Tuesday, February 26, 2008

Divorcing? 15 costly mistakes

If you let emotions rule when your marriage breaks up, the financial fallout could last for years. These pointers can help you focus on what's best for your future.

When you're going through the pain and emotional battles of a divorce, it's easy to overlook financial issues that can hurt you long after any hard feelings have healed. Here are 15 critical financial mistakes that you can't afford during a breakup:

Becoming a financial victim.

If you suspect your spouse is planning a divorce, now's the time to make copies of all important financial papers, from property and investment records to bank statements, credit card bills and tax returns. Worried that your estranged spouse may liquidate or retitle marital assets? Notify the holder in writing and get a court restraining order. Watch out for cash in joint checking or brokerage accounts, and protect the cash value of your life insurance.

Not considering mediation. If assets are moderate, joint custody is workable and your spouse is agreeable to a fair settlement, mediation will save thousands of dollars in legal fees and emotional aggravation, and provide more flexibility than an adversarial legal process. Mediation won't work if one spouse is hiding assets or income, or is unwilling to consider the needs of the other.

Talk back: .....How has divorce affected your finances?

Hiring a combative lawyer as punishment. This is a bad idea for two reasons. First, except in extremely egregious cases, divorce settlements are determined by equitable-distribution laws, and courts will not punish your ex-spouse financially for being a bad person. Second, your attorney assumes carte blanche to increase hours spent on your case. High divorce costs mean less money left over for living. Treat divorce as a business arrangement, and get your revenge by living well post-divorce.

Failing to recognize your enemy: the Internal Revenue Service.

Work with a divorce financial planner or tax accountant to minimize the total taxes you and your ex will pay during separation and after divorce, and share the money you save. Don't forget that both parties are liable for taxes due as a result of audits on joint returns. Don't count on the innocent-spouse rule to protect you.

Not producing an accurate budget. Invariably, clients underestimate or omit expenses when they produce their initial budget for temporary maintenance, and then later on in the divorce process they complain about being unable to pay bills. Use a financial professional to help you produce an accurate and complete budget.

Not evaluating a divorce settlement on an after-tax basis.

The bottom line is the share of marital assets you get after the tax man gets his. Say your spouse handles all the investments and offers to split them 50/50. Sound fair? I suggest you look at the value of your assets relative to your spouse's on an after-tax basis. Then decide if you like the deal.

Failing to use computer models to evaluate settlements. If you are trying to decide whether a divorce settlement is equitable and workable, you certainly want to know how you will be doing financially three, five or 10 years down the road. There are many interactive factors you must consider, including assets, incomes, budgets, maintenance and child support, taxes, retirement plans, investments and educational expenses. Specialized divorce computer models can produce comprehensive and realistic analyses of your post-divorce lifestyle.

Bringing an emotional attachment to assets.

The marital residence, the pension you earned, a painting purchased during your marriage -- these assets bring an emotionally charged debate to divorce negotiations. The fact is many women can't afford the family home on their own. A house is an asset that has a low return on investment (real estate appreciates at the rate of 2% or 3% annually) and is a major cash expense (mortgage payments, taxes, repairs, heat and electricity).
Continued: Your lawyer is not a therapist

Using your lawyer as a financial planner, therapist or messenger.

One woman I spoke with ran up $35,000 in legal fees in just two months. Arrangements for her husband's parental visitations were made through their matrimonial lawyers. Attorneys generally charge $200 to $300 per hour ($450 for partners in well-known New York City and Los Angeles matrimonial firms) and are not skilled therapists or certified financial planners. If you need emotional support, career counseling or financial analysis, utilize qualified professionals and save big money in fees.

Accepting a settlement that isn't as good as it seems. Both spouses and children must make compromises in their lifestyles after a divorce. A settlement that does not give one spouse enough money to live on is likely to go into default in the future. Be fair, but verify the numbers. Get payments upfront whenever possible, even if you get less in total. Secure all payments with assets and insurance.

Disregarding the impact of inflation.

The effects of inflation on the cost of a child's college education 15 years in the future, or retirement 20 years hence, can be dramatic. The rule of 72 is a simple way to judge the impact of inflation. If the inflation rate is 3%, the rule of 72 states that prices will double in 24 years (72/3=24). College costs at 5% inflation will double in 14.5 years (72/5=14.5).

Not waiting until a wife is eligible for her husband's Social Security. If a couple is married for 10 years or more, a wife is entitled to receive half of her ex-husband's Social Security at retirement. The husband's Social Security payments are unaffected. It's ironic that the average length of marriage for people who get divorced is 9.6 years. Waiting just six months longer will increase retirement options for a wife with no reduction in her husband's payments

Forgetting to update estate documents.

After heavily contested divorces, many people forget to change the beneficiaries on their life insurance policies, individual retirement accounts and wills. The result is that ex-spouses end up inheriting estates the decedent may have intended to pass along to children, a new partner or a favorite charity.

Failing to adequately insure the divorce settlement. Premature death or disability of your ex-spouse can result in loss of maintenance, child support, college tuition or property settlement. Life and disability insurance can guarantee your payments and your family's security. Also, don't ignore the high cost of purchasing individual health insurance.

Failing to develop a financial plan.

One indisputable fact of divorce is that two households cost more to operate than one but income is unchanged. Many people start their post-divorce lives not fully understanding that their settlement must last a significant amount of time -- perhaps the rest of their lives. Financial planning can help people transition from married to single life by prioritizing financial goals, developing realistic expectations and producing written plans for allocation of financial resources.

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This article was reported and written by Lee Slater for divorce360.com.

Thursday, February 21, 2008

Mandira Bedi does it again

While hosting the Cricket World Cup 2007 Finals on Set MAX with Charu Sharma, Mandira Bedi was seen wearing a saree which had national flags of all the countries which participated in the tournament. As seen Mandira was seen wearing a sari, which had an image of the Indian Tricolour below her waist, which was against the constitutional norm. Mandira's sari on the occasion had images of national flags of all the cricket-playing nations printed on it. But the image of the Indian Tricolour was in a rather disrespectful position.

The Indian Government had cleared wearing of images of the Indian Tricolour on clothing in 2005 following a raging debate over the provision of the Prevention of Insults to National Honour Act, 1971, according to which using the Indian national flag as a drapery in any form except in state funerals was a crime.

The restrctions were eased after a legal fight by industrialist and Congress party MP Naveen Jindal, demanding that all Indians and institutions be allowed to fly the national flag respectfully. After the Supreme Court ruled in favour of Jindal in 2001, the Government brought in an amendment in the Act in 2005.

However, even that amendment made it clear that the flag can only be displayed on garments above the waist. As per the order, caps and T-shirts are in, but swimsuits and evening gowns are still a no-no. The flag can not be embroidered or printed even on cushion covers, gloves, handkerchiefs, napkins and dress material. Mandira has worn garment with Indian tricolor on previous occasions but it was well above the waist.

as an afterthought......either way the auction for the boys at IPCL went of well....... no one knows who had the last laugh as they both seem to have benefitted from it !!

Wednesday, February 20, 2008

Narayana Murthy

One of the most powerful tech CEO is Mr Narayana Murthy, Chairman of the Board and Chief Mentor of Infosys Technologies....

Murthy founded Infosys in 1981 along with six other software professionals and served as the CEO for 21 years before handing over the reins of the company to co-founder Nandan M Nilekani in March 2002. Under his leadership, Infosys was listed on NASDAQ in 1999. He served as the Executive Chairman of the Board and Chief Mentor from 2002 to 2006.

Murthy is the recipient of numerous awards and honours. The Economist ranked him 8th on its list of 15 most admired global leaders in 2005. He was ranked 28th among the world's most respected business leaders by The Financial Times in 2005.

Murthy holds a BE (Electrical) from the University of Mysore (1967) and MTech (Electrical) from the Indian Institute of Technology, Kanpur (1969). He has been conferred with honorary doctorate degrees by leading universities across the world.

Mr. Narayana Murthy is undoubtedly one of the most famous persons from Karnataka. He is known not just for building the biggest IT empire in India but also for his simplicity. Almost every important dignitary visits Infosys campus. He delivered an interesting speech during an employee session with another IT company in India . He is incidentally, one of the top 50 Influential people of Asia according to an Asiaweek publication.

This is an extract of Mr. Narayana Murthy's Speech during Mentor Session : "I know people who work 12 hours a day, six days a week, or more. Some people do so because of a work emergency where the long hours are only temporary. Other people I know have put in these hours for years. I don't know if they are working all these hours, but I do know they are in the office this long. Others put in long office hours because they are addicted to the workplace."

"Whatever the reason for putting in overtime, working long hours over the long term is harmful to the person and to the organization. There are things managers can do to change this for everyone's benefit. Being in the office long hours, over long periods of time, makes way for potential errors. My colleagues who are in the office long hours frequently make mistakes caused by fatigue."

"Correcting these mistakes requires their time as well as the time and energy of others. I have seen people work Tuesday through Friday to correct mistakes made after 5 PM on Monday. Another problem is that people who are in the office long hours are not pleasant company. They often complain about other people (who aren't working as hard); they are irritable, or cranky, or even angry. Other people avoid them. Such behavior poses problems, where work goes much better when people work together instead of avoiding one another."

"As Managers, there are things we can do to help people leave the office.

First and foremost is to set the example and go home ourselves. I work with a manager who chides people for working long hours. His words quickly lose their meaning when he sends these chiding group e-mails with a time-stamp of 2 AM , Sunday.

Second is to encourage people to put some balance in their lives. For instance, here is a guideline I find helpful:

1) Wake up, eat a good breakfast, and go to work.
2) Work hard and smart for eight or nine hours.
3) Go home.
4) Read books/comics, watch a funny movie, play with your kids, etc.
5) Eat well and sleep well.

This is called recreation. Doing steps 1, 3, 4, and 5 enable step 2. Working regular hours and recreating daily are simple concepts. They are hard for some of us because that requires 'personal change'. They are possible since we all have the power to choose to do them."

In considering the issue of overtime, I am reminded of my oldest son. When he was a toddler, if people were visiting the apartment, he would not fall asleep no matter how long the visit, and no matter what time of day it was. He would fight off sleep until the visitors left. It was as if he was afraid that he would miss something. Once our visitors' left, he would go to sleep. By this time, however, he was over tired and would scream through half the night with nightmares. He, my wife, and I, all paid the price for his fear of missing out. Perhaps some people put in such long hours because they don't want to miss anything when they leave the office.

The trouble with this is that events will never stop happening. Things happen 24 hours a day. Allowing for little rest is not ultimately practical. So, take a nap. Things will happen while you're asleep, butyou will have the energy to catch up when you wake up....... Hence...