Steve Vetos walked through the empty rooms in the little house at 5210 Mount Audubon St. one last time. Then, he switched off the lights of his middle-class American dream and locked the door behind him.
As the truck laden with furniture pulled away from the driveway, he hoped the neighbors weren’t watching. That would be too much to bear.
It’s funny what you see as you drive away. He remembers the rose garden in the front yard, blazing in full color that September day in 2002. The hurt felt as if someone had punched him in the stomach. His wife, Tiffany, had fussed over those roses.
When he lost his job as a design engineer for Fujitsu telecommunications company, everything changed.
He began working double shifts, waiting tables at Applebee’s to tide them over. Tiffany stayed up most nights going over the bills, willing the numbers to change, knowing they wouldn’t.
Now the roses would belong to someone else. So would the house. There would be an auction and someone would get a real bargain. That’s how it works in foreclosure.
“The drive that day from Frederick to Aurora was the longest one of my life,” he says. “It was our first home, our dream. I couldn’t provide for my family. I had failed.”
The official word in Washington, D.C., is we are a nation in economic recovery.
Just look at the rising number of jobs, the rising stock market. Look at how a record number of people – 68 percent of the population – now own homes.
Doesn’t that all signal the good times are once again rolling?
Scratch the surface of national statistics and other data, and you will find an entirely different set, one that tells of a scary, mostly secret reality for millions of sensible, well-educated, hardworking families as they open their checkbooks:
Experts estimate that 70 percent live paycheck to paycheck, with little or no savings to cushion an unexpected crisis such as job loss, divorce or extended illness.
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Photo 1: The Vetos family – Tiffany and Steve have three daughters, Photo 2: Tiffany Photo 3: Cash pruchases are carefully logged into a notebook. The family Photo 4: This is the Vetos’ food log with entries and deductions on cash expenses. Tiffany puts in cash to her financial journal envelope for food. Photo 5: Tiffany and Steve now have a new home and sit down to check a monthly budget on paper and diffy out cash from a paycheck for expenditures for the next two weeks. Steve reflects the exhaustion of working two jobs, one of which starts most mornings at 2 am. Photo 6: Trystina, 7, tickles her sister Renee, 5, as mom Tiffany and daughter Alyssa have a dinner of tacos at right. Photo 7:Daughter Alyssa, 11, gets kisses from the family pooches. |
Simultaneous to the reduction in savings, consumer debt has risen to unprecedented levels. A generation ago, a typical family had about 5 percent of its annual income pledged to nonmortgage bills, such as personal loans, credit cards or car payments. Today it is about 35 percent.
The national foreclosure rate has more than tripled in the past 25 years. In the Denver area, 9,930 homes were lost in foreclosure during the first 10 months of 2004. That surpasses the 9,431 homes lost in all of 2003.
This year more U.S. children will live through their parents’ bankruptcy than their parents’ divorce. From September 2003 to September 2004, 1.6 million families filed for bankruptcy protection. That is roughly double the number in 1994 and five times higher than in 1984. Economists say millions more teeter on the brink and probably should file for bankruptcy but resist because of the stigma.
Nearly half of families with credit cards say they can make only the minimum monthly payments on outstanding balances.
One in three families in the U.S. with incomes of more than $35,000 have medical bills they can’t pay.
“The modern American family is walking on a high wire without a net, praying there won’t be a wind,” says Elizabeth Warren, a Harvard law school professor and author of “The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke.”
Together Steve and Tiffany Vetos were making about $80,000 a year when they went house shopping in the summer of 2000.
Good, solid money for a two-income couple in their late 20s with a decent credit score and a bright future.
They had three young daughters, two in day care. There was a lease on a truck, a car loan, a student loan and a couple of credit cards with a few thousand dollars charged on each.
It all seemed so doable if they were just careful.
A friend pointed them north to a new subdivision in Frederick called Summit View, where pastel-colored houses were popping up almost overnight, sharing space with the oil derricks and jackrabbits along the Interstate 25 corridor between Denver and Fort Collins.
“It had this great front porch, and we had friends up there. It was one of those neighborhoods where kids could ride their bikes,” Tiffany remembers.
They bought the two-bedroom house with a study in less than an hour. The agent at the builder’s sales office warned they had better act fast. They only had to put $2,500 down for a $205,000 house. The payments would be $1,700 a month, not including insurance or taxes – about $800 more than they were paying in rent.
A few weeks later, after the stack of closing papers were signed, they jumped in their car and raced to the new house. They lay on the new carpet giggling like kids. The walls still smelled like fresh paint. They were home.
Five months later, in March 2001, Tiffany got a call at work from her husband. He sounded strange, almost like he was crying. He choked out the words: “I need you to leave work.”
They met in a bar between her office at United Natural Foods and his at Fujitsu, both in Aurora. He was one of 10 employees laid off in one day.
“I had such loyalty to them,” he raged over his midday beer. He had been offered plenty of other jobs when he got out of technical college but always said no. He was happy where he was.
“We limped for a year,” Tiffany says. Their income was sliced in half, dropping from $80,000 to about $40,000. Their savings were nonexistent. The credit cards were soon maxed out.
Her husband got a part-time job at United Parcel Service making about $1,500 a month. He also began waiting tables, squeezing a job search in between.
Some weekends he would go 24 hours without sleeping.
Soon the collection calls began.
They refinanced their home to buy some time and quick cash. But they also added to the principal, wiping out any equity they had built.
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“We were juggling payments,” she says. “One month we would pay one thing, the next month we would pay something else.
“You know how they always tell you to just call your creditors and work something out? Well, it doesn’t work. I would ask, and they would say no. They wanted it all right now.”
By the time they were two months late on the mortgage, a real estate agent called. She offered to help them sell their house at a loss. Mortgage lenders will often forgive back payments after a sale.
“I must have still had some hope back then because I remember scraping together the money to have the carpets cleaned,” Tiffany says.
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Squeezing the middle
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After two months on the market, the house didn’t even get a nibble. Why buy a year-old house when you could build new in the same subdivision? They asked the builder, Capital Pacific Homes, to buy the house back. The builder said no.
Steve wanted to hold on. Surely something would break. He needed to prove he could take care of his family. But his wife was done with the house. She was scared if the situation went on much longer, they wouldn’t even qualify to rent.
She never once blamed him. Still, the strain was unraveling their marriage.
“I’m moving to Aurora, with or without you,” she told him one day.
He had lost his job, was losing his house. He was not willing to lose his family too.
They found a two-bedroom rental house in Aurora, closer to her job. They then let the little blue house with the great front porch slide into foreclosure.
On Jan. 8, 2003, at 10 a.m. it sold at auction in Weld County for $191,250 with $25,000 in arrears. The Vetoses got nothing.
“We’re looking for pants,” says Tiffany as she herds her three daughters through the crowded aisles of Ross, a discount clothing store, on a Sunday afternoon.
“And?” asks 11-year-old Alyssa, her eyes shining hopeful as she spots a blouse.
“We’re looking for pants.” End of discussion.
“One of the hardest things is telling your kids no,” say both parents. They used to shop at Old Navy and The Gap. Now they stick to thrift shops and outlet stores.
Eleven months after their first home was sold in foreclosure, the Vetos family is still struggling, living paycheck to paycheck. But they are determined not to repeat history. Theirs is a cash-only existence, and they watch every dime as if it were their last.
“We can’t trust ourselves with credit cards,” Tiffany says.
Her daughters have picked three pairs of sweat pants. The total is $19.35. Tiffany pulls a twenty from a special wallet with different pockets for different budget items. When the clothing money for the month is gone, it’s gone.
She learned that trick at the financial recovery classes she and her husband attend each week at their church. The classes follow the teachings of Dave Ramsey, a financial guru who, as a nationally syndicated talk show host, rails against the folly of easy credit and overspending.
Three months ago the Vetoses moved into a newly renovated ranch-style house in Aurora.
They figured it would be years before they could even think of buying another house because of their wrecked credit.
But within months of the foreclosure, their mailbox was stuffed with credit card offers and deals for easy homeownership.
“Let’s try,” Steve urged his wife.
He now has a job working at United Natural Foods alongside his wife. The pay isn’t as good as at Fujitsu, but it beats waiting tables. He still works part time at UPS to help pay off some old bills but hopes to quit after the holidays.
Tiffany recently got a promotion and a big raise. Their family income is now back up to about $80,000.
When they went house shopping this time, they were told they prequalified for a $226,000 house – $20,000 more than the price of the house they lost in foreclosure.
They chose instead to buy one for $207,000, putting down just over $6,000.
When the truck lease was up, they decided they could get by with a used car. They still had to finance it, but the 1996 Subaru Legacy cost $8,000 instead of a new, $25,000 vehicle.
In their financial classes they are told they should always have $1,000 in an emergency fund so they won’t have to pull out the plastic. So far they haven’t been able to do it. Something always seems to come up.
First, their dogs got sick, and the vet bills came to almost $1,600. They used the money saved by not having a mortgage payment during the grace period of buying a new house.
Then, the car alternator went out. So much for their fledgling savings account.
“We’re still very much on the edge,” says Tiffany. “Right now we’re paying what we owe. But it wouldn’t take too much to put us right back where we were.”
She rolls her eyes as the talk shifts to the national economic picture.
“If we’re in economic recovery,” she says of this country, “it’s on the back of everybody’s debt.”
She isn’t bitter, really. Sadder, yes. Wiser, definitely.
It now seems so long ago – only two years – when everyone was saying yes to them. “I just wish someone had said no.”
Staff writer Jenny Deam can be reached at 303-820-1261 or jdeam@denverpost.com.
