Up until now, the effects of our bad economy had been happening to strangers. As a teacher in the DC area (where most people are employed in secure, government jobs), the economic crisis, while constantly in the news, always seemed far away. Anonymous. Happening to lots of others, but not me or anyone I know. Until now.
My aunt was laid off a few weeks ago from her job as an auditor for a pharmaceutical company. I found out about it a while ago, but I didn’t get a chance to talk to my cousin (her daughter) until yesterday, and it was then that I really got a sense of how dire my aunt’s situation is. My aunt is about 55, with no emergency savings and only about $20,000 in retirement, so clearly she hasn’t been a very good financial planner. However, she happens to live in a New England state where the housing crisis has been especially….catostrophic. She’s severely underwater on her home, and can’t afford to sell it. So now she’s unemployed, without any savings, and about to lose her home. She hasn’t made a mortgage payment in almost 2 months.
Her plan is to let the bank take her house and move back into my grandparents’ house in another New England state (she lived there with my cousin as a single mother for most of her adult life). My cousin is helping as much as she can, but she’s a new homeowner with a new baby, and she’s also trying to find a job in her new field. Thankfully, her husband is the primary breadwinner, so her financial situation, while not fantastic, is stable. Basically, she’s helping my aunt with resume writing, networking, etc., but can’t offer financial support. And this makes her feel terrible. It’s just a really bad situation, all-around.
I don’t want to paint my aunt as a victim. Clearly, if she had had emergency savings she could have sold her house for what it’s worth now, paid the difference to the bank, moved away and started over. Now, she has a black mark on her credit and won’t be able to buy again anytime soon. But at 55, financing a house is probably not a great idea. Not that she’ll be able to retire anytime soon, but carrying a mortgage into retirement is something to be avoided….but I digress. The point is, she could have been much better prepared, financially. As a single woman, I really wish that she would have been more educated about money, and careful with her earnings.
That being said, at 55, if she hadn’t been laid off, she could have done a lot to improve her finances before retirement if she had had a wake-up call of some kind. The economy really made her already bad situation much worse. The only positive is that she made an example in my family of Who Not to Become (financially speaking). Maybe none of us will make her same mistakes because we’ve all witnessed the devastation being financially unfit can cause. Maybe.
This is causing a lot of stress in my family. My cousin has always been like a sister to me, and she’s feeling so much guilt. This aunt is my mom’s closest sister, so she’s very stressed, too. I’m just sad for everyone involved, and scared straight about my own finances.
Blah. Happy holidays, huh?
