Lee, 57, and Anise, 50, are facing a financial nightmare. Lee has been out of work since January, and he hasn't been able to find a new job. Anise, meanwhile, isn't working either. She's suffering from cancer and her health is not good.
Money was a problem for the family before Lee lost his job. Anise's medical bills, along with those Lee received after heart surgery five years ago, has left them $50,000 in debt to doctors alone. Additionally, the couple's medical insurance - now under COBRA - will run out next month.
They haven't been able to pay their other bills, either, and they're several months behind on their mortgage. The bank is preparing to foreclose on their home.
"I want to stop the foreclosure on my home and repay my bills," Lee says. "I have been applying to many different positions as I go through job search sites, one of the biggest problems that I am coming across is the fact that my credit rating is so very low - yes, companies do look at this - and I guess the companies are afraid to take a chance with me."
Lee and Anise, whose names have been changed, have few assets left. Anise has $3,500 in an old 401(k) plan and the couple has $6,000 in checking.
Newhouse News Service asked Reed Fraasa, a certified financial planner with Highland Financial in Riverdale, to help Lee and Anise get on the right path to save their home.
"They are currently in a crisis mode of planning," Fraasa says. "This is not a good place to be, and it is understandably very difficult to think straight when they have the pressure of collection agencies and Anise's medical condition weighing on them."
The couple's first challenge is mental. Fraasa says they must believe they can overcome the financial hardships they are experiencing. Second, Lee must continue seeking employment of any kind - working at a fast food restaurant, delivering newspapers, anything. Having a job will not only bring money in, but it will show lenders Lee is trying to rectify an ugly situation.
Fraasa says until Lee finds a job, he shouldn't stop asking people for work. He says Lee should consult the newspaper's classified section, ask friends, go to businesses. Lee should reach out to people in his industry, but he also should focus on large retail stores and other organizations where he can get health benefits.
The second thing is Lee and Anise must control their expenses. Fraasa found several areas.
"At this point, they cannot afford any of the items we call discretionary," he says. "Although these items have become important for our modern lifestyle, they are not necessary to survive. Every dollar will make a difference."
Fraasa's suggestions include: Use only the house phone instead of the cell phone, saving $200 per month; cut premium channels and downgrade to basic cable; discontinue internet service, get a free Yahoo or other e-mail address and use the library for internet access to save $30 a month; cut back on clothing purchases and stop dining out.
Next, Lee and Anise must act on their mortgage. Fraasa says there's not much they'll be able to do without Lee finding a job, but once he secures work, he will be able to access resources to help negotiate with the bankers. In the meantime, Fraasa says they should contact Money Management International, a nonprofit consumer credit counseling service, at moneymanagement.org or (800) 308-2227. They are a legitimate service that has a lot of resources to alleviate consumer debt and housing issues, he says, and the consultation is free.
"They charge a small fee for consumer debt-management services (they can get the collection agencies off your back), but only if you have a job," he says. "Housing services are free."
Finally, to secure health insurance for the family, the couple can investigate state services at state.nj.us/humanservices/dmahs/dhsmed.html or (800) 356-1561. They also should try NJ Family Care at njfamilycare.org or (800) 701-0710.
Get With the Plan involves readers anonymously divulging their personal financial information in exchange for free advice from a professional. The feature is designed to illuminate personal-finance concepts and isn't a substitute for actual financial planning or dedicated professional advice.
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