There but for the Grace of God…

Here’s a hair-raising story of not just one but several formerly middle-class Americans who today are living out of their cars. The issue has become so dire in California that a nonprofit in Santa Barbara has arranged with various owners of large parking lots to provide “safe” space for people to car-camp. Meanwhile, so much as a whiff of the word “homeless” makes it even more difficult—indeed, pretty much impossible—for these once decently earning workers and small-business owners to get jobs.

Looking at photos of Janis Adkins trying to make a home in the back of a Toyota Sienna—which happens to be the make and model of the Dog Chariot, though hers is newer than mine—I thought, holy Christ! How lucky am I not to be walking in her shoes! Like Adkins, I’ve never been able to get another real job; not for any lack of trying, either. But at least I’m still in my home.

So…what happened that kept a roof over my head while she was being put out on the street?

Well, I think it’s a combination of a few decisions made, long ago, that happened to be right (even though they were questionable at the time), raw luck, and social safety nets that kicked in just in the nick of time.

The Decisions

The big decision, maybe the only smart one I’ve made since I left my husband, was to pay off my house.

One day while I was tooling up the freeway, a little revelation dawned: once the alimony ran out, the mortgage on my home would consume over half my net income, which was, shall we say, not very generous to begin with. I was just getting by on a combination of the alimony and net pay for a full-time, non-tenure-track teaching position at the Great Desert University. In fact, most months I ran a little in the red. With the alimony gone, my salary would not cover the mortgage payments and put food on the table. I needed to pay off the $80,000 mortgage as fast as I could: clear it off the books before I had to rely on salary alone to live.

A small inheritance from my father, another from a remote aunt, plus some other money I then had in short-term corporate bonds would close that debt. My financial adviser had a freaking kitten when I told him I intended to cash out those investments and pay them toward the house. “You’re over-invested in real estate,” said he (my 403(b) owned an REIT), “and it wouldn’t be a good idea to pay off the mortgage.”

Right.

So I went right ahead and did it.

Eight or ten years later, I sold that house and used the cash to buy a comparable house in a quieter, better-kept part of the neighborhood, with a pool, a larger lot, and lots of upgrades. Selling price of the old house was more than twice what I paid for it.

If I hadn’t had that cash to buy this house, I’d be up to my nose in debt today, since it also cost more than twice what I paid for the first shack. And if I’d owed money to a bank at the time GDU canned me and all my staff, I probably couldn’t have paid it. Almost certainly, by now I would have lost my home, and I, too, could be living in a minivan under some parking-lot’s trees.

Other lucky/wise decisions:

• Bought a Toyota. Today, when I can’t afford to buy a newer car, it’s 12 years old, has 112,000 miles on it, and still runs like a top.
• Got in the habit of living frugally. Not being able to go out to eat, to take a trip, to afford cable or a cell phone, to see a movie or go to a concert: none of those is much of a hardship, because I didn’t do those things in the first place.
• Didn’t get another big dog. Few things will empty your bank account faster than the cost of owning large dogs. Especially German shepherds…
• Banked at a credit union, which did not then and still does not inflict nicks and gouges for the privilege of letting them invest my money.
• Refinanced the house my son and I were co-purchasing through the credit union, which made a loan modification as soon as we told them I was out of work.

Raw Luck

The expensive dogs were gone by the time I lost my job. Not that I wanted to lose them. But today I couldn’t even begin to pay the vet and drug bills for the German shepherd. I’d have had to find another home for her, had she still been living when GDU canned me.

The university laid me off on the last day that people were eligible for the 50% COBRA discount.

My health was good, my teeth were good, and I already had all the pairs of glasses and contact lenses I needed.

My car, all the appliances in the house, and the air conditioner were running well.

A hailstorm wrecked the roof and the ancient air-conditioner, causing the homeowner’s insurance carrier to replace both of those very expensive items, each of which will probably last as long as I’m likely to stay in the house.

The Social Safety Nets

No way could I have afforded health insurance if I’d had to pay the full freight of COBRA. Thanks to the 50% discount, which I grabbed just under the wire, COBRA cost me less than Medicare does. We might note, however, that Medicare costs approximately eight times what I was paying for an EPO that gave me access to the best doctors and medical facilities in the Valley. Still. I’d have been uninsurable if I’d had to pay the full cost of COBRA.

Mercifully, I was already eligible for Social Security. Although I was forced to take it at a much-reduced rate—I’d intended to wait until I was 70, another six years, to collect Social Security—it paid several times the amount of Unemployment Insurance, without the hassles. The $2,400/semester the adjunct teaching pays would have rendered me ineligible for UI, anyway.

And, thank God, I became eligible for Medicare on the first day of the month after COBRA ended. Paying eight times what health insurance should cost for less coverage and fewer willing providers is less than perfectly desirable, but at least I’ve got some coverage!

Overall, it was a confluence of decent financial management, one or two reasonably intelligent decisions, frugal living, crucial government antipoverty programs, and incredible luck that kept me from spending my old age in a minivan. Even though things can be difficult at times, at least I have my home and my health. So far. My mother was right: I am blessed.