VIRGINIA BEACH
In October, Christine Barnes realized she needed new shoes.
She spoke with her husband, Jerry, who works for the Chesapeake Fire Department and is the family's lone breadwinner. He asked her to hold off while he collected some overtime to cover the expense.
A month or so later, Christine was able to buy a pair of sneakers: white Reeboks on sale at Kohl's for $30. Raising two small boys, ages 3 years and 4 months, the family lacks the cash for much beyond the basics.
"We're just not going out and buying things," Jerry Barnes, 35, says. "I guess you weigh necessity. We're not replacing things just because they're old. We're making do."
Middle-income families like the Barneses have kept the economy rolling in recent years with their steady spending. Now, though, they're cutting back. They are giving up many extras as they wrestle with a mound of debt, higher costs for food and gasoline, and a recession on the horizon.
In their single-income home in Virginia Beach, the Barneses are acutely aware of the precarious balance between their earnings and their expenses, and the potential danger of an unexpected tip of that scale - a child's sudden illness or a loss of wages.
Jerry Barnes makes a total of about $70,000 a year from his job with the fire department, occasional overtime pay and a part-time position as an emergency-response instructor in Virginia Beach. That puts the Barnes family above the median household income for the region, estimated at $56,000, based on the latest census figures, says Gilbert Yochum, head of Old Dominion University's economic forecasting team.
The Barnes' monthly bills - heat and electricity, credit cards, auto insurance, phone and Internet services - run about $1,300 or $1,400, not including groceries or gasoline. They pay a mortgage of almost $1,500 a month.
"What would put us in a bad situation is if I lost my part-time job," Jerry Barnes says. "I would have to find somewhere to make that money up. We would not be able to pay our bills."
Christine and Jerry Barnes are consummate money managers, aware of every penny - whether it's the balance owed to their kitchen contractor or the price of meat at the wholesale club where they shop. They buy their children's clothes and equipment at a second-hand shop, their bread at a local bakery outlet and their groceries wherever they find the best prices.
It's not that the Barneses won't splurge. In late 2006, they bought a 52-inch high-definition television set and accessory package for about $2,600. It now provides the primary source of the family's entertainment, replacing expensive trips to the movie theater.
They paid a contractor about $8,000 for a new kitchen countertop and cabinets, on which they pride themselves for getting a great deal. They enrolled their older son, Jerry, in a soccer program for a $50 fee, plus a $34 equipment package.
"That wasn't in the budget, buying that," Christine Barnes, 33, says. "But he was so excited."
In September, just before Christine gave birth to Cody, the Barneses refinanced their four-bedroom house on Club House Road, a raised ranch in a modest neighborhood not far from Lynnhaven Mall. In 1994, w hen he was single, Jerry bought it in foreclosure with a friend for about $95,000 and still owed about $78,000 on an adjustable-rate mortgage.
A new house of similar size would cost the Barneses $350,000, and the couple didn't want to take on that much debt. After refinancing for $190,000, they bought out the friend and remodeled their kitchen. They also paid off the loan on their Ford Expedition, which they bought new in 2005 for $31,000.
When the Barneses were deciding whether to buy a home or refinance, a lender told them they could afford as much as a $400,000 mortgage, but Jerry balked. He had heard about consumers who had taken on bigger loans than they could handle and now faced foreclosure.
"I knew that was as comfortable as we could be," Jerry Barnes says of his new mortgage.
The Barneses fit into a category of families who have borrowed against their homes and used that money to finance purchases. Nationwide, those who took on home-equity loans and lines of credit have accounted for about 30 percent of consumer spending, according to Mark Zandi, co-founder and chief economist for Moody's Economy.com.
Now, with housing values falling and their debt reaching a limit, U.S. families are reining in expenses - accelerating the economic downturn.
Christine and Jerry Barnes try to stick to a weekly budget of $150 for groceries, gas and other basics. With milk costing about $4 a gallon and the Expedition about $50 to fill up, it has become harder to stay within that limit. A recent trip to BJ's Wholesale Club cost them about $92, mostly for baby products.
More recently, Christine Barnes has become a keen coupon-cutter. On Sundays and Wednesdays, when the newspaper circulars arrive, she studies them for items she needs. She keeps different lists for Sam's Club, BJ's, Wal-Mart, Kmart and grocery stores. In her small leather planner, she groups the coupons by store, priority and expiration date.
On Wednesday evening, she and her husband sit on the sofa in the living room with the grocery advertisements, pinpointing the best discounts.
"Pork butt, 10 pounds for 10 bucks," Christine tells Jerry. "That's a good deal." She'll prepare barbecue out of it, slow-cooking the meat in vinegar, peppercorns and brown sugar.
The Barneses have cut back on dining out. A recent meal at Cheeseburger in Paradise cost them $45.
When they do decide to treat themselves, they like Warriors Grill, a nearby Asian restaurant. Dinner there costs the family about $22, plus tip, for relatively healthful, fresh-cooked food at a place where the owners know their names.
"They treat us like family. They walk around and hold our kids," Christine says. At fast food restaurants, "we're spending, like, $18 - for grease."
They also recently abridged their vacation plans to save money. At one point considering a week long trip to Myrtle Beach, S.C., the Barneses now plan to take a long weekend or two to Washington, where they can visit the National Zoo and museums for free.
Online, they'll look for a deal on a hotel room, preferably one with a small kitchen or refrigerator. That way, they can stock up on food so they don't have to eat at restaurants as often.
The belt-tightening of the Barneses and other families has begun to show in the bottom line of Hampton Roads businesses. Taxable sales in the region - reflecting purchases at retailers and restaurants - increased 4.8 percent in the first eight months of 2007 from the same time the previous year, says Vinod Agarwal, an ODU economics professor and forecaster. However, f rom September through November, that rate of sales growth slowed to 1.4 percent from the same three months in 2006.
"People are anxious," Agarwal says. "All this financial turmoil and talk of recession, it creates anxiety and people become more cautious."
The Barneses put some of their new kitchen items on credit cards. They typically avoid plastic, favoring the "12 months, same as cash" programs that many retailers offer. With these no-money-down, no-interest credit plans for a limited time, they bought their high-definition TV set at Circuit City and a stove and some new windows from Home Depot.
Such deals run consumers the risk of a huge, cumulative interest amount at the end of the designated period if they have any balance remaining. Jerry and Christine Barnes say they keep close watch on that timeline, usually paying off the balance well before the no-interest period has ended. They plan to use their tax refund this year to cover many of these outstanding bills.
With the expected economic stimulus package, which would give the couple an $1,800 rebate - including $300 for each of the kids - the Barneses say they probably will save it in their money market account. They'd rather bank the extra money than buy things, as the president and Congress suggest they should. "We'll just have to see what happens and where we are when the time comes," Jerry Barnes says.
When the couple married in 2003, she worked as a paramedic. She put in about 60 hours a week, earned about $40,000 a year and saved a good amount of it. But she eventually needed surgery for back problems and had to ease up on the emergency services work.
Then she took a part-time emergency-room medic job at Children's Hospital of The King's Daughters. She was earning about $900 every two weeks.
When little Jerry was born in May 2004, they realized the cost of day care would take more than half of her paycheck - and leave someone else to raise their child. In addition to that, fuel costs and time spent getting up early, Christine often would arrive home at night too tired to cook. That meant more money spent on eating out.
"We just collectively decided, for us, that we were going to change the way we did things," Jerry recalls.
Promoted to lieutenant in fall 2006, Jerry now earns about $52,000 yearly in base pay from the fire department. His part-time job in Virginia Beach pays him about $21 an hour, adding about $1,200 a month to the family's income.
In the past, Jerry would increase the contribution to his employer's retirement plan with each raise. As finances tightened, he stopped doing that.
"Right now, I'm just kind of being cautious," Jerry says, worrying about tough economic times ahead. "It's easier to stay more conservative and wait to see what happens."
Carolyn Shapiro, (757) 446-2270, carolyn.shapiro@pilotonline.com
Delicious
Digg
Reddit
Facebook
Google
Yahoo
Give The Barnes' A Break!
If Jerry didn't eat so much, the family wouldn't be in these dire straits financially! They had to spend $8000 to remodel the kitchen, otherwise, they would spend $45 every night at Cheeseburger In Paradise! $40 of which was probably Jerry's food!
Embarrassing
This was a sad story to read but it taught me a lot. Now that my priorities have been corrected I guess I'll stop saving for my children's college so I can buy that new 50-inch HDTV and get that HUMMER I've long for but couldn't afford before.
Thinking of the past, I am so glad that my parents had the common sense to live within their means. Mom and Dad always put my brother and I first and made sure we had the best of what was most important. Too bad these parents don't feel the same for their children. I respect the man of the house for keeping up the work ethic. But come on dude. You need to face reality - you will never be rich.
Wow I can't keep up with the Jones much less the Barnes! sob...sob...sob...
C.B. and a few others.
Nice. I couldn't have said it better myself! You people hit it right on the nose. "The Barnes' monthly bills - heat and electricity, credit cards, auto insurance, phone and Internet services - run about $1,300 or $1,400, not including groceries or gasoline. They pay a mortgage of almost $1,500 a month." I mean good grief... And a $70k income to boot? Someone REALLY needs to wrangle these people to a credit counselor. They don't have any issues they have not made for themselves. This is only news because they are fiscally irresponsible and an example of what NOT to do.
Zingers
"They pay a mortgage of almost $1,500 a month." "Jerry bought it in foreclosure with a friend for about $95,000 and still owed about $78,000 on an adjustable-rate mortgage." "They also paid off the loan on their Ford Expedition, which they bought new in 2005 for $31,000." "
they bought a 52-inch high-definition television set and accessory package for about $2,600" They enrolled their older son, Jerry, in a soccer program for a $50 fee, plus a $34 equipment package.
"That wasn't in the budget, buying that," Christine Barnes, 33, says. "But he was so excited."
This thing is full of zingers. The kids sport is less than the cost to fill up the SUV. I would say someones priorities are way out of whack. Perhaps they should vote for Obama cuz' he will change things? LOL!
Go to school
If you cannot make do on those bills with that amount of income, you are in need of education. You are making poor choices. You should easily live with that amount of income. Your benefit package is awesome as well. Your much better off than many people. Disgusting really that this was printed.
They are feeling the pinch
of their own choices. That is not a small chunck of change they make. I 'am not real sure what this story is supposed to tell. I bet you have a lot of people reading this story who wished they made that much. That amount of income you can live comfortably on. But if you make bad decisions and live beyond your means, then it would not be hard to find yourself in a bad way. It's all about responsibility. And sometimes you do learn the hard way. If someone is that bad off at 70 grand a year they have stop raising the amount they put into savings, then they need debt counseling FAST. That's roughly $5,800 a month before taxes.
Priorities
I do hope this family continues to watch what they spend and they can get out of debt. But I have to wonder why the adult toys and clothes are new and very expensive, the son's sport actitivy isn't in the budget and the children's clothes and equipment are bought used.
C.B.
You took the words out of my mouth. It's hard to feel too much sympathy for a family who can buy a pricey entertainment system, Expedition, and pay a contractor 8000 for kitchen cabinets.
Set the priorities
1. Christine needs to get a full time job. 2. Cut off the high-end cable 3. Turn in the cell phones. 4. Sell the guzzler Expedition and buy something more economical. 5. Cut up the credit cards. 6. Vote for Hillary who is going to put a 90 day hold on foreclosures--like that is going to change behavior. These people don't know hard times. What they need is credit counseling, and now.
Wrong Priorities
This family needs to get their priorities in check. $8000 for kitchen remodeling, $2600 for a new TV, and $31,000 for a new gas hog SUV but the $84 for their son's soccer program was a splurge because it wasn't in the budget??
A slightly used smaller SUV and not doing the remodeling or getting the TV would have given them the money for the family vacation that they gave up. The memories they gave up for the parents materialistic selfishness can never be undone.
Times Are Great!
I keep hearing how poor the economy is and that people can’t make ends meet, and that everyone misses the 90s which was the time of prosperity. I lived through the 90s and I am doing 110% better now than I have ever done and I started in the 70s right after high school. So I recommend that these people start finding better ways to conduct their affair and stop complaining that they aren’t able to make ends meet.
Suck It Up Some More
I'm sorry, but where's the pinch? In the remodeled kitchen? In the giant tv? The big vehicle? My family and I watch tv on a twelve inch screen, using only what comes out for cable (five channels on a clear day). Computer time is from the library or at relatives' home. We watch old movies and passed along movies for entertainment, only borrowing the newer ones. I didn't want some one else watching my son, so I work nights and weekends so he spends only a little time with the sitter while his dad is finishing work. That family has things that mine can only dream of. With what they have in luxuries, I feel little sympathy for them. Oh yeah, and I have been asking for sneakers since last winter.
70K???
What about all the families in the Hampton Roads area that live on half or a quarter of a $70k budget. Just the other day I stopped behind the school bus at the local hotel/motel and watched children get off to go "home". The economy is not the problem with this family, its living beyond their means. They've backed themselves into a corner with overspending and overextending. Write an article about the families who work 3 or 4 jobs just to pull in $30K and then I'll feel some pity.
While I understand their struggles to a degree
The real problem is that families with TWO working adults who actually work to live within their means are suddenly being priced out of their means... With taxes going up, groceries going up, gas through the roof, medical care unattainable for all but the lucky few, and wages stuck in 1995, families are losing everything they have.
Whoa nellie...
Although I seriously admire firemen, this family has and continues to create their own demise. $1400 a month for electricity, car insurance, credit cards, phone and internet? That is way over the top. This is a long shot but electricity ($200 maybe because I am familiar with the homes), car insurance ($100 maybe for a really bad driver), phone and internet ($100 maybe minus long distance) leaves $1000 a month in credit card payments. They could have gone to Lowes and purchased the necessary cabinets and such for way less than half of $8000 and installed them themselves. Driving an Expedition? What is with refinancing for almost triple what the house was originally bought for? A huge TV for almost $3000? This family seriously needs debt counseling before sympathy. I can understand the wants but I smell instant gratification going on here.
Low Vis
Over here in the Centreville/Kempsville section of Virginia Beach, we mainly work around Greenbrier, commute via Lynnhaven/Volvo, and pay property tax of .89 in Virginia Beach VS 1.06 in Chesapeake. No tolls, no interstates, no problems. I see plenty of families that do well in an older economy wagon vs a new land tank. I see plenty of families living off potatoes, bread, bologna, milk & cereal, and pay cash for a bonus meal at a pizza place VS writing huge checks at mega-warehouses for more food than they can eat. I watched two homes in the Oak Grove section of Chesapeake have their assessments jump, one from $368,000 to $533,000 and the other from $305,000 to $444,000 last spring! It's been a good time to be just over the line. Just like the tax change of 1986 that robbed families of their homes and investments, 20 years later, a new generation of upper middle class are about to be robbed of theirs.
This is Hard? Try being a SINGLE PARENT of 2 with 1 income
Wow - I wish I had had it so good. Being a single parent for 18 years- raising 2 children with no child support- (granted the family in the story has some difficulties,) but as a single mother we didnt even get to buy NEW shoes, all our stuff came from Thrift Stores. And what social help programs that are available just dont help enough or the parent makes like $5 too much to qualify.
WE never had enough money or bought a house and having chicken was eating GOOD!
Lets do a story on how Single Parents make it-
oh yeah did I mention the EX bought a house with his girlfriend while his kids went without? My kids are grown now, and I still cant buy a house- being a single parent means you either have no credit or bad credit usually.
Maybe someone should report on this as there are more single parents and more children that go without every year from what the statistics say.
I FEEL YOUR PAIN
There should be no reason for a firefighter in our city to have to get a part time job, just to get by. It would not pay for his wife to get a part time job, because child care would still cost too much and not knowing who is watching your children can be dangerous. We must pay these brave men & women of our police & firefighter departments who risk their lives on a daily basis accordingly. I am disabled and a stay at home dad, because child care is astronomical. It's a struggle for my wife and I who works for Customs and Boarder Protection. I believe a Cost Of Living Adjustment property tax policy, would give citizens more of their money, to ease the financial pinch felt in households. These problems exsist because of the spending of taxpayer dollars on non essential pet projects. It's not just people with ARM or sub prime loans, the flawed property tax and assessment policy in Chesapeake has caused financial hardship for the fixed conventional mortgage holders also. We must not re elect the same council members, who have had many years to fix this problem. "CHANGE IS GREAT IN 2008" CLEAN SWEEP CITY HALL!! May 6, 2008.
The Expedition killed them
I have read that 25% of American households are financially distressed due to buying too much car. That is what happened to this kind family here- they paid $31,000 for a gas guzzling Expedition. A $15,000-$20,000 car or minivan would have done the trick and given better gas mileage.
No closing cost lie
Rose - I don't think any banks will really do a no closing cost loan. They are going to put you in a higher rate loan and earn more on their side. It's a scam.
Hmmm
If they are on the edge, why doesn't she get a part time job? Also, it's interesting that the house was bought so long ago for so little, yet the payments are so high. Dudes salary is above the median household income for most of the cities (all of the cities?) in Hampton Roads according to the last census numbers. My friend just showed me a home he is looking at renting when he moves back to HR with his wife and son. 120 x rent is about 60% of what the asking sale price would be. This shows a huge disconnect between sale prices and rent prices in our region, and why values are going to crash.
Rose, I don't think ...
... they still have an ARM. According to the story, when the husband first bought the house (with a friend), it was with an ARM. But the couple recently refi'd it and bought out the friend. The new mortgage is $190k, considerably less than the $300k or $400k the lender said they could do. Also, with the refi, they paid off the SUV, so they no longer have a car payment.
You could argue (and I might, myself) that using home equity to pay off the car is a bad idea. After all, home values are tenuous these days. But for THEM, I think it was the best option.
I personally don't think everyone needs a $31k SUV, but they don't exactly sound like free spenders in other areas of their lives. If the TV purchase has replaced spending on other entertainment, it was probably a good thing. The kitchen redo will probably add value to their home.
As for tapping into the wealth of talent of friends and neighbors, not everyone is able to do that. (My husband and I are not handy at all.) While it might have been your experience that firefighters are handy and willing to help with others' home projects, things may be different now. In this scenario, the husband works a part-time job in addi
few extras!!! I'm doing that on $35,000 a year.“GIVE ME A BREAK”
I couldn’t say all I wanted in my last comment. A few comments below.
Like the guy on 20/20 at the end of the show. “GIVE ME A BREAK” a couple making over $70,000 with a stay at home mother of two says they cant afford much. Try walking a day in my shoes with half of your income and childcare expenses. $70,000 income would go far in my household. I guess my father was right the more you make the more you spend. My father was very tight with money only ever making about $25,000 a year at best with two kids growing up in the 80s, and 90s and I grew up fine and with the things I needed and was grateful for the things that where luxuries around our home. Looking back I’m glade I came from a family where a dollar was earned and kept for something useful and not blown away on things we could live without. Its helped a lot with how I manage myself and money.
seriously?
I am very very sorry, but i don't feel any sympathy for these people supposedly feeling an economic "pinch". They own their own home, dive an EXPEDITION, bought a 52" plasma TV, and just HAD to get their kitchen remodeled. On top of that, they just HAVE to go on a vacation too?
THIS is feeling an economic pinch?? I wish I could feel an economic pinch like that. I wonder what its like to have health insurance. Probably won't be able to find out till I pay off my student loans though. The funny thing is, I'm okay with the life I'm living. I've made my choices and, while I'm not content with my life, I'm happy with my direction.
Its really upsetting to me when I see things like this though. These people do NOT have problems. They are leading a very blessed life. You want to write a REAL article? Write about the people who are homeless. Write about the people who have to choose whether they pay their water or their electric bill each month. Write about the people who DON'T have cars. Write about the people who have to skip meals because they don't have money to eat. THEY are the ones feeling an economic pinch. Not the people in this article. Shame on them for having the arrogance t
Why on earth do they still have an ARM?!?!?
Do you not see that interest rates are low and that many credit unions and banks will do a refi with NO closing cost. That means when interest rates explode (very likely to happen in the next four years) you will be in a fixed rate loan and not have to worry. I recall when my husband built our first house in 1979, when we started we got a 6 month commitment from the bank and a construction loan, both at 10 and 3/4 %. When we closed, the current rate was 15%, but we were safe with my low interest loan. Other obvious things are $8,000 for a kitchen (part of it on plastic) a huge expensive SUV (most likely a huge payment) and the use of plastic in general. Most firefighters I know are very good with their hands. If they don't have a certain skill, most likely one of their buddies do. We wouldn't dream of spending $30 for tennis shoes when Wal-Mart has them for half that. We can't afford new or luxury cars, so we buy used and reliable cars that are cheap on gas. I wouldn't dream of spending $2,600 on a tv when we can do the same with our five year old $300 tv and cheapo dvd player with a dvd traded for another with a friend. We live good compared to thirty years ago. It's all good.
are you SERIOUS???
I am very very sorry, but i don't feel any sympathy for these people supposedly feeling an economic "pinch". They own their own home, dive an EXPEDITION, bought a 52" plasma TV, and just HAD to get their kitchen remodeled. On top of that, they just HAVE to go on a vacation too, right?
THIS is feeling an economic pinch?????????? I wish I could feel an economic pinch like that. I wonder what its like to have health insurance. Probably won't be able to find out till I pay off my student loans though. The funny thing is, I'm okay with the life I'm living. I've made my choices and, while I'm not content with my life, I'm happy with my direction. Its really upsetting to me when I see things like this though. These people do NOT have problems. They are leading a very blessed life. You want to write a REAL article? Write about the people who are homeless. Write about the people who have to choose whether they pay their water or their electric bill each month. Write about the people who DON'T have cars. Write about the people who have to skip meals because they don't have money to eat. THEY are the ones feeling an economic pinch. Not the people in this article. Shame on them for having
????
I applaud this couple for making sacrifices and I wish the best for them.
However, I would ask the paper? Is this the BEST example of "penny pinching" you could come up with? A couple with 2 kids making $75,000 who is able to drop $90 plus at a pop, who could afford to buy a NEW vehicle that isn't even economy size for their family of 4?
Seriously. I can guarantee you that families across Hampton Roads right now are, along with myself, saying....if ONLY WE had it so good.
I know plenty of folks with twice as many kids making due with half as much. I know plenty of folks who wait for the BOGO sales at PAYLESS when it is time to buy shoes for the kids. I even know of several families who had to move home with their parents this year, along with the kids, and rent out their homes to try to make ends meet.
I know of other families with circumstances beyond their control that require them to make huge sacrifices--such as paying health care costs for children with disabilities. I know of families in the middle of huge custody battles that require lots of pennies to be pinched to pay legal bills. In my case, I am court ordered to drive my kids 1-2 times a month to visit wit
It shouldn't be so hard
My grandfather sold men's shoes for a living, but he was able to support his family on that single income. Why can so few families make it on one income today? In my grandfather's day, government at all levels, consumed less than 20% of the Gross National Product. Today, it consumes nearly half of the GDP.
Most of that burden is concealed in the prices of goods and services, so we mistakenly believe that the cost of living has risen. When the cost of embedded tax is removed,the number of hours we must work to provide our family with food, clothing, shelter and transportation has been cut almost in half by the increased efficiency of the economy, but these great economic gains have been swallowed up by the carefully concealed, exploding cost of government, particularly at the State and local levels.
The key to more prosperity for our families is limiting the cost of government. TidewaterLiberty.com
few extras!!! I'm doing that on $35,000 a year.
I make roughly $35,000 after taxes on a good year and have a $180,000 mortgage in great bridge. Where daycare for three little ones cost me about $400 a week. I don’t receive any help from the state/government. I’m a single father and the mother doesn’t pay child support/ she rarely supports the kids with shoe’s or toys. After the mortgage and childcare cost monthly around $2400 it only leaves me on a good month around $500 for food/ gas. The little I have left over goes in to savings broken up in to doctor visit funds, college saving funds, and if at all $10 dollars for retirement fund for myself. I know it’ll get better once the kids start school that will be less in childcare cost. I still manage to have a new jeep liberty and nice things and stay debt free. The kids have nice shoe’s and clothes. The $3000 tax relief I receive for having three kids goes toward their yearly clothing fund. I work in the construction field and pick up many side jobs when it doesn’t take time away from the kids from that I started the new vehicle fund for us in 2005 and was able to buy a 07 jeep liberty in Jan. of this year from the money I had saved from side jobs. Like the guy on
Still not living within their means.
Those of you applauding them, you're still missing the big picture. He's still working two jobs (probably missing out on a lot of time with his family), and he's cut back on his retirement contributions. They are obviously still living beyond their means.
If you plan correctly, you shouldn't have to take a second job to be able to afford having your wife be a stay-at-home mom. You should still be able to increase your retirement contributions every time you get a raise. So no kudos from me; they need to tighten that belt a little more!