Sol (00:01)
Welcome back to Co-parenting Beyond Conflict. I'm your host, Sol. Today we're exploring a critical topic for many co-parents, navigating the financial complexities of divorce. And to help us make sense of it all, I'm joined by an expert in the field, Melissa Murphy-Pavone. Melissa is a certified financial planner and certified divorce financial analyst with over a decade of experience helping individuals navigate the financial side of divorce. Her expertise spans asset division,

tax implications, retirement planning, and cash flow analysis, ensuring that her clients walk away from divorce with clarity and confidence. We cover a lot of useful topics here, especially for those just starting on their divorce journey. Let's dive in.

Sol (00:41)
Hi, Melissa, welcome to the podcast. Good to have you here today.

Melissa  Pavone CFP®, CDFA® (00:44)
Thanks so much for having me, Sol.

Sol (00:45)
So Melissa, I'm always so curious about how people get into this line of work supporting co-parents, supporting people who've gone through divorce. Can you share a bit about your journey and where you are today?

Melissa  Pavone CFP®, CDFA® (00:56)
Sure. I always start with my why as my mom. She went through a divorce and she made a lot of decisions with her heart and not her head. When you're in the throes of divorce, it's hard to see past the end of the day, let alone how these decisions that you're making are going to affect your life five, ten, twenty years down the line.

And so there's some regrets there that she has, and I wish that I know what I know now back then to have helped her, but I was only a child. And so I've made my mantra to be able to become a financial ally for people going through divorce and really empowering and educating the non-CFO spouse so that they know what they're signing

and how it's going to impact their future.

Sol (01:46)
I love that, financial ally. It can be so overwhelming to go through this process and then have to deal with all the financial aspect too.

Melissa  Pavone CFP®, CDFA® (01:54)
Yeah, especially if you're not the CFO spouse of the family and you didn't have that hat on in the marriage and now all of sudden you need to do all of those things. There becomes this analysis paralysis and you almost get, a flight or fight response.

Sometimes it's post divorce, after they had their settlement and they're like, okay, now I have support for this long or child support for this long, but retirement is this far away. How do I bridge that gap? How do I manage this cashflow that's not going to last forever? How does this impact my future? I was never in charge of saving for retirement. I kind of just gave that to my spouse to handle. And so there's a lot of education there.

Oftentimes there's a lot of regret and shame. We try to get rid of that shame because there's no point in that. We meet you where you're at and just really educate and empower and walk along that path with you to get to the next step.

Sol (02:52)
Speaking of regret, what are some of the common mistakes that you see people make while they're going through divorce, financially?

Melissa  Pavone CFP®, CDFA® (03:00)
A lot of people don't take into consideration the future cash flow. They think about what your expenses are now, with two spouses, children, one house, two incomes. But making that projection is really hard to say, okay, we're going to take the same amount of money after we pay all the attorneys, and then we're going to have two houses

and two sets of sheets and two bottles of ketchup. And as silly as that sounds with the ketchup, everybody needs to have the same things at both places, for the kids to be comfortable. And oftentimes it's duplicate stuffed animals or, duplicate sets of clothes and shoes. So there becomes a higher expense that's not always accounted for

in the post divorce. I spend a lot of time going over the cash flow to see really what that looks like. And there's a lot of unexpected things also. I think the number one thing I see is a lot of times people fight for the house, right? I want to keep the house. And sometimes it just doesn't make sense financially.

We really try to peel back the layers of the onion there to see, do they want to keep the house or is that symbolically? They want to keep the family together, right? That's where the kids were born. That's where the holidays were spent and unfortunately, I've come into the situation post divorce where in this situation, it was the wife who fought for the house, got the house and didn't have enough assets to

buy her spouse out and so she forwent the maintenance. She said, in lieu of maintenance, I'm going to take the equity in the house. And so she came to me after for the post divorce transition assistance to go through and I said, okay, not working, we have this house. It was really high expenses. The taxes were high, the maintenance was high. So how are gonna pay for this house?

And she said, I have this account here. And I said, OK, let me see the statement. And I look at the statement. And it's an IRA.

And I said, you can't touch this until you're 59 and a half. And she kind of looked at me with a blank stare. And I said, did anybody tell you about this? And she was like, no, no one told me. We went to the mediator. We went through the motions. I wanted the house. He got the bank account. I got this IRA. I thought I could pay the taxes and pay the groceries out of this.

Fast forward, she ended up having to sell the house because one, it was too big, two, she couldn't afford it. And now she had to pay a huge capital gain on the house because there was a gain and she only now as a single person only had a $250,000 exclusion. So those are the cases that break my heart. And if a CDFA or financial professional was just brought in a little earlier to educate,

she would have known these things and perhaps would have made different decisions or would have put some things in place and would have changed the whole trajectory of her financial future.

Sol (06:00)
Wow. Yeah. What you're talking about is making me think about the standard of living and how in the courts, at least here in California, there is this notion that, well, you should remain in the same standard of living post divorce. But that's definitely not always the case.

In fact, is that ever the case?

Melissa  Pavone CFP®, CDFA® (06:15)
No, and

the truth of the matter, inflation is really high and and the terrible thing is that a lot of people are in a relationship that they don't want to be in due to financial reasons. They think, if I sell this house, I will not be able to get a better interest rate or the amount I pay for my mortgage now,

rent for a studio apartment would be the equivalent of what I'm paying for my 35,000 square foot house right now. Those are the things that, you have to take into consideration, not all mortgages are assumable. There's that deep dive that you have to go, but there are options. And when you have a financial ally with you, you can really dive deep and see, sometimes there are

alternatives where you keep the house. But you change the title of it and say, we're going to keep this, we're going to make it joint tenants in common versus joint tenants with rights of survivorship. We're going to live there until the kids graduate from high school or college. And then at that case, we'll sell it and we'll split the proceeds in this way. And in the interim, you pay the mortgage as the tenant.

If something big were to happen and we needed a boiler or we needed a hot water heater, then that would be something that would be like a landlord tenant, the owner would take care of it. So they would both jointly, but if it's just cutting the grass, that would be something that whoever lives there becomes like the tenant. That can work if you can get along with your significant other.

But I think the key there is communication and very set boundaries. But as long as there are other options. So it's not just, okay, split it in half or you buy it or I buy it. There are creative solutions out there and professionals that can help parents get to that because nobody wants to disrupt the kids. The kids didn't ask for this, right?

Sol (08:10)
Yeah, totally. I wonder too about what about people that are going through this process and maybe they weren't, as you mentioned, the CFO of the family. What if they feel more in the dark about their situation or maybe what if they're experiencing coercive control? What do you say to someone like that?

Melissa  Pavone CFP®, CDFA® (08:26)
Yeah, unfortunately it's becoming more and more common that people, are either in the dark about their finances or being controlled due to their finances or that there's financial infidelity taking place. there's a lack of trust. I think that if you find a certified divorce financial analyst, they can really help you to learn what you own,

the titling of it, and what your rights are to the different assets. It's really about education and empowerment if I were to summarize it and just having somebody who's not gonna judge you, right? 'Cause you feel so terrible about yourself why did I do this? Why did I get myself into this situation? And there's no point in beating yourself up. We meet you where you're at. We're gonna see what you got.

We're gonna analyze all the documents and say, hey, these are the things we need to look for. Let's keep an eye on them. Or if they're not gonna give it to them, these are the documents we're gonna subpoena. And that will help build the financial picture because oftentimes people are making decisions without the whole picture. And that could be problematic too, not knowing where certain things are or the titling of certain assets.

Sol (09:39)
I hear a lot of questions around as a co-parent, how do I manage finances, shared expenses with my co-parent? It can get so messy with.

Do we have a shared account? we reimburse? How are we paying each other? What are your recommendations there?

Melissa  Pavone CFP®, CDFA® (09:54)
Yeah, I hear this a lot with clients and it starts off like the copay is going to the doctor and then it's the soccer cleats and then it's the birthday parties and they all sound rather trivial, right? Under that $50 mark, but it adds up as a parent, you know how many birthday parties we have to go to on the weekends. I don't wanna say there's a right or wrong answer, but I think the key is communication.

So if there is a line in the sand that says, we are each putting $250 into this joint account and this is kind of like the kids disposable income, if you will, for this category and then we share that. It gets icky when it's like, hey, you Venmo me this or here's half of this and we're texting receipts to one another.

Nobody really likes that. But having a joint account also, depending upon reasons for the divorce and trust issues, you might not want to have that. So I think the key is just communication, whether it's let's have that joint account, let's put a fixed number of dollars into it. We both have access to it so we can have a debit card, use it solely for the children, keep receipts, or if it's monthly, I'm just going to do a tally

and give you a bill at the end of the month and make sure that we reconcile what that is. But the key is really communication because oftentimes it's like, hey, I'm paying child support, right? I'm not paying for X, Y, and Z. But there are things that when you have the children that add up that go above and beyond the normal expectation.

Sol (11:29)
Totally. I'm wondering now about bigger expenses, planning for college and educational expenses or maybe even medical. What do you recommend about that?

Melissa  Pavone CFP®, CDFA® (11:39)
So the college is a big issue and I've seen it both ways, where some people don't put the language into their decree and it's kind of just, we'll deal with it when we get there, which is a little

And then I've seen instances where, it's very specific as far as how much we're expected to pay up to either a certain cap or a dollar amount.

Or it's, let's put a fixed amount into a 529 plan and this is college. What I hate is when There's such a focus on the cost of college and people end up putting more money into their kids' college savings than their own retirement savings. And I always say You can take loans for college, but you can't take loans for retirement.

And so Sometimes I think there's such a focus because there's that guilt for our children. But inflation is really high and college is inflation plus three plus percent at this point. So it's not always expected to pay the full amount. I think that's like a societal pressure we put on ourselves as parents. And so that perhaps a fixed dollar amount.

or a, hey, we can contribute 10 grand per year, split 60, 40, everything above that, you can take loans or you can get scholarships or grants or financial aid. It's sometimes a better solution, because I've seen people really overextend themselves for their children's college and then suffer for it later when it comes time for retirement.

Sol (13:13)
Yeah, that makes so much sense. I mean, also, we don't know what the future is going to look like. You know, how much college is going to matter all that much in a post AI world. We just don't know. And we don't know what it's going to be like when it's time for us to retire. So I love this idea of putting on your face mask first, rather than worrying so much about making sure that you pay for their entire college education together.

Melissa  Pavone CFP®, CDFA® (13:28)
Yeah.

Yeah. And oftentimes when you're filling out that FAFSA form, there's financial aid and there's that I'm claiming the kid. No, you're claiming the kid. No, we're alternating claiming the kids. It's odd. It's even. Sometimes it pays to work with a professional and there are college professionals that specialize in the divorce world to help.

really show what makes the most sense. Because sometimes if you're filing separate or head of household with a standard deduction, it might not make sense and it's not going to move the needle. And so you can use that almost as a bargaining chip and say, hey, you have the higher income, you claim the child and that is better for your tax return. And then in lieu of that, you know,

I don't want to have to pay the health insurance or whatever it is, but there are options that it doesn't have to be that, okay, we're splitting everything down the middle, even an odd. And if people work together and just communicate a little better, everyone will be better off and there are some creative solutions in there that both parties would benefit.

Sol (14:21)
Right.

Right. A lot of co-parents, we don't know what to even ask or what the creative solutions could possibly be. So working with a professional like yourself that has been there, done that can really be helpful.

Melissa  Pavone CFP®, CDFA® (14:51)
Yeah.

Sol (14:53)
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Sol AI (15:15)
And now, back to the show.

Sol (15:17)
I'm wanting to switch now to mindset. With finances, money is security. And following a divorce, everything's changing, you're moving, it can be so overwhelming. What can you suggest to co-parents that are navigating all these changes and feeling insecure? How can they regain their security around money?

Melissa  Pavone CFP®, CDFA® (15:37)
I think it's really important to know your numbers, to know how much is coming in, how much is going out, what you own and the titling of those assets is very important and then what you owe. And I like to do this exercise before or during the divorce proceedings so they have a better

feeling for it and so that they can craft an agreement that works best. Because especially when there's kids involved, it's a zero sum game, right? There's only X number of dollars to go around. There's only X number of assets to split. And so you want both parties, no matter how angry you are or upset you are with one another, you want your children to have financially stable parents. I think that is

very important and sometimes we lose sight of that with all of the anger. But as much as the money, is such a big turning point, you have to think about, I always say health is wealth. Without health, the wealth doesn't really matter. And time is really our most valuable asset that we have.

We can all make more money. We can get more jobs, we can get a raise, we can get a bonus, we can spend we can cut back on our expenses and be mindful of those things. We all have the same amount of time. And so That is really important for the parents to realize: hey, we have X number of summers left with these kids. Let's not spend it

in court. Let's not spend it paying for the lawyers' summer houses, right? Let's work together and let's get through this and give our kids the best 13 summers of their lives because pretty soon they're not going to want to hang out with any of us. And we're going to have that regret of wasting that precious time.

Sol (17:28)
If one parent could make that decision for the whole team, that would be great. But oftentimes you hear that story of the one that keeps on dragging the whole system back to court again and again. And that's so hard. How would you coach a

a co-parent who's facing that circumstance where there's some legal abuse happening and it's draining them financially.

Melissa  Pavone CFP®, CDFA® (17:48)
It's really hard and I really try to work with other professionals that deal with amicable divorces. I'm a big proponent of collaborative divorce. Next week is Divorce with Respect week and there's a whole bunch of professionals who are willing to do

free 30 minute consultations with those parties who want to go the amicable collaborative route and not drag their families through the court system because you really lose all of the control for everything, for when the meetings are, for how long the meetings are, and there's that ripple effect that takes control of your whole life,

essentially your health, definitely your finances and your mental stability is just, you know, it wreaks havoc on all of it and all of the parties involved, right? Like it affects us at our jobs. It affects our children in their schoolwork and it just goes on and on from there.

When there's kids, you can't just cut someone off from your life. There is a time that we have like committed to be parents, we're in this together, whether we like it or not, we made this decision. Let's just forge through it together and do what's best and really put the kids above all.

Sol (19:07)
That's such a good message. Yeah. Doing it collaboratively really saves a lot of money. You can incorporate more professionals and get more people on your team and really learn how to progress through it together in service of the kids.

Melissa  Pavone CFP®, CDFA® (19:23)
Yes, oftentimes people ask me I can't afford a coach, I have a lawyer and that, and it's actually less expensive by having more professionals that stay in their lane. I think that we need to

spread the word on that because you want a divorce coach or a mental health professional that's going to help you emotionally because this is uncharted territory, you've never done this before, you don't know what this looks like what this feels like is this normal, there's a range of roller coaster of emotions that you go on through this process and then there's the financial aspect of, how are we going to take this

and divide it where two people barely making ends meet now we have to go get another apartment or get another job or where can we cut these corners? And then there's the legal aspect, but if everybody stays in their lane and works together for the common interest of the family, it's just a more peaceful process.

Sol (20:21)
Yeah, I advocate for that as well, that there are so many professionals out there that can support you through this really painful process and who have been there before. They know where to look and how to navigate. A coach can save you a lot of money because they can tell you, well, don't bring that to the attorney. They can't help you. You need to go this way. I'm curious when we're talking about co-parenting systems and experts.

Besides a coach and a financial planner, what other professionals would you incorporate into a system?

Melissa  Pavone CFP®, CDFA® (20:51)
We have brought in co-parenting specialists, specific for the parenting plan. depending upon people's work schedules and travel schedules, I think that's really important. We have brought in real estate professionals. We talked about the house and how interest rates are low and how that has become an issue. Oftentimes, you call someone on the phone and you say, hey, is this

mortgage assumable? You get somebody that's on a help desk and says yeah sure it's assumable no problem and then you you proceed with everything and then it turns out that that person was just call center help and you never went through the underwriting process or, in order to go through underwriting you have to prove a steady stream of income for X number of months and that hasn't happened yet because you're not working or support hasn't happened so you can't put the cart before the horse and so

those real estate professionals can really help with that underwriting process when there is a house in question. So that's really important. Also, forensic accountants or business valuation analysts, because sometimes there are family-owned businesses. And that gets very, very sticky because oftentimes family-owned businesses run a lot of their family expenses and personal expenses

through the business. So when it comes time to buy a partner out, there's usually two sets of books and what we're using for the valuation versus what we're using for cashflow, those things don't line up. So not to get the IRS involved, but more so to say, what does this look like if we take all of our personal expenses outside of the business to make sure those maintenance and child support numbers are really fair

moving forward because nobody wants to come back to court, come back to a judge, come back to a mediator and have to open up a case again. So the more work you do on the front end, the better off I think you'll be. And a lot of people just want to rush, right? I just want to get divorced. I'm signing here. I don't care. There's not a finish line, right? There's not a party at the end of this.

If you put a little bit more work and time and effort, think you can really design your divorce. And that's important because we put a lot of effort into the marriage, and the wedding. But you have to put some of that same effort into dividing things and separating and cutting the cord.

Sol (23:09)
That desire to rush through is so real. Just close my eyes and I just want to get through this and get past the conflict. But when you do that, you might miss something really important.

Melissa  Pavone CFP®, CDFA® (23:18)
Yeah, and it's great that people bring in other professionals. I'm a big fan of mediation, but I always suggest having a consulting attorney look over before you sign on the dotted line just to make sure nothing is missed. You know, a lot of times in legalese it's hard to know what you're signing. These are big documents that are

way above my pay grade. To have another attorney that is looking out for your best interest, it's worth that one to two hours to say, Hey, can you review this? Is this exactly what I think I'm signing? Is there anything in here that, raises a red flag or could be a problem later?

Sol (23:58)
How do you suggest that co-parents navigate finances with their children or how do they teach financial literacy to them?

Melissa  Pavone CFP®, CDFA® (24:06)
That's a good one, and one I'm still trying to figure out as a parent. I go back to the story that my daughter broke her water bottle and needed a new water bottle.

I at night put her to bed and ordered a new water bottle. She woke up the next morning and there was an Amazon delivery package of a brand new water bottle. And she was like, wow, great, thanks mom. And I sat there after I dropped her off at school and I was like, how great is it that we live in this technological world

that I can just snap my fingers and something can appear at my house in less than 24 hours. At the same time I felt terrible she never saw me order it. She never saw me pay for it. She never saw me research it. She never saw me have that exchange of money

for it and so not everything is a teachable moment but I have an inherent guilt like she just thinks she can whisk her fingers and now there's a new water bottle.

Divorced or not divorced, just as a parent, the financial literacy piece is a heavy one. You just try to make it those teachable moments. My husband and I, when we go on vacation, we try to give the children,

I wouldn't say an allowance, but spending money for the trip, for a weekend. And so we try to empower them to say, "Hey, here is your $20. You can use it at the ice cream store. You can use it at the candy store. You can buy something at the toy store, or you can put it in your pocket and bring it home with you. Those are your options. And so if you spend it at the first store and we go to a second store and you don't have any money left..."

trying to just see the value of a dollar. My kids are young, but I see them trying to start adding things up. Like, "okay, if you buy this, then I can buy this. Or if you buy this, let's just share one ice cream cone, cause we might want this" --it's those times when you have those teachable moments, but

it's hard, right? If you're not getting along with your spouse or you are divorced and co-parenting to say "mom buys me everything," or, "you're mean, you're not giving me an allowance." I think that getting on the same page with your co-parent is important for that case, because we all want our children to be fiscally responsible and we don't want them to be entitled.

That's hard in today's age. Divorcees tend to overcompensate, there's the guilt. "I haven't seen you all week. I'm taking you to the store. You can buy whatever you want." So there's some of that, that goes on.

In the long term, think about the values that you wanna instill in your children and the financial habits that you want them to have. think It just goes back to communication, which is hard with co-parenting.

Sol (26:35)
and.

Yeah, and depending on the co-parenting situation, there may not be a lot of communication, and there may not be a lot of alignment, but there still is this idea that you should lead your kids through example, right? That if you're just buying things and showing up on Amazon and there's disconnection for yourself about what you're spending and why, and you're always buying new stuff, then that's teaching your kids a certain way.

But if you're actually engaging with them and teaching them some habits where they can think about, or you talk about delaying a purchase, maybe something that you wanted, but you're gonna save up for it. I wonder if that's something that co-parents could do.

Melissa  Pavone CFP®, CDFA® (27:17)
Yeah, there's a good book. I actually read it to my son the other night Pete the cat wants to buy a shark bot and he doesn't have enough money and so the book goes through all the things that Pete saving up money for the chores that he does in order to get the money but then there's that temptation of like hey let's go to the movies. It's gonna take longer to save up for the shark bot and

let's go out for hot cocoa. Like, no, let's let me make hot cocoa at home because I don't want to take money from, the shark bot piggy bank. Those books that are on the children's level sometimes will help and really incorporate the children into some of the decisions that you make as a parent. If we're talking about going on vacation, "do you want to go tubing or do you want to go

skiing? This is the cost of this. This is the cost of that Which would you rather do?" and having some choice so that they see there's a cost associated because like you said we're often in this cashless society where things just magically appear. There's not a physical handoff of money, credit other day my son found an old

Marriott hotel key card from a conference I was at. He's like "this is my credit card Mom, I'll buy you dinner" and my husband and I just looked at each other like if it was that easy. But from their point of view, it's small. It's plastic and we use it to pay for things. My husband looked at me and he's like "you're the financial planner I'm giving this one"--

Sol (28:40)
You handle this.

I love that. Could you give us one or two parting words of wisdom for co-parents in regards to just financially navigating divorce and co-parenting?

Melissa  Pavone CFP®, CDFA® (28:51)
I would go back to: communication is key and that includes communication with yourself and being honest about your numbers. That's something we all struggle with, I think. And putting the children first. But it's definitely worth the investment to have professionals to help guide you along this path.

Sol (29:10)
That's wonderful. Thank you so much, Melissa, for being on and for listeners who would like to connect with you and learn more about your work. How can they find you?

Melissa  Pavone CFP®, CDFA® (29:18)
Sure, my divorce practice is Mindful Divorce Partners and it's just MindfulDivorcePartners.com

Sol (29:24)
Great, we'll put that in the show notes. Thanks for being on

Sol (29:28)
Thanks for joining us on the Coparenting Beyond Conflict podcast. To support our show, subscribe or leave a rating. Links for all books and resources mentioned on appear in our show notes or on CoparentingBeyondConflict.com. See you next time.

Sol (29:46)
The commentary and opinions available on this podcast are for informational and entertainment purposes only, and not for the purpose of providing legal or psychological advice. You should contact a licensed attorney, coach, or therapist in your state to obtain advice with respect to any particular issue or problem.