finances significantly, right? And sadly, unfortunately, sometimes we're not really looking at it that close until we're going through a big change like that. So I wanted to kind of learn a little bit more about the services that you provide and ask you a few questions about that. So do you want to give us just sort of an overview first about your business and What that looks like.

I think money is the first thing that comes to mind when people start panicking about their kids and their financial stability. And so as the good divorce coach, my sweet spot is working with couples who are looking for an amicable path that they don't want to blow things up. They want to have two stable households. Often they're raising children side by side. And I think we call the lawyer to get divorced, but who do we call when we need to know how to be divorced and live in the journey of what often is a lifelong relationship? I remind my clients the marriage is ending, but if you share children, the relationship is not. And I like to take people kind of soup to nuts, A to Z through the experience. And there's so many little micro actions and decisions along the way that cast a really long shadow., over the course of people's lives and everything from helping them know how to speak to their children to then transition schedule and how to liberate that over time, how we're managing real estate, what are the division of assets, how do we talk about the galaxy of people around us who are influencing our divorce, the well-intended moms and dads and aunts and uncles, and how do we prevent the legal system from hijacking our divorce process. And I really believe it is a path to the best intended outcomes. So if you can sit in the room with your soon-to-be ex-spouse or your ex-spouse and you are looking for a path that is more collaborative and full of grace and respect, then the Good Divorce Journey is probably for you.

Hmm. Yeah, I, I've not heard of somebody who does that other, you know, before, because I think We all know about attorneys and maybe even meeting with your financial advisor or something, but I think navigating the long-term impact is better for everybody involved, right? And they've spent a lot of years together potentially. And like you said, they're probably going to be in each other's circle for a while. So how do you do that with grace and ease? So, well, great. Well, give us a little bit of a story or two about things you have noticed along the way. Was how divorce has impacted the finances. What are some of the high-level things and maybe some things we haven't thought about that people need to realize how money and divorce go hand in hand? And maybe any stories you have of things that are cautionary tales for people to avoid.

Yeah, money is a hotspot in most relationships. And if the relationship is unraveling, it's going to get really spicy, uh, potentially. So one of the first things is that I remind people that what we're trying to accomplish is to create two stable homes. So rather than looking at a scarcity model and it's a land grab for everything, it really is, we have a responsibility. And I, and I'm speaking to co-parents here, those that are going to continue their, in their financial entanglement. Um, is that they may be going for the scarcity model, that there's not enough, rather than how do we make sure that we both have enough, because then that creates abundance for our children. So for instance, I know one family, as they were getting ready, you know, they were separating finances. One, uh, spouse was moving out into a new home, but they recognized that this new second home is still a responsibility to the family. So they kept a stash of shared money to hire the U-Haul and the movers to get belongings to the second house, right? That's a shared expense that they committed to. And then, oh, we have two couches, we each take a couch, but we only have one dining room table and we only have one set of bunk beds for the kids. So we have some furnishings that need to be purchased for the new family home. So that also came out of a shared bucket rather than the one parent who is moving out, having all of the financial burden. And again, this is in the best-case scenario when there's some equality and collaboration and that they see we together are establishing two new comparable family homes. And so we together need to commit resources and time and energy to that so that no one is left, right? We're always trying to find this kind of equilibrium. The other thing, and you might have a thought about this, Penny Kidd, is we talk a lot about what's equal and, well, that's not fair. And so I'm more inclined to speak to people about what's appropriate, what feels appropriate, and that fair isn't always equal. We talk about teenagers too, like, well, that's not fair, and how come they get the car and I don't? Like, well, because you have 6 Ds and they have 6 As, so there's going to be different treatment. And so it isn't always that it's apples to apples. It's what feels fair and appropriate and trying to find that as an intention versus every little penny and dime. So someone in the spouse relationship might say, oh, I don't even want the camper or the boat because I can't pull them. I don't want to deal with them. I'm happy for my partner to take those. And they have a value of $20,000. So we have a little— it is the prerogative of this other parent to say, I don't need to equalize that. You can have the boat, and because you're going to pay for all the gas and the insurance and take the kids camping and boating and that, and I want that for our children. I want those items to be in our house. So if you're willing to take them over, and they just say that's a wash, but they might also say, oh, you're going to have those, and so there's a $20,000 gap, and reminding people there's lots of ways to close that gap. It might be a cash payout. It might be an exchange of belongings. You take the boat and the RV. I'm taking the grand piano, the king bed, and the Prius, right? Or whatever it might be. And we sort of go, oh, those belongings. So that might be a way to equalize. Cash is a way to equalize. Sometimes it's also our retirement plans. And this is one way where we can make an equalization without penalty. Often if we're taking money out of retirement and moving it somewhere else or utilizing it, there's a penalty. And a lot of investment firms, if you work with them, we will, you know, we the legal team, you should ask, will provide the appropriate paperwork so that we can do a shuffling of money, changing of beneficiaries. That's a thing people forget about. Like, oh, my former spouse is the beneficiary on everything.

Right.

Do I need to change that? So we can also equalize by kind of moving money in between accounts. I just worked with a couple and it was beautiful. We had everything equalized and then Dad said, I really feel like I should move some money from my retirement into her retirement account. We're like, you don't have to. Tell us more about that. And he said, well, she didn't work for 7 years and stayed home, which meant she was putting less money in her retirement account while she was doing the work of raising the and so I want to offset that.

Wow.

Those are the kinds of outcomes that we can get when we're working with a divorce coach, so that again, we're finding where's the abundance. We want everyone to be solid. It is in your best interest for your former spouse to be financially solid.

Wow, that's huge. Tell me a little bit about, um, if people have not worked. I'm sure when you first got started, or you've met people along the way if they haven't found somebody like a divorce coach, what are some of the pitfalls that people can hit? Avoid.

Yeah, avoid. So a couple of things come to mind. One that we don't think about is if we leave any entanglements. I always like my couples to really be clean at the end of the divorce, but sometimes It doesn't go that way. So for instance, right now, if you share a home and one spouse is moving out, in order to get spouse number 2 off the title of the family home, you have to refinance.

Mm-hmm.

I believe this to be a tax on the divorced population, and I would like to see this change. And soon enough, I will be starting to do advocacy and policy work about all the ways that we kind of have social norms that are at the expense of divorced families, and, and there's a number of them. So this is one of them. So I have to refinance my home to get Dad off the title, but we own that home with a 2.75% interest rate, and now it's 7%. Yeah, so that is not in the best interest of financial stability for the family. So instead, right, you can actually take them off the title but not the mortgage. So we can move titles around and do what's called a quick claim deed. So Dad comes off the title, he no longer owns the house, just Mom owns the house. But we have this mortgage that we have to share because the only way the bank is going to put it on my name only is to go through the entire refinancing process. So this couple who was caught in this situation said, all right, we'll, we'll take the title independent. We will keep the mortgage together. Mom's paying the mortgage 100%. Dad's not paying it on it anymore. But if she stopped paying for 1 or 2 or 3 months, that hits his credit, right? He's still tied to it. So you have to have a lot of trust. And again, if you're moving through a coaching journey, because these are the things, not just the paperwork signed, we're divorced. There's all these lingering pieces. So, and, and they do— they've had a good divorce experience, they have a lot of trust in each other. I've worked with them in and out for almost 2 years, and now we're done because they went through separation before they started divorce proceedings. And both names are on that mortgage, and we've just written into their decree, if for some reason you are unable to pay this mortgage, you must immediately alert the other spouse. And the intent is that you will refinance and remove spouse 2's name within 5 years. So it's still a little crystal ball because in 5 years we hope interest rates will soften. They might double, we don't know. So that leaves a little ambiguity. Another real estate story, um, to think about: Mom and Dad owned a construction business and they had some speculative property that they co-owned. And so they were dividing out. Dad was taking the contracting business. There were some settlements, and it was written that as soon as the property that was built on spec, right, there's 4 condos to sell. Mom has money in the, like, a quarter of a million dollars in that investment. And Dad says, great, when it sells, you'll get all that money out. And there was an assumption made, and I wasn't— I, I got on the back end of this, not the front end. Okay, on the back end, when Mom called and said, those properties haven't sold and I need that money, and we were sure that they would sell in 2022 and they didn't. And we all know the reasons of why things changed. And so now she's trying to rearrange an agreement that was already made and that it wasn't You know, the language probably should have been, "Wife will be reimbursed of those funds by December 31st or when the property sells, whichever comes first." But that sentence wasn't in there. It only says, "When they sell." And so now they're all kind of held hostage by the market and a lot of things that they can't control. And it keeps a little bit of that tense entanglement that is in sort of undercurrent to an otherwise really great co-parenting, good divorce experience. But the real estate market ended up being the enemy.

Yeah, that's crazy that, you know, we like to think what is happening today is what's going to happen tomorrow. And, you know, what if we haven't learned anything in the last 3 years is that we can't really anticipate anything, and we have to be prepared for everything at some level. And I think what you're doing is helping people think through the what-ifs and the possibilities that are coming down the road, even though maybe today it's either really fine or really contentious or whatever, and trying to see that what we see today is not necessarily what we're going to see a year or 10 years from now. Right.

I have another one that's a 10-year post-divorce, what I would call financial trauma. So in this scenario, again, mom and dad shared a business, kind of a wretched, terrible, horrible divorce. I was, uh, I only know the parties, the mom in this story, and nonetheless there were some taxes on the business that were due, some past taxes, uh, Dad took the business and should have— and the, and the tax bill went with the business, etc. Dad then quickly declared bankruptcy post-divorce, so everything was wiped out for him. Mom still has a successful business growing, has the kids primary amount of the time, and this huge tax bill, which she didn't even know was out there and existing, is accruing interest and penalties. And then finally she finds out, oh, she's attached to that tax bill, to that IRS, the last time they jointly filed taxes. And so now it's her responsibility alone because he's not paying anything, not doing anything, not engaged. So she's chipping away, paying down that tax bill, gritting her teeth. Every month she writes a check. And here's the interesting twist: she is now headed to Ireland in the fall with her mom and her sister and her daughters for this generation family trip. Her passport has just expired. She goes to get a new passport. They will not give it to her because she has an IRS debt.

Really?

All of those government bodies are tied together. And when she went to apply for her passport, they went, oh, you've got this massive debt, which she cannot pay off in full. She has been paying down, working with them Hard to say what will come of that, but what we know is she is having a financial trauma that is now limiting her ability 10 years later to just go to Ireland with her mom and her daughter and her sisters.

Wow.

Isn't that just heartbreaking?

Yeah, that's great.

So that's why we want to wrap up all the loose ends when we have the court and the lawyers and the coaches and the financial advisors and the Pennywise and the Karen McNennys all sitting there working with you so that when you're done, you really feel like you're done.

Wow. What are some of the things that you think, um, like you mentioned taxes, obviously. What are some of the hidden gotchas in a divorce that, you know, like you said, people come in thinking, oh, let's figure out the house and the, um, kids. But there's other things that impact people that maybe they've come to you after, after the fact, or that you're like, oh, cautionary tales. Anything else you can think of?

Yep. And, and, you know, those are, those are so real estate, wanting to make sure you're clean on real estate, being aware of what you can and cannot do with mortgages and titles and planning for that. I think another myth is that people are going to take their, their lifestyle that they had as a two-income household and move it over to their single-income household. That's when Pennywise coaching comes in hand, like, oh, I have to readjust my spending. And even if you have a strong salary, it's now one. And I think there's a shock, and it can take longer than you think and certainly longer than you want. It's typically a 3-year journey for full financial recovery and to reestablish— I now know how to live within these means. The dust has settled. Like when we really think about recovery. And it's the same when there's any death. And I really think of divorce as a death journey. And I think that's one of the things we get wrong as a society is we underestimate the impact that divorce is having on all parts of our life, social, physical, mental, spiritual, financial. It's a full package. And that's why I, I'm so devoted to the work I do because it really is wraparound services. So we touch on all those places. And as a mediator, therapist, co-parenting specialist, divorce coach. Um, I can bring really all of those other invisible pieces of the divorce experience so that you don't completely fall apart or blow up your family.

When is the best time for somebody to reach out to you or to a divorce coach?

The day they decide that both parents have come And, and I say the day they've actually decided because there is this purgatory period for most of us and for your community that I'm 12 years post-divorce. My daughter was in the first grade when we divorced and we graduated her last weekend.

Hey.

And it was beautiful. And we all sat together, which we have done for 12 years for every child event. We had celebrated together, the grandparents, the photographs.. And, and if that's what you want, if you want to behave and operate as one family that has two households, which is really our mantra at The Good Divorce Experience, one family, two homes, then get started as soon as possible because there's lots of little micro actions and decisions that need to be made and considered in a thoughtful, intentional way before you even call a lawyer. And my goal always, and in the collaborative divorce process, we agree we don't go to court, we don't lawyer up. We work in partnership with a trained, uh, legal mediator lawyer to write your legal documents and send you to the courthouse to file. So that purgatory period beforehand of, are we in, are we out? Let's go to counseling, let's go to a retreat, let's take a break, let's double down. And people tend to be in that rubber band, which is why I always think when folks are like, oh, they're getting divorced, they're just taking the easy way out. They're like, uh-uh, there's nothing easy about this decision. And most of us sit in our truth long before we speak it.

Yeah.

Then something happens. And I also say, don't stay too long. Don't stay too long. You just do more damage. And, and actually, if you can make the decision to leave while there's still love, there's still some sensibility of the love, the story, the original story that brought you together, that brought you into this world to want to have children, right? We think divorce means we have to trash all of it and that there was nothing good in there, but that's not true. Yeah, the majority of it actually very well may still be let's, let's save the good parts. Don't destroy it all. Yeah, but I will have people who call in the midst of or afterwards, and they're in the aftermath, and they're, they're just looking to kind of reconnect with themselves.

And that—

and there really is an aftermath, um, and there's this period of time where, oh, I don't have my kids for a week, what am I going to do with myself? And truly, how are you reinventing yourself? How are you sitting in the alone time without being destroyed by loneliness? How are you taking care of yourself and reaching out and making sure you have a plan on the evening that your kids transition? Because the silence in the house is deafening. These are things that we don't see coming. But when you're in partnership, just like you, Penny Kidd, when you're doing financial coaching, we think, oh, it's a budget. One and done. Like, oh no, no, no, no, no. So many other pieces in order to help with your financial stability. And it's the same to be said in terms of having a stable divorce.

Right.

Not a great idea. Like, let's have a good divorce.

Well, and I think it's interesting because what you teach and espouse is not the act of getting divorced, but being divorced and having a good divorce has a very different meaning when in your world. And it's not a one week, one year, you know, process, right? It's living as a good divorced couple, right? So yeah, that's fascinating.

I'll, um, I'll just mention as we move towards wrapping up, uh, there is the Good Divorce Podcast, which you can find on any platform. And what makes me think about it is that next week's episode, Maggie and Cara are a mother-daughter duo. Dad has since passed away. Mom remarried. It was 40 years ago that they announced the divorce. And so in retrospect, here is mother and daughter who will talk about the day she was told, who will talk about what the transitions were like, who will talk about my parents never burdened us. And now as an adult, I can look back and know that there were things happening behind the scenes. But it didn't land on our shoulders. And so I would remind your listeners, um, and your audience and the people in your community who are facing this that do not burden your children with adult problems. And it's easy in the money story to say like, oh, we don't have enough for that, or oh, your dad didn't contribute, and oh well, your mom, you know, she's so tight. Like, we take our agitation and our narrative around money that may be negative, especially early on, and we place it on the children as though it's their responsibility. There is no value in that. You call Penny Kidd, you call Karen Kidd, you call your best friend, and that's where you bitch and moan about your money problems and your spouse and what they are doing and what they're not doing. Never with your children. They are not deserving of that, right?

As an old social worker, I saw that a lot and had to do the mediation around that, like burden that that is way greater for the kids than you dealing with. And I, you and I were talking a little bit before this that you, you said when people come to you immediately, you help them figure out even how to tell the kids and how to tell their families and what to do. So that's why I think coming to you early on is super critical versus I don't think most people would think of that. They'd be like, all right, we told the kids the night we decided or whatever. And now, you know, it's like they dropped a bomb. When maybe it didn't have to be that way.

No, it's like a big project management. You know, you're renovating your family. Let's think of it that way. You don't just go in and start tearing walls out. You need to know what's the supporting wall, what has— do we have a blueprint? And we do things in a very particular order in order to then have the renovation be stable and operational at the end. I love that idea. We are renovating your family. So you would never take that on unless you were a contractor yourself. And people don't know how to get divorced. Most of us don't know how to manage our money or our relationships. We're learning it as a divorce.

Even if you've been divorced and, you know, maybe you're having a second divorce or something like that, that if you could do it better, I think having some wise counsel in many areas of our lives makes a lot of sense.

Absolutely.

So, well, great. This has been really fun. And as always, I think you and I click really well and I love what you do and I feel like we're two sides of the same coin. But, um, tell my people how to find you and where, how to reach out to you if they're in need of your services. Yep.

So on any podcast channel, you will find The Good Divorce Show with Karen McNenny. And I interview, as I mentioned, couples, uh, who've come through divorce, adult children of divorce, as well as Penny's, uh, our episode what is there. Um, coaches, clinicians from the mental health profession, as well as legal professionals. So a wide variety. And we only are broadcasting how to do it well. You won't turn on my podcast and hear stories of despair and discontent and how we set out to destroy each other and how to do that. That's not what we're amplifying. And then you can always, uh, find me on any socials, The Good Divorce Coach, and the website also. You can search The Good Divorce Coach or Karen McNenny. And reach out online there if I can be of service, or if you know somebody, or if you've got a story to tell on the podcast, check it out.

Yeah, because you're looking for guests too, right?

I mean, I'm looking for guests.

Yeah, you've got some fascinating stories. So, well, thank you so much for your time today and for sharing some great tips, and I hope that people will reach out to you if they're in need of that service. So, or know somebody else. So wonderful.

Thanks. Bye.