Five years ago, as part of an Akron Beacon Journal yearlong project looking at the economic challenges of the middle class, five Akron-area families agreed to talk about their lives and their finances.
They were chosen to represent different segments of consumer behavior.
Each was tweaking a budget at the time to make improvements in their financial health.
Today, the Beacon Journal reports on two of the families, who agreed to go through a five-year financial checkup. The other three families all said they are fine and dealing with life as it comes.
The two families — Donn and Janet Ehrich and Laurel Kunkel — have differences in their bottom lines in measuring monthly expenses and incomes. Five years ago, they were also on different sides, but the gaps are larger now.
The Ehrichs, a Goodyear sheet-metal worker and retired schoolteacher, who make about $86,000 a year combined, had a surplus of $163 a month five years ago and now have a surplus of $1,233.
Kunkel, a divorced mother of two teen girls who makes about $32,000, had a deficit of $194 five years ago that has grown to $411 a month.
The Ehrichs experienced several health issues and related expenses and Laurel has dealt with the added costs of two teenage daughters coupled with the loss of alimony payments and a reduction in child support.
I’ll explain the nitty-gritty of how their budgets changed, but first want to note that Victor Russell, regional operations manager for Apprisen, the former Consumer Credit Counseling Service which partnered with us for our project, said Kunkel’s financial situation is similar to what families are facing these days.
“Obviously, Laurel has had a lot more challenges than the Ehrichs,” Russell said. At Apprisen, counselors often see families who are struggling to make ends meet, he said. “Underemployment is still a big issue. ... Individuals make substantially less overall.”
Still, for Laurel, although her monthly take-home pay has decreased and she’s curbed some of her expenses, she struggles but is not in a dire situation where her bills aren’t being paid.
“I take it one step at a time. That’s all I can do,” she said.
While the Ehrichs have been able to manage their expenses to be in a savings mode, they’ve had to do some hard work to get there, Russell said.
“They have been able to plan for those types of expenses they didn’t see coming and that made it less of a burden on their overall budget,” he said. “They didn’t have to take it from somewhere else.”
Jay Seaton, area Apprisen president, said consumers can learn a valuable lesson for their own budgets.
“To presume that financially tomorrow will be just like today [or even better] is just not the best approach,” he said. “Live your financial life at least in part by creating a ‘cushion’ for the rainy days ... and carry as little debt as possible,” he said.
Donn and Janet Ehrich
Five years ago, when the Ehrichs first met with Apprisen credit counselor Cheryl Hall, they immediately “fixed” their budget and found a large cushion when they realized they were spending $1,315 a month dining out. The couple hadn’t realized they were spending so much and it wasn’t putting a pinch on their budget since they had done a lot of financial preparation before Janet retired as a schoolteacher in 2008. They had done a lot of pre-planning by replacing potentially expensive things in their home such as the roof, new appliances and furniture.
Janet began cooking more and they almost immediately found extra savings. They took a lot of ribbing from Donn’s co-workers and criticism from readers, who couldn’t believe they spent so much on food.
But the Ehrichs also found out that sharing their financial story helped others. A clerk at a grocery store stopped Janet and said it prompted her to discuss with her husband how they could pre-plan for retirement.
They refinanced their home-equity loan, knocked off two years and reduced the interest rate from 6.9 percent to 3.5 percent. About $21,000 remains on that loan, which was to put an addition onto their paid-for Norton house.
The couple has also had challenges and heartache.
One of Janet’s adult daughters from a previous marriage passed away unexpectedly after Christmas in 2008, so the couple had to deal with some funeral expenses.
For a while, Donn’s brother was living with the couple in their basement, but has since moved out. The couple also spent money to remodel their bathroom in 2009 after Janet, now 70, had some difficulty recuperating from an illness.
This year, it was Donn’s turn for medical issues.
The 61-year-old had a knee replacement this spring, which kept him off his feet and away from work for much of the summer. He also had back surgery last fall, which also kept him off work. That also meant Donn couldn’t rake the leaves, shovel snow or mow the lawn, so the couple had additional costs of $160 a month. Donn was also recently diagnosed with diabetes, so the couple is researching those new costs.
Janet had cataract surgery and needed new glasses that weren’t covered by insurance and cost $400.
Their new furnace also went out and, though it was under warranty, they still had to pay $250 in labor costs.
“It’s all little stuff you don’t think about,” Janet said. “There has been a little bit more of a pinch.”
But Janet has always been the worrier and liked to sock away extra money when she could.
“Thank goodness we had this extra money,” she said.
At the time of the medical costs, Janet took from extra money they were putting into a credit union.
“Little hoarder that I am, I started putting that extra money back,” she said. The couple has $29,000 in savings.
“The bottom line is we haven’t had to dip into our big savings account,” she said.
The Ehrichs also needed to replace both of their vehicles since, as Donn put it, they were both “nickel and diming us.” They spent $5,000 on one car and $12,000 on another — both used vehicles.
“It’s all interrelated in how they’re able to afford two new cars, weather the medical storm and still have $29,000 in their savings account,” said Russell, the credit counselor. “It can be done, but it’s going to take some self-reflection and how you are spending money and your goals.”
Janet thought about paying off some of the couple’s loans instead of adding to savings.
“I like knowing the money is there if something comes along,” she said. “The money we’re paying on the loan is not backbreaking.”
Janet said the couple has the luxury of helping buy school clothes for eight great-grandchildren. She tells the adult children to “let us do it while we still have it” because when Donn retires, they may not have as much extra to help.
When the Ehrichs met with money coach Hall, Janet said they had stopped paying an extra half payment on their home-equity loan, a suggestion from five years ago. When Janet asked Hall if she should pay off the loan, Hall said it was secured debt at low interest, so she challenged them to instead pay extra on their new cars. The Ehrichs agreed.
The couple said they will re-evaluate when Donn retires, which won’t be for several years.
“We’re not by any means rich, but we’re not hurting either,” Donn said.
Five years ago, Laurel wanted to show her daughters that she could handle money properly. At the time, Laurel, a divorced mother, was worrying about how to make her already tight budget work when she would lose her alimony payments the following year. She also wanted to send her oldest, daughter, Celeste, to a private Catholic high school, St. Thomas Aquinas, and eventually daughter, Claire, too.
Fast-forward five years and Celeste graduated from St. Thomas as valedictorian and just headed off to Walsh University. While Celeste was able to get some scholarships and grants, she will take on some loans, which makes Laurel feel bad. Laurel said she knows Celeste will need some occasional help and she will do her best.
“It’s also not like my budget will be great without her,” Laurel said. “Not even close.”
Laurel’s overall income has fallen, even though her salary as a school secretary stayed the same. She no longer receives alimony and before Celeste turned 18 recently, the child support for the girls had fallen since Laurel’s ex-husband retired and his income went down. Laurel no longer will receive child support for Celeste.
Laurel has worked on adjusting to a lower income but still comes up short each month.
Her daughters are growing up with more expenses, such as an extra car (a 1997 Buick Skylark from Laurel’s mom after she went into a nursing home) and the accompanying gas and maintenance costs.
Laurel used to rely on her 85-year-old mom for financial “emergencies,” but since the nursing home costs are straining her mom, Laurel no longer counts on that assistance.
Both girls were very involved in the Canton Ballet, which brought dance-related expenses. They did drop band as an activity.
Until Celeste’s graduation, there were also two girls at St. Thomas. Laurel received some assistance, but costs still added up.
Credit counselors and financial planners had Laurel cash out two life insurance policies worth $29,000 to switch to a cheaper term insurance five years ago. Laurel said she occasionally needed some of those savings and has about $16,000 now.
Laurel said she hasn’t been hurting to the point where she can’t pay the bills.
“You keep adjusting. I’ve had to go back to the cheapest things in the world. In the last year, I haven’t bought clothes for myself,” she said, adding that she’s considering eliminating cable TV.
“I feel I need to do something to cut back. I haven’t imploded,” but she thinks it’s in her nature to worry.
But, Laurel says, the sacrifices for her girls were worth it.
“I laugh because last year was the best year for my kids. I know these are really right decisions I’ve made.”
Both daughters have been good about helping Laurel keep expenses down, she said.
Celeste took an idea for a $600 prom dress she saw in a magazine, found a similar, but cheaper dress and had her aunt make a tulle skirt to wear on top.
“It looked so different. It was light green cotton candy and was $150 total,” Laurel said.
Laurel said she’s learned to always expect something to come along, like costs this summer to clean up fallen trees after a storm.
“You just ride the waves and hope you make it,” she said.
Betty Lin-Fisher can be reached at 330-996-3724 or firstname.lastname@example.org. Follow her on Twitter at www.twitter.com/blinfisher and see all her stories at www.ohio.com/betty.