From Middle Class to $5 in the Bank
Layoffs Send Residents Who Were Living Comfortably Into Economic Tailspin

By Brigid Schulte
Washington Post Staff Writer
Tuesday, November 25, 2008

Mark Goldman once lived comfortably in a house with a pool. He ate out. A lot. With a six-figure salary from his work in information technology, middle class was more than his economic status: It was his state of mind. Comfortable. Secure. Hopeful.

Alenia and Kirby Johnson didn't have the pool, but, like Goldman, they had good jobs, paid their bills on time and were saving to buy a house to tighten their hold on middle-class life.

Then came the layoffs.

Each of these families learned just how fast the slide to the bottom can be. The Johnsons have been able to eat some months only because they became poor enough to qualify for public assistance. And Goldman, 57, who is in his 11th month without a full-time job, thinks in his worst moments that bankruptcy might be his only option.

Don't talk to them about a rainy day fund, the three to eight months of living expenses that financial advisers recommend everyone set aside as a cushion. Goldman burned through his in a few months. "Oh my God, is that even realistic?" Alenia Johnson asked, laughing at the idea. "Who can afford to do that?"

Theirs are stories that will become all too familiar as the stock market slide, global bank crisis and credit crunch move into the next phase: job shedding, pink slips and company restructuring. Already, Citigroup, Sun Microsystems, Yahoo, General Motors, Ford, Morgan Stanley, the Shopping Channel and a host of big companies have announced major layoffs. Last week, more Americans filed for unemployment benefits than in any week in 16 years. The most pessimistic of Federal Reserve officials expect joblessness to rise to 8 percent at the end of next year, the highest in a quarter-century.

Economists say the Washington area is more recession-proof than other regions in the country because of the large number of federal jobs. But several large employers, including Washington National Cathedral, the Discovery Channel, Circuit City, CarMax and Legg Mason, have announced layoffs. And the pain of the loss -- the struggle to regroup and survive -- is huge when the person laid off is you.

Alenia Johnson, 31, learned the importance of living within her means long before her husband, Kirby, lost his job in June. She had almost finished college when she was forced to quit because she couldn't afford to have her son, Lozenzo, now 7, and pay for books and tuition. Lorenzo's father held several jobs, but after Sept. 11, 2001, she said, he came home one day and never worked again. After breaking off the relationship and becoming a single mother, she went on public assistance until she found a job as an administrative assistant at the American College of Physicians in the District. She still works there.

So when her husband, Kirby, 37, was laid off from his job as a security guard, she had long been careful with their budget. They had big student loans, but no credit card debt. Unlike many of their friends, they had resisted easy money deals to get a house. Still, she had no idea how tough it would be. She had their daughter, Kadence, in April and had been home on maternity leave. "I went back to work lickety-split," she said.

They cut the luxuries first: movies, restaurant dinners, pedicures and hair appointments. But soon they were hemorrhaging anyway. They decided to concentrate on keeping a roof overhead -- their apartment in District Heights -- and food on the table, and pay the rest when they could. Their phone was cut off. The cable bill lapsed. One night, they heard the security alarm beeping on Kirby's 2002 Dodge Ram as repossessors came with a tow truck to haul it away.

Alenia applied for public assistance and began frequenting Sav-a-Lot, a discount grocery store where she could buy off-brand food cheap. She opened her cupboard recently. "This soup isn't Campbell's, it's Kaskey's," she said proudly. "The can of chicken here isn't Sue Bee, it's Sweet Sue. And the tuna isn't StarKist, it's SeaNet. And it costs so much less than anything you could find at Safeway."

But while Alenia pinched pennies, Kirby struggled internally. Raised in St. Croix, Virgin Islands, he had once juggled two jobs and college classes and survived on two hours of sleep a night.

"I was devastated. I changed my attitude. My demeanor," he said. "How do you go from working all the time to not working at all? I had to go on unemployment. What is that? I didn't even know where the office was."

"For him to be out of work," Alenia interjected, "I didn't even know my husband. The quality of our life diminished considerably. It made life miserable. You get depressed. The relationship becomes strained. You're snapping at each other, arguing about the kids, and it's really about none of those things. It's really about money."

To make ends meet, they started a catering company, cooking huge platters of soul food and Caribbean fare. Lorenzo would sometimes stare longingly into the refrigerator. "We'd have to tell him not to touch anything," Alenia said.

Last month, Kirby found a job as a security guard. When his first paycheck arrived -- Alenia called it "release day" -- almost all of it went toward getting his car note up to date and paying the towing and storage fees to get his car off a lot in Fredericksburg, where it was about to be auctioned. Kirby works nights so they can save on child-care expenses. He drives Alenia to and from work to save on gas. And he's lucky to catch a few hours of sleep if 7-month-old Kadence naps.

Slowly, they are working their way out of debt and back to zero. "I went to the bank today, and I was able to finally put a little money aside," she said. "There's $82 in there. Woo-hoo. But that's better than last week, when there was $5."

* * *

Mark Goldman was a success story. He learned to work with computers back in the days when they ran on punch cards. He lived in Montgomery County and earned good money as a contractor and IT program manager. But he always ran businesses on the side: a sound and DJ company, a home improvement business, computer camps for kids, speed-reading classes. You name it, he did it, and he did well.

He and his wife had always planned to move to Florida and live the good life. So a few years ago they sold the Rockville home they had bought for $132,000 for $600,000. With the windfall, they bought a new 4,500-square-foot house with a pool in Orlando. They chose all the upgrades available: quartz kitchen counter tops, rounded walls, even larger toilets. He went to work as a sound technician for Disney, but only because he wanted to play with all their toys." When he became bored with that, he decided to get another IT job. Everything was going so well that Goldman bought new cars, one for his wife, one for his daughter and one, finally, for himself.

"That was stupid. I shouldn't have done that," he said. "But I didn't know that at the time."

His IT contract ended in January. The housing slump and foreclosure crisis hit his Florida neighborhood hard -- 18 of his neighbors walked away from their homes -- and now his house is worth $75,000 less than he owes on it. And as the economy has soured over the year, Goldman said, he has been unable to find another job, even after he moved back to the Washington area in August. "Most of my contacts have either moved on or been laid off themselves," he said. "And my age doesn't help. I go in to talk to people and they're in their 20s and 30s. They look at older guys as old-timers."

Although his wife has a good job an executive assistant, it comes nowhere near paying their $8,500 monthly expenses and the debt they have racked up. He had to put $10,000 of his daughter's college tuition on a credit card after he lost his job, followed by almost $5,000 to pay for lung cancer treatment for their dog.

He gets occasional jobs as a sound technician -- his hobby. He has rented his Florida house to keep up with the interest-only mortgage payment. (He had meant to refinance after two years to get into a conventional mortgage but now can't because his credit is shot.) And a friend in Derwood is letting him stay rent-free in his townhouse in exchange for home improvement work. Goldman has tried to unload the cars, but he has been offered less than he owes on them. "Fortunately, because I can do so many different things, I can't keep up with all my bills, but I can pay my rent and eat," he said. "We eat peanut butter and jelly for lunch, and we might buy a $4.50 chicken from Costco for dinner."

Perhaps, Goldman thinks, his luck will change if he has a project management professional certificate. He fingered an "ExamCram 2" book recently while he waited for a $600 check from a sound tech job, almost enough to bring him up to two months behind instead of three on the $750-a-month note on his convertible Toyota Solara. But the test costs $700. He'll need to pull off a few more sound tech jobs, he said, before he can afford to take it.

At home, he pores over an elaborate spreadsheet of bills and decides which ones he can pay and how much. It's at those times that he considers bankruptcy. But he thinks bankruptcy might prevent him from getting a security clearance and any chance at a lucrative IT contract with the federal government.

Goldman walked to the payroll office. "Goldstein?" the clerk asked. "Goldman," he said, enunciating clearly. Someone had forgotten to sign his paperwork. There'd be no check today.

Down in the garage, he found his gunmetal gray Solara. "This is ready for repossession," he said, resigned. He sighed as he backed up. "I may just have to start over."