Success Story: Keep the House

Written By: Gayle Rose Martinez

Editor’s Note: If you have a success story that you would like to share, please email Jill Ladouceur at ladjill@me.com

Maine is primarily a rural state. USDA Rural Development home loans consider all of Maine rural except for Bangor and Portland. There is a high percentage of military personnel in Maine. Nationally, about 5 percent of the population have served in the Armed Forces, but in Maine, 10 percent of the population have served in the military. The only military installation in Maine is Portsmouth Naval Station, so most currently serving are members of the United States Army National Guard, Air National Guard, and Reserve components. The National Guard and Reserve service members who live in rural areas have much less support from the military, because there is no central place to access a PX (Post Exchange), commissary, counseling,  or other kinds of support. The resources that are available often require significant travel to access.

As the local Military and Family Life Consultant, Personal Financial Counselor for Maine, I was asked to provide financial education to a work site that had full time government employees—technicians, who by job definition are also in the National Guard. This request came after the sequester in 2013.  The loss of drill paychecks hit many hard as they were an essential income source for many. This loss of income led to an increase of requests for financial assistance.

After I provided a few basic money management classes, several of the employees met with me individually to develop a spending plan and strategies for building savings and debt repayment. Through these contacts with the work site, it became apparent that most of the employees did not participate in the Thrift Savings Plan (TSP)—a defined contribution plan for Federal employees and members of the uniformed services.  Also, few had any savings for emergency or non-monthly expenses.

One soldier said he had no idea how basic money management worked and the classes helped break it down to simple concepts allowing him to understand for the first time in his life. Another stated he thought the TSP was a way to save for emergencies.

One couple I met with, John and Sue, were three months behind on their mortgage. Sue had recently become disabled and lost the ability to work. She had been working full time. The loss of her income decreased their household income by a third. When the sequester came, they lost all hope.

At our first meeting, I asked what they wanted to do and they both said, “save the house.”  They had just received a notice that a foreclosure action had been filed. Also, John had recently purchased a brand new truck just before Sue lost her job. I suggested that in order to save the house they would have to radically change their lifestyle until they recovered the lost income. They agreed.

At first, I asked them to track their spending to make sure we were capturing all of their expenses in the spending plan. Once we felt confident that the spending plan was accurate, we identified the exact amount of the monthly deficit. It was substantial. This number helped John and Sue break through their denial so they could see their situation clearly. At this point, I asked John if he was willing to give up the truck. By the next time we met, he had come to terms with letting it go.

Each week John and Sue found creative ways to reduce expenses. It was like layers of an onion, until they finally were able to significantly close the gap between expenses and income (which included savings). John was able to get grant dollars through the Maine Military Family Foundation for two months of mortgage payments which stopped the foreclosure proceedings. He also took on some side jobs to increase income.

Sue found a way to create a small amount of income that did not challenge her disability. She also applied for Social Security disability benefits. The couple agreed that they would file a Chapter 7 bankruptcy to discharge the significant debt that had accumulated, primarily from the loss of income. Because of the potential impact on John’s security clearance, he met with a Judge Advocate (a military attorney) to seek guidance prior to filing.

We met for a little over three months;at first weekly, then every two weeks. John and Sue committed to meeting weekly with each other to review their progress on their new spending and saving goals. One year later they still have their house and are building savings, and had accumulated no new debt.