Michael Sausser, 45, never planned for retirement. Doctors diagnosed him with AIDS almost 20 years ago. His first symptoms of the full-blown disease -- AIDS-related dementia -- indicated the end was near. A doctor gave him two months.
But two decades later he's still here. The dementia comes and goes. Survival hasn't been easy, and Sausser has taken as many as 35 drugs a day to stay alive.
The disease has also ravaged his finances.
Sausser gets about $4,000 a month from a disability insurance policy and Social Security, and $1,000 a month in rental income from a guesthouse at his Van Nuys home.
But he spends about $8,000 a month on living expenses, largely because of home repairs and big out-of-pocket medical costs. That's deficit spending to the tune of $3,000 a month.
Sausser has managed to stay afloat so far by drawing down his home equity line of credit and maxing out his credit cards. But he won't be able to play this shell game much longer.
He's down to $12,000 on his home equity credit line. And he owes nearly $35,000 on his seven credit cards.
Financial planner Delia Fernandez sat down to untangle the mess with Sausser and his partner, Rodrigo Rodarte, also a longtime AIDS survivor, who maintains a separate home.
After friendly chitchat in her Los Alamitos office, Fernandez spelled out the bottom line in gentle tones. "You have about two to three months' worth of cash and that's it," she said.
"I've been putting my head in the sand," Sausser admitted.
"I completely understand that when times are terrible," the planner allowed. "You've got a nice amount of income, but you spend more than you make."
The disease makes it impossible for him to resume the 9-to-5 schedule of his former career as a city planner, though he has taken real estate investment courses. But going to five to 10 doctors' appointments a week eats into his schedule, and his cognitive struggles make any kind of investing a shaky proposition.
Fernandez says the first order of business is for Sausser to cut his expenses.
She found that 83% of Sausser's monthly income goes to fixed expenses related to the house. The mortgage and equity line payment exceed $3,200. Taxes, insurance and repairs add $1,000 more.
"That's a huge amount," Fernandez said, a far greater percentage than she advises. For younger people, she recommends no more than 40% to 45% of their gross income for housing. For Sausser, she prefers 25% to 30% because of the high cost of his medical care.
Sausser can see where this conversation is heading. He tells Fernandez that he has considered selling the Van Nuys house, which is worth an estimated $600,000, and buying a three-bedroom condominium in Palm Springs for about $250,000.
Fernandez quickly endorses that idea.
"I know you've worked really hard on this house, but the house is taking over," Fernandez said.
If Sausser bought a condo for $250,000 at 6.25%, with a 20% down payment of $50,000, Fernandez estimated, he would halve his current monthly payments, bringing them to $1,656. That includes condominium association fees, taxes and homeowner's insurance. He also would eliminate the cost of a gardener, pool service and his biggest home repair bills.
At that level, his fixed housing-related costs would be 42% of his income.
"That's very good," Fernandez said. "We're headed in the right direction."
Another way to save money would be to give one or two of his pets to caring homes. Sausser has two dogs and three cats, all rescues. A charity for pet owners with AIDS pays for some of the animals' food, but Sausser still finds himself paying high bills to the veterinarian. A recent trip for one of his cats cost $500.
Sausser balks at shedding his pets.
"I've done so well because of the animals and the love they've given me," Sausser said. "I feel I come from a distressed situation like them."
"The parallels are clear," Fernandez said. "But you need to take care of yourself first."
Sensing no movement, she punted: "I think it might be wise to not take care of any more new family members."
Spending too much
Pets weren't the only discretionary expenses in Sausser's portfolio, however.
Last year he bought a time share in Florida out of foreclosure for $7,000, and this year he bought another foreclosed time share in Palm Springs for $6,000.
Sausser plans to sell both. He said his broker in Florida told him the time share there should sell for more than $20,000, and he hopes the Palm Springs property should do about the same.
Fernandez is skeptical, given the soft market for real estate and vacation property. If he can make that kind of profit, she said, "Everyone will want to know what you've done."
Sausser has also spent heavily to renovate his home. The modest two-bedroom house, with a large pool, cost $289,000 in 2002. As the value rose, he borrowed $200,000 against the equity.
He has spent about $130,000 on improvements. About $30,000 went for work on the main house and $100,000 went to convert his garage to a guesthouse that he recently rented out.