In January we did our taxes and got another shock: Mark owed thousands. In 2007 he had panicked, watching his stocks fall, so he gambled and took everything out of the previous investments, and put it all into banks. Hindsight will tell us all that it was an unfortunate move. Investors will know that when you pull stocks out of one place to buy something else, it’s counted as income. Though Mark never saw a penny of it, the IRS saw that he “earned” about $140 thousand in 2008 by selling stocks. In his despair at seeing banks fail and all his savings evaporate, Mark did not remember to hold anything aside for paying taxes.
Catch up to our story if you like, by reading Chapter 1, Chapter 2, Chapter 3, Chapter 4, and Chapter 5.
24) We did manage to talk the IRS down from owing $46 thousand to owing $18 thousand, but what’s the difference when we have nothing to pay it with regardless?
25) I was thankfully spared from owing taxes, because of my incredible loss on selling the Massachusetts home.
26) Eventually the stay on foreclosures was released. We chewed our fingernails. In April 2009 we received our foreclosure notices.
The paperwork that went into our response was tedious, but we were willing to play their game for a chance at a new agreement. We began hearing stories about how people had their interest rates reduced to 3%, or had the amount financed reduced from $400 to $300 thousand – huge benefits offered to those who were willing to work with their lenders and to pay off their debt somehow. We had hope, and pressed on.
Part of our requirement was that we had to call a credit counseling agency. I called one of the numbers listed in the Wells Fargo paperwork. I talked with a wonderful woman who asked a million questions and gradually began to lose her assurance that she could help us. “There is no way my company could get you better rates than what you have,” she said. “You are managing your finances very well.” Hm. Small amount of good my smugness did for me at that point. But regardless, I had talked with the credit counselor. I had upheld my end. What would Wells Fargo do for us?
27) We had been asked for budget spreadsheets and copies of taxes and pay stubs on three separate occasions. We had been asked for letters explaining why we wished for a mortgage modification. Finally they responded that we had been approved on a trial basis. Rejoice! They came up with a new, lower monthly rate, and said if we paid that new amount for three months in a row, they would consider installing it permanently. They had reduced our obligation from $1624 a month to $1185. We were thrilled. Now we could afford everything on my salary alone.
We paid $1185 in May, June, and July, and then called Wells Fargo. They had stopped the foreclosure process, and our house would not go up for auction. Whew! But that’s all they could tell us. “Keep paying that same amount,” they always said. “We will contact you as soon as we get to your case. We can’t guarantee it, of course, but the $1185 you have been paying will most likely be your payment from now on.”
Months trickled by. My student loan forbearance with Direct Loan expired, and they requested that I begin paying another $210 a month in addition to the $223 I am already paying in student loans to Sallie Mae. And, in the time since I had last reviewed my account, I saw that the amount I owed in student loans had climbed to over $80 thousand. Why, again, did I go to school? What an idiotic thing it seemed to me. What a fool I was to buy that classist ideal that school is the path to a better life. Well, not from what I have seen. I put that portion of my loan back into forebearance.
28) When my tax money came in, I paid off a credit card, and paid off Mark’s student loans.
29) Mark got a job in July, after 13 months of unemployment and no unemployment compensation.
Finally we didn’t have such bitterness when hearing news about unemployment benefits extensions. We had applied for food stamps, medical care, housing assistance, heating assistance, and were turned down for everything because I make too much money.
Finally we didn’t have to listen to all the ignorant comments from people intending to help, saying, “If you haven’t found a job, it’s because you aren’t trying hard enough.” Or “Lower your sights and you’ll find work.” And, “Apply to 10-20 jobs a day. Unemployment is a 40-hour-a-week-job.” And our favorite, “Have you tried looking outside your field?” Thank god there are people who have had an income through all this, and have had no reason to understand what it has been like for suffering families. But still, if you think you’re helping someone by saying those phrases to them, you aren’t, so shut up.
30) With the new lowered mortgage payment, and second income, you’d think we’d finally be in a comfortable place, but it didn’t work out that way. Suddenly, we had the option to take care of more responsibilities, and all of them cost money.
We scheduled dentist appointments for everyone. We took both of our clunkers to the shop so that they would pass emissions tests and we could renew our tags and drive legally again. Both cats went to the vet. I paid off a loan from my 87-year-old grandmother (I HATE owing money, and especially hate owing people I love). I started getting the mental health therapy that was long overdue. Bought our kid new clothes that she desperately needed. Paid off another credit card. We continued our pared-down lifestyle of no cable, no home phone, very few dinners out, no splurging on little things that catch our eyes. We ate tons of food from our small but unexpectedly productive garden.
31) The last week of September our final paperwork from Wells Fargo finally came through! But we were confused with what it said. Rather than the $1185 we had been paying, they had finalized our bill at $1536. And even though we had been making payments on time since May, the money had been held in a separate account, and not paid against our debt. Their records showed that we had not paid for months, so 1624 x 7 months = 11,368 + 207,000 still owing = a new financed amount of $218,000 at 4.625% = $1536 a month.
Ok, yes, I concede that 4.625% is a great rate. However, we previously had a great rate of 5.875% that was fixed. Now we had an adjustable rate and the amount financed had jumped drastically! Months of fear, anxiety, and paperwork all amounts to this? A savings of 88 dollars a month? Yes, we defaulted on our mortgage, but we were under the impression that this “Making Home Affordable” plan at Wells Fargo was going to, er, help make our home affordable.
With Mark’s new job we could possibly afford the new payment plan (if we made a few more cuts), but we were furious. We had been abused. I saw it as a breach of contract. Mark called to ask what happened, and was told that the people who first worked up our paperwork had made a mistake by using our net income rather than our gross income, and the $1536 was the absolute best they could do. I called someone else at Wells Fargo, and she said if we don’t like the new terms, don’t sign the new contract and send it back with a letter explaining why we won’t sign it. So we sent it all back.
32) Then we wrote our congressmen, the CEO of Wells Fargo, President Obama. We’re hoping for a couple of form letters from someone, but so far haven’t received even that.
33) The IRS called and said, “Enough dilly-dallying! You must pay!! $300 a month, and that is our final offer.” So, I guess we must pay.
And here it stands.
November 13, 2009, we have two reasonable incomes and are as broke as can be. How is that possible?
- Mortgage – 218,325.79
- Sallie Mae – $57,570.70
- (Direct Loan Student Loans – $19,487.35) – in forbearance till April 2010
- IRS – $18,461.60
- Discover Card – $14,125.37
- Chase Visa – $4,737.38
That leaves a monthly amount of $289 to take care of: utilities, school clothes, food, phones, home&auto insurance (we have no health insurance), internet access, etc.
You try spending only 289 on every expense for an entire month for a family of three. It is not POSSIBLE. When my forbearance expires, it will drop to $79 per month available to live on. I don’t know what we will do. Wish us luck.
Here’s a quote I caught this morning, and I’m going to take courage in it: “Despair is for people who know beyond any doubt what the future will be. Nobody’s in that position. So despair is not only a kind of sin, theologically, but it’s also a simple mistake.”
Conscious Engagement 