How To Survive In This Economy
LIANE HANSEN, host:
This is Weekend Edition from NPR News. I'm Liane Hansen. The sputtering economy is making it increasingly difficult for Americans to make ends meet. Many people who once considered themselves middle-class are turning to government assistance and cutting back on everything from food to medicine. Today, we begin a series that looks at how the economic downturn is affecting the daily lives of average Americans.
Melissa Parker of Sacramento, California is one of our listeners who shared her financial struggles on our Soapbox blog. She and her husband, both in their late 20s, bought their first house two years ago with an adjustable-rate mortgage. It seemed like a good deal at the time. But now, with the high cost of gas, groceries, and student loan payments, the Parkers are in trouble. Melissa Parker joins us from a studio in Sacramento. Welcome to the program, Melissa.
Ms. MELISSA PARKER: Thank you.
HANSEN: There's a story on the blog about how you didn't think the economic downturn would hit you so hard, and the story you wrote was about your grandfather. Would you read it?
Ms. PARKER: Sure. When I was little, I used to think that my grandfather was so strange because he always had a pantry full of non-perishables. He used to tell me that he grew up during very different times, and he was raised to prepare for the worst, just in case. My rebuttal would always be something to the effect of, it's not the Great Depression anymore, Grandpa. Snap out of it.
HANSEN: So given what you're going through now, what do you think of your grandfather's habits?
Ms. PARKER: I actually think they're really smart. I'm going to start putting some of them into practice myself.
HANSEN: How are you getting by with food?
Ms. PARKER: Beans, rice, and multi-vitamins get us through. Actually, one of my very good friends gave us some gift cards to a local grocery store, and so we're going to go stock up on meat and - which would be nice - and hopefully stock our pantry full of non-perishables.
HANSEN: What do your husband and you do for a living? What are your jobs?
Ms. PARKER: I work in the finance department of a Indian gaming casino. My husband works for a collateral management firm. He's a supervisor.
HANSEN: Mm hmm.
Ms. PARKER: My second job, I work for a company that provides support to adults with developmental disabilities that are living independently.
HANSEN: And what kind of expenses do you have? What are your bills?
Ms. PARKER: Well, it's pretty basic. I mean, we have our mortgage, obviously, car insurance. We do have cell phones. We don't have a land line. We have basic utilities, electricity, gas, water, fuel for our cars. Our car payment, we do have one car payment. We have student loans. Right now, I owe 23,000, and we're paying over $800 a month on those, and groceries.
HANSEN: Do you have credit card debt?
Ms. PARKER: No.
HANSEN: So is all of this as a result of the mortgage you took out on the house?
Ms. PARKER: Yes, it is.
Ms. PARKER: Well, we were really excited about the prospect of being able to purchase our first home, and we didn't go to all the wonderful classes that are out there for first-time home buyers. And so we really didn't factor in a lot of the stuff that would come up, like homeowners insurance and paying for water and garbage and sewage and drainage, and it kind of just piled up on us.
HANSEN: So when you got the adjustable-rate mortgage, did you completely understand what that meant at the time?
Ms. PARKER: I think that I did understand what it was. However, I kind of ignored how - what a horrible loan it was. We have one of those famous 80-20 arm loans, the second 20 percent mortgage covered our down payment. And I fully expected to be able to refinance, and I didn't consider it an issue.
HANSEN: Has the value of your house stayed the same?
Ms. PARKER: No, unfortunately, it hasn't. When we purchased our home, December 1st of 2006, it was valued at $285,000. And the last time we got a rough estimate from our mortgage consultant, it had dropped down to under $150,000 in value.
HANSEN: Your mortgage is about to go up?
Ms. PARKER: Yeah, it is.
HANSEN: Tell us how it's going to go up and what you're going to do.
Ms. PARKER: Well, we have spoken with a mortgage specialist, and we're going to try and propose a mortgage modification. But if that doesn't go through, which not a lot of them are, December 1st, our mortgage will go up $300. And to be honest, I don't know where we're going to get it. We don't even have $200 left over at the end of the month. We have no savings. So I don't know what we're going to do.
HANSEN: Do you regret buying the house?
Ms. PARKER: You know, some days I do because, you know, it does put a lot of stress on myself and my husband, and it's hard to work two jobs and hold it all together. But then there's also mornings or nights where I sit in my backyard, and I love my house. It's the perfect house for us. I just - we should have waited until we had a down payment. That's the way that it's always been, and that's the way it should have stayed. And we got caught up with actually being able to own a home and didn't think about how this just wasn't right. It was just a little too good to be true.
HANSEN: That sounds like advice you would give to others.
Ms. PARKER: Definitely. It's wonderful owning your own home, but just before you enter into anything risky, think about the heartbreak that you're going to go through when you lose it.
HANSEN: Melissa Parker lives in Sacramento, California. She wrote into our Soapbox blog to let us know how the economic crisis is affecting her. She joined us from a studio in Sacramento, California. Melissa, thanks. Good luck to you.
Ms. PARKER: Thank you.
HANSEN: We are interested in hearing from you about how the economic crisis is affecting your life. You can write to us at npr.org/soapbox.
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