Kris Veldheer: Hi, I'm Kris. Jennifer Carlson: And I'm Jennifer and we live in Albany, California. Kris Veldheer: With our six-year-old son, where I work as a librarian. Jennifer Carlson: And I own a dog walking and pet sitting service. Kris Veldheer: And we've gone through some tough financial times recently, but we're looking to rebuild.
Music Sumi Das: 50-year-old Jennifer Carlson and her 47-year-old partner Kris Veldheer were living the good life with a nice home in the San Francisco Bay area. But then, they were hit hard by the economic downturn. Jennifer Carlson: I'm absolutely amazed at how life can change so quickly. I feel like I've spent the last, at least two years, in a constant state of anxiety. Kris Veldheer: I was very unprepared for the depth of how deep the cuts have been.
Griffin: Black fish, blue fish, old fish, new fish. Sumi Das: In 2007, the couple and their 6-year-old son Griffin, became casualties of the sub-prime meltdown and housing collapse. Jennifer Carlson: We had a house that we ended up not being able to sustain because our payment went from $1,100 to about $3,000 a month, so it was just sort of a process of decisions that we made, coming together in a very bad market, and we got slammed. I mean, you know, it's a memory. Sumi Das: The couple's home went into foreclosure. Jennifer Carlson: I sort of hurt for a while there, but now I'm kind of... Sumi Das: Today they're in a different house from Kris's parents. Like many Americans, Jennifer and Kris are looking to start over and get back on track. Kris Veldheer: You've got to make some tough decisions. You've got to make some tough choices. Sumi Das: Some of their main worries, planning for retirement, rebuilding their nest egg, and saving for their son's college education. They have huge doubts, if it's all possible. Jennifer Carlson: I've sort of reconciled myself to the fact that I'm never going to be able to retire. Because our retirement was basically the equity in our home, and when we lost the home, we lost it all. Our hope is that I'm going to be proven wrong. Kris Veldheer: Are some of these that set up on auto-payments? Jennifer Carlson: Yeah. Sumi Das: To help Kris and Jennifer figure out their finances, MoneyWatch.com called on its editor-at-large and financial adviser, Jill Schlesinger. Jill Schlesinger: That's a pretty decent diversified portfolio for a 40-something-year-old. Sumi Das: Here's a breakdown of Jennifer and Kris's financial portfolio. Their combined salary is $85,000 a year. Their debt, $2,000. And their retirement savings is $30,000. Schlesinger believes Jennifer and Kris first need to pay off their debt, and then create a safety net. Jill Schlesinger: Everybody should have an emergency reserve fund. It used to be that people would have three to six months in the bank. I think, under dire economic circumstances, and we pretty much qualify for that right now, six months is at least what people should have. Sumi Das: Also, they need to buy life insurance. Jill Schlesinger: In terms of life insurance Jennifer and Kris each need a policy. I think that it's important that they have, each of them have a $500,000, 20 year, level term life insurance policy. You can get this online, you can go to an insurance broker, but term life insurance is the cheapest, most efficient way, for them to fund their need. Sumi Das: They also should have Kris's parents re-finance the mortgage on the house they are living in. Jill Schlesinger: It's going to be important to fix that mortgage that Kris's parents have. Right now, it's an interest only loan. And that means, as soon as interest rates go up, and they will go up again, that the payment's going to jump up. So we want them to fix that loan with a 30 year mortgage. A 30 year, fixed rate mortgage, right now is available at below 5%. Sumi Das: And as a same-sex couple, they need some legal assurances. Jill Schlesinger: There is an interesting situation. Because Kris's parents own the home with Kris, and Kris's parents alone are on that mortgage, it's going to be critical that Jennifer have some assurance that if Kris were to predecease her, that she could stay in that house. There are a lot of legal ways to do this, and it takes going to an attorney and maybe creating a document that gives Jennifer the right to stay in the house, basically be a tenant during her life, and then after that, the house would revert back to Kris's estate. Sumi Das: Finally, Kris and Jennifer and going to need to buy in to the plan. Jill Schlesinger: I think that they have both come to this point, deciding they're going to change their lives. And once you have that buy-in, that religion, that emotional fortitude that, "We will get through this," surprisingly, that may be more important than the dollars and cents that are involved. I think they've got their work cut out for them, but they can do it. Sumi Das: And both Jennifer and Kris are optimistic they can do it too. Jennifer Carlson: I wish it would turn around faster, you know, because this is an uncomfortable place to live, and it's, uncertainty is a very hard thing to live with. Kris Veldheer: We're monitoring our expenses really closely and we're, you know, we're kind of cheap. We're both getting cheap about everything. Jennifer Carlson: I'm good cheap. I'm good cheap. Sumi Das: For MoneyWatch.com, I'm Sumi Das.
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