CNN Money is featuring stories of 15 households that are facing dire financial straits thanks to the economic downturn. Even a rebate check this summer won’t go far to help these families. While some better decisions may have helped them prepare for the direct effects of a recession, hindsight is always 20/20. Here are the some of the highlights from the featured stories:
Suzzanne Cromwell: A $250 commute
Suzzanne is a 39-year-old program coordinator from Massachusetts. “Sadly, my husband and I were priced out [Cambridge] when we decided to buy our first home almost two years ago. We decided to move to Lowell, about 10 minutes shy of the New Hampshire border… I will most likely need to leave my wonderful job as program coordinator due to the rising cost of gas. It costs me about $250 a month to commute to work…”
Billie Romero: Pocketbook strain hits home
Billie is a 32-year-old nurse from Louisiana. “We have two kids we are TRYING to keep in private school. [Like] most working couples, we want the best education for our children, because not just ‘the rich’ deserve private school. We want to be able to buy a home AND pay the bills.”
David Martorano: Waiting for the bust
David is a 37-year-old physician from California. “I am a physician renting in Pacific Palisades, where my practice is located… I have been a holdout from purchasing for the past two years because of my belief that the market is at least 20% inflated… People are still lining up to purchase entry-level properties, and paying absurd amounts, up to $700 per buildable square foot… When I ask them why, they still say it’s the Palisades and it can’t go down.”
Tracey Feller: Relocation disaster
Tracey is a 37-year-old purchasing analyst from Alabama. “I accepted a job in February 2007 that required relocation… we were sure that our house in Three Rivers, MI would sell. Not the case… our home in Michigan is set to got into foreclosure April 11 and we also fell behind on our home in Alabama, but were able to work out a repayment plan with the lender.”
RJ Hernandez: Subprime surprise
RJ is a 27-year-old vice president of business development from California. “As a single, 27-year-old executive and first-time homeowner who got a subprime loan (which resets in 2010) and who got laid off from a project management job after three years to find himself now working for a subcontractor working for senior management, let me tell you — these are strange days…”
Shannon McCauley: Burned by fuel cost
Shannon is the 28-year-old owner of Smokin’ Stokes BBQ & Catering. “Our in-store sells have dropped almost 50%… There are so many less people eating out these days. We have opened credit card accounts just to pay our bills, and those are almost maxed out… We are in our late 20s with a 2-year-old child and a mortgage. We are at the end of our rope. The answer is obvious: CUT FUEL COSTS NOW.”
These are just a selection of the stories, but the theme is clear. If a recession is prolonged (which I don’t think it will be, but I can’t see the future) many people are going to have to change their expectations. Private school may not be an option for the kids. It may be time to trade down to a more affordable house. Will fuel prices go down? Probably, but what if they don’t? The good job in the good location may be out of reach thanks to commutation. The dream of having a Full House like The Brady Bunch or Eight is Enough may be replaced with Two and a Half Men.
What other expectations will the “typical American” consider changing if faced with a new reality of recession?
America’s Money: In their own words [CNN Money]
Published or updated March 21, 2008.