Dear Mr. Dad: I lost my job more than a year ago and have been unable to find another. My wife works part time, but doesn’t bring in nearly enough to cover our expenses. We have no health insurance, burned through the little savings we had trying to stay current on our mortgage and other bills. Now we’re faced with having to take money out of our retirement accounts to make ends meet. I’m so embarrassed by this whole thing that I can barely face my children. What can we do?
A: I’ve been (and still am) in almost the same situation and I definitely feel your pain. The good news is that you already took the first step: acknowledging that there’s problem. The bad news is that you’re in for a bumpy ride. Here are some steps that should help.
- Buy some throat lozenges and get rid of any weapons you have around the house. I’m only half kidding. This may be the most frustrating and infuriating experience of your life; you’re going to do a lot of screaming (hence the lozenges), and you don’t want to do anything to hurt yourself or someone else. Believe me, it’s tempting, though.
- Ask for help. Start by talking with your mortgage company about refinancing your home or modifying your loan. But be prepared for an exercise in twisted logic. My lender told me that I made too much money to do a loan modification but not enough to refinance. There were other options available, but I didn’t qualify because I was current on my mortgage. Apparently, being a responsible adult and paying my bills meant that I couldn’t get help. Defaulting, however, would have made it a lot easier (try to avoid this).
- Look into the Making Home Affordable Program. This actually encompasses two separate programs, HARP (Home Affordable Refinance Program) and HAMP (Home Affordable Modification Program). The rules can be complex and seem designed to exclude as many people as possible. In my case, conveniently placed loopholes made me ineligible for any program. Check your eligibility here: makinghomeaffordable.gov/
- Apply for insurance through healthcare.gov. But hurry: If you don’t make the February 15 deadline, you may have to wait until October to enroll. Ready for more twisted logic? My income was so low that I wasn’t eligible for Obamacare and had to enroll in Medicare. But then Medicare denied coverage because I have money in IRAs. If I take it out now, I have to pay penalties.
- Apply for SNAP (Supplemental Nutrition Assistance Program, formerly known as food stamps). Check your eligibility here: snap-step1.usda.gov/. Also look into local food banks.
- Ignore the media. Every day there’s a new story about the booming economy and dropping unemployment numbers. I’ve seen precious little evidence of that. Plus, those statistics are carefully manipulated to exclude all the people who have given up looking for work, who are working part time for economic reasons, or who are under-employed. According to the U.S Bureau of Labor Statistics—the agency that calculates the “official” data—the true unemployment rate is roughly double the official one.
- Use your situation as a lesson—if you can talk about it without scaring your children. Being in horrible financial straits (which, hopefully, won’t go on too much longer), made me a lot more sympathetic to homeless people and others who access government benefits.
- Get past embarrassment. You and your wife worked for many years, and a lot of the taxes you paid has gone to help people in need. Now it’s your turn, and there’s no shame in getting the help you deserve.