By Jill Demby Guest –
Lost your job? Your home? Your husband? Your investments? Need to quickly reinvent your financial life? Wonder if it’s even possible?
Can you reinvent your finances in mid-life? That’s the question I posed to financial strategist, Lorraine Conaway of Conaway & Conaway in Brea, California.
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Lorraine, along with her husband Jim, own and operate Conaway & Conaway, a financial strategy firm. For the past 25 years, they have been helping people build wealth with clarity and confidence. They host a weekly radio show, Smart Money Talk Radio, LIVE every Monday from 3-4pm on KCAA 1050, an NBC-affiliated station. It can also be heard online at www.kcaaradio.com.
Lorraine has a passion for the financial concerns of baby boomer women.
Her mission: to put to rest any fears they may have about reorganizing and reinventing their finances in mid-life. She stands as the beacon that will take you by the hand, assess where you are financially and show you her specialty: potentially finding hidden wealth opportunities that may already be available to you, without having to go out and make any additional income.
During the recession, many baby boomers lost their jobs and large percentages of their 401Ks and many found their homes were underwater. Some went through divorces or were widowed and saw even their safest investments become worthless just as they were facing retirement.
It was an uncertain and challenging time that forced people to heavily assess where they were and what they wanted in their lives and figuring out if reinventing their finances was a viable option. But after talking to Lorraine, as a female baby boomer myself, I heard several success stories that opened up possibilities I would have never seen on my own.
In addition to Lorraine’s extensive knowledge of the financial field, she has a beautiful, sunny smile and comforting manner that would put anyone at ease. This is an especially important talent when it comes to talking about finances. Since money talk seems to be a “hot” button for so many people, having someone cool headed, practical and positive as your guide is an optimal solution.
Below is an excerpt of my interview with Lorraine Conaway about reinventing your finances at mid-life:
JILL: Is reinventing your finances in mid-life possible?
LORRAINE: Absolutely! It’s possible! One of the things that I have recognized as I work with women baby boomers, which are either divorced or widowed, is that looking at where they’re at financially is emotional. They need to be emotionally ready to look at their finances. Some of my clients have to have an emotional breakdown first and then they’re ready to face it.
One of my clients said, “I’m ready to take my head out of the sand now, because I’ve been taking my credit cards, my bills and throwing them in the drawer. I don’t even look at them.” As an advisor, guiding and coaching to help them recognize where they are is an important first step.
JILL: What are some key questions women should be asking themselves about reinventing their finances?
LORRAINE: The key question that women need to be asking themselves is, “Am I taking care of myself financially?” You always hear that you’ve got to take care of yourself physically and health wise, but what about financially? And what I mean by that is, am I paying myself first?
When I first started in this industry I thought, there’s no way I can pay myself first.
I just got divorced and have two little children.
When I started paying myself first. I put it into either a money market account, a CD, or into a cash value life insurance policy because that way it could be liquid. You make it work because it is so critical to pay yourself first.
There are many easy ways to do this.
One example was on Oprah. There was a woman who used coupons, and every time she saved money, she would take that specific amount and put it away in a savings account. At the end of the year, she had four to five thousand dollars of savings! Anyone can do that.
JILL: What if someone came to you and said, “Lorraine, I’m 55 and just lost my job of over 30 years. My 401K took a big hit and I’m not ready to retire.” What would you recommend?
LORRAINE: The first thing I say is that there is that there is a light at the end of every tunnel. There is always hope, so we take a look at what their assets are.
A lot of times people don’t look at their core strengths as assets. How many people talk about their assets as being their core strengths? We look at how they can utilize those strengths, what are the things that they can do and how can they bridge their cash flow between now and making revenue. It doesn’t matter whether the revenue is establishing a business, going into partnerships, or having another opportunity in the corporate world.
Then it’s back to recognizing where they are and seeing if they have assets or a situation that can potentially produce cash flow.
For example, there can be cash flow in a tax return or cash flow by reorganizing the credit card debt. There is cash flow by reorganizing their real estate, there is cash flow by utilizing their 401K temporarily. They can possibly do distributions without penalty. IRA code 72 allows you to take systematic periodic payments before fifty-nine and a half without penalty.
JILL: Do you have any quick tips women can use right away while they’re reinventing their finances?
LORRAINE: One quick tip is to use a list whenever you are shopping, whether it’s for food, clothes or shoes. And stick to that list! This way, you are less likely to overspend on things you don’t need.
Look in your closet first before you go shopping. For example, I know that many women love shoes. So before you head out on that shopping spree, figure out what you REALLY need and THEN head to the store.
When you go grocery shopping, how many times have you said, “Look, it’s on sale!” so you buy a big can of mayonnaise or you buy things that you didn’t go to the store to buy. You go to the store to buy milk and eggs and you come out with 80 dollars on your bill.
Then the next tip is to get rid of the ATM.
My husband and I did this when we first got together because it was the down turn of the real estate market (1989,1990) and we got hit hard. And so we hated that little voice on your shoulder that said you can’t buy that, you can’t afford that, you can’t spent that, you can’t do that.
So in order to get rid of that little voice we went to cash. For some reason when you have cash you think twice about spending the money.
So what happens is you go to Starbucks and you get a cup of coffee for 5 dollars and if you have a 50 dollars of cash for the week for example, when that cash is gone, that cash is gone. That’s it
At the end of the month you will have a little extra cash flow.
One of the other things I encourage women to do is to start a journal. It’s a great, safe place to go. Write down what you want your life to look like, financially, personally, in every way. It helps to clarify your vision and take steps to fulfill it. Writing it down is great because when you write it down, it becomes real.
JILL: What are some of the common myths women have about their finances?
LORRAINE: The key point is, whether you make 20 thousand dollars a year, 50 thousand dollars a year or a million dollars a year, it doesn’t matter. Even the person who is employed making 30 thousand dollars a year has the same opportunity. They just don’t know how to get there. So when they seek advice, the advisors will create the road map of how to get there. But for some reason, their fear that it’s only for the wealthy is a myth.
JILL: Can you share some success stories about finding hidden wealth opportunities?
LORRAINE: I have one woman who’s a baby boomer and has a property in a college town and so instead of renting it to a family for a fixed amount, she rented the property to college girls and charged by the room. This reorganization of her asset brought additional income. And now she has positive cash flow instead of negative cash flow!
It’s also looking at their debt. What’s going on with the debt? It’s looking at whether they roll out their 401k and set up an IRA or maybe it should be solo 401k, so they could take a loan against that to rebuild their business or whatever their goals are. We look at the mortgage statements, pension plans, and where there are opportunities for additional cash flow. A big part of that is in their tax return so we collaborate with the tax advisor and look to see what’s going on.
For example, there is one woman who had a couple of properties. She never ever heard of the phrase “professional real estate status” and these certain rules related to that, but she qualified. And because she qualified, she received unlimited depreciation for her investments, which gave her an extra substantial amount of money each month.
Another example is of a woman who is divorced. She is a single mom in her forties, a schoolteacher and her house was under water, bleeding out a couple thousand dollars each month. So we had to downsize her property, completely reorganize all her finances and now she has a positive cash flow!
We have another woman who is a dentist and we looked at how she was paying herself by collaborating with her tax advisor. So by paying herself in a different way than she was, she was saving a substantial amount of money each month on self-employment taxes. And all she had to do was pay herself differently.
There is somebody else who I worked with who has a good W-2 job, but their credit card debt was really high. They had a home that was under water and yet they had very good credit. So in that scenario it’s all about sequencing and the sequencing was very critical. We worked with him to refinance his primary residence, which financed his credit card situation, and the interest was much lower. Let me just tell you that he saved a huge amount of money each month, which added up over the year! Now he is working on short selling his rental property, which would save him another chunk of money. So just be reorganizing his cash flow, he was able to save a very, very sizable amount of money that year!
I want to make a point that these examples are not about having to go out to make more money; it’s looking at what you currently have and seeing how to make it work better.
It’s looking at things like how you are going to pay yourself. What’s going on with your real estate? What’s going on with your credit card debt? What’s going on with your cash flow? It could be the kids. It could be college and planning it. There are lots of baby boomers who have kids in college. If they own a business maybe they can utilize it. The IRS allows income shifting, so you could shift part of your income to your children who could do some jobs for you. They can get five thousand dollars of income, tax free.
Here’s a recap of Lorraine’s suggestions to get started reinventing your finances:
- Get emotionally prepared
- Put your financial team in place
- Discuss and create your strategy
- Execute the plan
- Have a “Can Do” attitude
- Educate yourself continually
- Look for hidden wealth opportunities
- Pay yourself first
- See your core strengths as assets
- Take a list when you go shopping
- Get rid of the ATM habit
- Keep a financial journal
While reinventing your finances at mid-life may at first glance seem daunting, from talking to Lorraine and hearing so many positive outcomes, it’s clear that with advice from the right experts, implementing the right strategy and tools, you can become your own success story. Reinventing your finances at mid-life is more than just a possibility; it’s a reality.
Jill Demby Guest is an Emmy Award nominated producer, writer, blogger and celebrity interviewer with 25 years in the entertainment business. Visit her at: YourInterviewTips.com for a free report “How to Get Star Quality Interviews.”
You can find out more information about Lorraine Conaway and what Conaway & Conaway offers at www.conawayandconaway.com or sign up for more information at http://yourinterviewtips.com/conaway.
1 thought on “Can You Reinvent Your Finances in Mid-Life?”
Very good article and, yes, people can re-invent their finances IF they are willing to make hard choices and decisions. When we decide to live within our means, or less than our means, that means we’ll have money.
Mom and Daddy always taught us…pay God first, yourself second and then your bills. They always saved up and paid cash; it’s no secret but so many people WANT instead of NEED. Let’s face it, in this country so many of our needs were met a long time ago but people go into debt paying too much attention to their wants.
One Very Important thing…make a budget. Until you make a budget, you have only an inkling of your expenses. A journal and a budget go hand in hand but you need *both*.