Sunday, June 17, 2012

No Dearth of Opinions

The Oregonian, the newspaper for most of Oregon, ran this article about a Portland couple in financial trouble. I enjoyed (although that's not quite the word I mean) reading about the Carters because they have handled their finances in ways both right and wrong, and because they are drawing near retirement age.

They have saved for retirement, and have not raided their 401(k) to keep themselves afloat during the past two years that the husband has been out of work. They do not have credit card debt. They are helping out their pregnant married daughter and her husband.

On the less positive side, they have used their modest home as a piggy bank, and now, in their mid-fifties, still have 25 years to go on an increasingly non-viable mortgage. If they are not upside down, they are near to it.

The husband is retraining, but he rightly fears his age will be against him in the workplace, both in his prior work as an insurance adjuster and his new degree for medical billing. My question is why he waited two years to start the retraining. In retrospect, he needed to be working at least part-time at any job he could get or he needed to start school sooner. I'm guessing he didn't because he hoped to find work in his field, and it never occurred to him that it would be two years and he still wouldn't be employed.

In fact, I suspect the whole family thought his job loss was just a temporary set-back, not a major lifestyle change. This would explain their continued reliance on expensive meals eaten out and their unwillingness to stop shopping at one of Oregon's great, local and costly markets, New Seasons.

The comments section is enlightening as well, (123 posts at last count), though there's a fair amount of political nonsense to be waded through. The advice varies from the terrible (Cash in the 401K) to more thoughtful commentary on how to live on a reduced income. I admit to a bit of surprise that some posters felt it was somehow "unfair" of this couple to take advantage of a federal mortgage-suspension program. Personally, I think it makes no sense NOT to take advantage of any available program that would help the couple get back on their financial feet.

The comments were also interesting regarding the presence of the couple's daughter and son-in-law. Clearly the young couple needs to increase the 'rent' they currently pay, but if they're going to pay market rent (as some posters feel they should) why would they bother to stay with their in-laws? I assume the idea is to help both families--giving Mom and Dad some much needed cash while allowing the kids reduced housing expenses.

Too many of the comments focused on the mistakes that have already been made (and were highly judgmental in ways that suggested to me that the posters had never truly experienced any of the life experiences this couple had had) without offering suggestions for the here and now.

But I am in total agreement with those who suggested that the couple accept that their situation is NOT temporary and adjust accordingly. Should their earning power go up in the future, more power to them. But it may not. $39,000 a year (which is what they will have when the husband's unemployment insurance runs out) is a comedown from their past lifestyle, but it's not impossible for a two-person family to live comfortably, if not richly, on that amount.



11 comments:

Just me said...

I think alot of people do not accept that the situations they are in just may be forever. When my husband and I thought this way it made us work even harder(and still does) to get out of debt and hopefully change things. But I agree why would you wait two years to retrain..thats two years that other people had to get ahead of you.

But at least they didnt touch there 401

Judy

Early Retiree Tamara said...

In truth, this article frustrated me greatly. This couple did not live a financially prudent lifestyle even though they had the means to do so. They instead choose to live beyond their means, as evidenced by their decision to pull out almost $100,000 of their home equity to fund purchases they could not have afforded otherwise.

I extend every well wish to this couple, and hope they are able to straighten out their financial lives, but I don't believe at this point they are owed governmental help with their home. They took the money and ran it would appear. That's a whole lot different from someone who's underwater due to simple poor timing.

Jane said...

Very interesting article! It just goes to show that none of us are too far from the edge - a job loss in this economy can quickly put a family in dire straits. They are sure in a rough spot with their house - I don't know if they'll be able to save it. I would like to hear how they make out over the next couple of years. The end of the article sounded positive with the possibility of a job!

Juhli said...

I am not surprised at the level of denial and perhaps optimism they have displayed by continuing to live much of their previous lifestyle although also making other changes. So many people don't make immediate changes in their financial life after a job loss or other major life challenge. So I think we can all learn not to delay making tough decisions about our spending - we can always go back to a more luxurious lifestyle if things improve.

Sharon said...

Grace,
Thanks for the link to the article. I'm always interested in learning from others' mistakes. Articles like these serve a greater good, by trying to alert others to take heed. I'm finally doing that, as I'm working towards getting an emergency account in place and paying down my home as quickly as possible. Job loss can be devastating, but preparing a head of time while the money is flowing in is the answer. I wish the Carters well, and hope they come out on top.

nicoleandmaggie said...

The situation for unemployed folks in their mid-50s is especially depressing. Not quite old enough to really retire when they were expecting at least another 10 years of high salaries, but not young enough for employers to not discriminate. It does take a lot longer to find new employment, and when/if they do, they usually do take a big pay-cut.

lita1857 said...

I am ok as long as it does NOT impact me(the taxpayer me).Elders before me said it best "You make your bed, you lie in in".The Carters made decisions and now there are consquences, so be it.For those of us who have paid cash,worked multiple jobs,no vacations etc etc we should not have to shoulder the burden for people's greed and bad behavior.

LC said...

I am thankful my parents hammered home financial lessons through conversation and example throughout my growing up years.
My husband and I made our share of financial missteps as young marrieds. But fortunately we had time to recover and learn the emotional and financial freedom that comes from saving for an emergency cushion, saving for big purchases then paying cash, and living below your means.

And that freedom included lots of fun and adventures for us and our kids. Hope this couple successfully experiments with lifestyle changes that include satisfaction, joy and contentment without a disabling price tag.

priskill said...

So agree -- they would be crazy NOT to take the help, and I don't think it's unfair. It's so easy to judge but frankly, most of us were blindsided by 2008 -- no judgement needed. I sure do wish them well, like all of us!

Early Retiree Tamara said...

priskill - you endorse us taxpayers having to cover this couple for the removal and spend of over $100,000 in equity since they first purchased their home?

That frightens me immensely.

Anonymous said...

No, what is frightening Early Retiree Tamara, is the fact we (taxpayers) are more than happy to bail out businesses (auto and banking industry) yet when it comes to an individual asking for help, oh no, the answer is always along the lines of "you made your bed, now you lie in it"...as I see it, whether the taxpayers bail out businesses or individuals, it's all the same.