September, 2008, the start of it all. The real estate developer for whom I worked had been suffering a prolonged cash shortage and throughout my over 2 years there, the story was constantly about working very hard to get loans to keep the doors open. We believed we had bridge funding to get us through the next 3 months worth of payroll, rent and other necessities, and we had tons of development deals lined up for the first time since things had started to go bad. We thought we could see the light at the end of the tunnel, but instead, one bad thing after another from September to January caused that tunnel to completely collapse. At end of month January when it came time to distribute payroll checks, the funding we thought we’d have in the door by the end of the month was not there. I had to (while simultaneously worrying about my own finances) play peacemaker with the employees while assuring them, as I had myself been assured, that funding was delayed and everyone would get paid, it would just be a bit late. Come February 7, the owner informed everyone it wasn’t going to happen, the company was for all intents and purposes “on hiatus” and while the owner was committed to getting everyone paid, he had no idea when he’d be able to do so. So, jobs were gone and basically everyone had already been unemployed for 5 weeks and didn’t know it. Being in control of the checks (as I’m the one who did payroll, and I’m the one who had all the access to the bank accounts), I knew there were limited funds available, just not nearly enough to make payroll, and in the interest of my own survival, on the way to the meeting where we were told money was not coming in, as I had a bad feeling about it, and was concerned that this might be the message, and as I had bills that were due in 3 days, I deposited my check, which I knew would clear, and then after the meeting I sent the owner an email saying that I’d had my check ready to go to the bank, and wouldn’t you know it, my wife went and dropped off the deposit…I kind of felt like push came to shove I had the legal upper hand, but if I didn’t approach it right, he could stop payment and refuse me a reference, two reasons I continued to help support him over the next couple months as I had time. I had enough of the financial records, passwords, and knowledge to basically get my payroll, my expense reports and a few hours of contract wages out of him before I returned all the company records, and I managed to do so in a way that didn’t piss him off, so he’s still my main reference, and I hope he manages to stay out of jail long enough for me to get a job and use him as such.
But 9 months down the road, I have no job. Now, I have a Bachelor’s in Accounting. I passed the CPA examination. I have been a professional Accountant for 15 years. I am applying for everything from Staff Accountant to CFO and several financial and business analyst positions, casting a net wide enough to catch ANYTHING I might even remotely qualify for, and yet the phone has barely rung. In fact, I went for over 3 months without getting a single phone call. And I’ve been unemployed before, it does sometimes take a while, but usually what happens is I apply for maybe 250 jobs, I end up getting 25 interviews and 2 job offers…that’s pretty standard. I would guesstimate that I have at this point applied for over 500 jobs, I’ve gotten 3 interviews and no offers. Even the staffing agencies have nothing, and I live in a huge metro area with the world HQs of 19 Fortune 500 companies…this is a major business center which needs people like me. And then I’ll pour my heart and soul into a job search and the employers who do call seem to string me along and then completely drop the ball.
Case in point, I got a phone call for a Controller position. The job duties were very similar to what I’d performed in the past. They were looking to convert their computer system, something I had direct experience doing. On paper, they were looking for me. I applied and almost immediately got a phone call. The general manager talked to me for ½ an hour on the phone before she set up the interview. We had a lot of areas where I was able to demonstrate how I could help them, it couldn’t have gone more well. She set up an interview for me the following week. I met with her, the contractor doing the job in the interim, and the owner of the company, a family business that had been around for over 100 years. I wowed them. The owner gave me a personal tour. He told the GM before the interview was over to make sure to get my references. I left expecting to hear back the next week. I sent a brief email saying thank you and here are my references. I sent out hand written thank you cards to both the GM and the owner. One week after the interview I sent an email saying thanks again and just following up, and to let me know whatever they have decided or even if they haven’t made a decision. That was 2 weeks ago, might even be 3 now, and they never responded to that email, they never sent me a thanks but no thanks letter…I don’t think there’s any possibility I’m still in the running for the job, but they left me rather ambiguously, saying after the interview that the next step would probably be having me meet with their tax accountant. So, maybe they’re having trouble getting on his schedule. Maybe they offered the job to someone else and that person is thinking about it and they don’t want to burn a bridge. Or more likely, they have so many applicants they don’t even believe in the common courtesy of a follow up to tell someone that they’re no longer being considered. And this is a family business, not some faceless corporation.
I’m finding that I will sent out resumes where if there are 20 job duties listed, 10 core requirements and 5 desired qualifications, and I have first hand experience in all 20 job duties, meet all 10 requirements and have 4 of the 5 desired qualifications, I more often than not still do not get a call. And I’m willing to commute much further than ever before, I’m willing to take a massive pay cut, whatever it takes. I’m certain I’m not coming off as desperate, I’m very familiar with how to conduct a job search, and I’m thinking that is about the only potential problem. I have had a number of jobs, some lasting less than 2 years. The transitions are all explainable and I’ve never been a job hopper, but I’ve been laid off many times, not for anything I did wrong, just the way it goes…companies restructure, or even shut down. One would think that when 10% of the population is unemployed, employers would understand why you’re out of work, but it almost seems you need to have a job to get a job.
And all this would even be OK, but the economy has crippled me in another way. You see, I have had credit cards for close to 20 years, I have been in my house for 12.5 years. I have had bank loans and have paid them in full. I have never missed or been late on a house payment or a credit care payment. I’ve never paid a late fee. As such, throughout the 90s and even into the 2000, I was inundated with pre-approved, low interest offers. What happened a lot was the 3 other times I’d been laid off since 2003, all of which occurred while my wife was in grad school, I would get something like 2.99% interest until the balance is paid in full, so I’d open a card and I’d get a 10 to 25k credit line. I’d move things around or pay them off in one form or another, so what I ended up having was 4 credit cards, all of which had been purchased by Chase, which had balances on them which were at a low interest rate (under 5%), probably totalling about 30k in debt, but again that was so low interest it really didn’t matter. But I also had just tons of open credit cards out there, so I had access to probably 150k in revolving credit at my fingertips. This included my American Express card which I signed up for because it doubles as a Costco membership, so I only pay one annual fee. I went in to sign up for the card in March of ‘08, expecting to get a few hundred dollar credit line so I could use it at Costco. Instead, I got a 33,000 dollar credit line…I didn’t need that much. But the interest was under 10%, and I thought this could be used as a last resort if I was unemployed for a long time and couldn’t tap into that other 150k any cheaper than 10% for whatever reason.
My other ace in the hole, or so I thought, was my house. I live in an area where houses were even in the downturn, on my block, selling in 3 days. I had bought my house for 105k in 1997, and in 2006 I refinanced, it was appraised at 265k and I only borrowed 175k of that. So, I thought home values may have dropped, but probably not quite as precipitously in my neighborhood which doesn’t have any vacant homes and where houses still seem to sell. So the first thing I did was to call my mortgage company and ask if I could get a home equity line of credit. At this time, there was still a belief that there might be some chance of the business coming back, the phones for the business rolled to our cell phones and I was the guy to verify financial data, so I could have used my old income to qualify, plus my wife is working ½ time, so if the intention was to basically have a cushion we wouldn’t use unless times got really tough, this seemed like a good option and one I could probably pull off (a lot of guys I worked with managed to do so).
So, the banker first says a 2nd mortgage is a better option for me because I can lock in the amount if housing values drop further and I can get a fixed rate. So he checks my credit rating. 3 agencies came back with 715, 718 and 720. He told me that even though anything over 700 was ALWAYS considered a great credit rating, restrictions on lending had tightened up so much that they weren’t doing any mortgages unless you had all 3 over 720. So, he said he could do a HELOC with that rating, and had to check my housing values. Well, they had dropped, and really all I wanted was access to an emergency 10 grand if times got really rough. Well, he said the problem was, they would not write a HELOC for under 25k. Well, my balance was 170k and a year and a half before my home appraised at 265k, so I figured hopefully there was still 25k in equity there, and there was, but they had also tightened lending so that they could loan more than I think 75% of the home’s value, which meant my maximum amount I could borrow based on the home estimate was 15k, which was not enough to write a loan for.
Well, I wasn’t freaking out yet, I still had my AMEX, and a ton of other open credit lines I hadn’t been using, which I was going to find out what they all were. Then AMEX, who had given me WAY more credit than I needed a year before, wrote me to tell me they were cutting my credit line of 33k down to 3,900! There went my cushion. Then as soon as they did that, one by one, all of these other open lines of credit that I thought I had, I’d start getting letters…we’ve closed this account. No warning, just gone, no way to fight it. I was down pretty much to the cards I use and pay off in full every month. Times got tough enough I started having to let the credit ride. Now it’s a game of staying under my available credit on my Discover Card and my AMEX, both of which were charging me 10%...a lot for me, but not that bad in the grand scheme of things. So, I build up balances on those cards and all of a sudden they both send me letters saying, we’re jacking up your rates, and you can refuse, but if you do we’ll cancel your account. Now when I can least afford additional expenses, I’m paying 13 and a quarter percent (I’d never paid more than 5% for borrowed money in my LIFE).
So I start looking at 401(k)s I have out there, thinking maybe I can borrow against those. Nope, see…to discourage people cashing out their 401(k)s, they let you borrow, but only if you’re employed and the employer administers the 401(k) so they can ensure you will pay it back (because your employer has to deduct payments from your payroll). All well and good, but it leaves an unemployed person with the incentive to cash out his 401(k) and pay the 10% penalty, because basically, if you have no income, your tax rate is going to be pretty low, and you may not owe any actual taxes on the distribution, so you get off by paying 10%, which is less than you’d pay if you took it out when you retired. So, I had to cash out a smaller one but I made myself promise to pay aggressively into the next employer sponsored 401(k) I get to make up for it.
Then I found out about the new loan programs available throught he stimulus plan. So I checked that out, and even though my property now appraises for just more than it’s worth (it’s lost a ton of value since I checked in February) and I could refinance, but my interest rate would actually go up, I would be able to cash out about 3 grand, and it would cost me 4 grand in closing costs to get it.
Long and short, even now after 9 months out of work, I still have never been as much as a day late on a payment, I have a small fraction of the available credit I once used to, it’s all several times more expensive than it used to be, I have no income, I’m further in debt, and the value of all my assets has gone down by 10s of thousands of dollars. I’m wroth probably a hundred grand less than I was worth a year ago, the credit rating I’ve worked diligently my whole life to build is now so bad I couldn’t even get a $300 line of credit from Pearle Vision to buy glasses this summer, and I have zero job prospects, I’m within a few weeks of exhausting the first emergency extension of unemployment benefits, and I’m working way harder just looking for work than I ever did when I was employed.
