George and Virginia Filart have seen their share of financial ups and downs since they emigrated from the Philippines more than 30 years ago with just a few hundred dollars in their pockets.
Back then, George landed a job as a design engineer and Virginia found work as a nurse. But George's career has had some rough spots -- he was laid off four times during construction downturns, and each time, the couple exhausted their savings, then rebuilt their financial safety net.
Now, with George's retirement perhaps five years away, the Filarts wonder whether they can ride out another rough market and reap the rewards of a lifetime habit of saving -- aided by their knack for living below their means.
"We know we can go over the hurdles of hard times," George said. "But I'm nervous because of the stock market."
The huge Wall Street plunge this year has battered their retirement accounts, which they now realize weren't arranged well in the first place.
"When it comes to stocks, I'm just throwing darts," George admitted.
Through the rough patches, the Chino Hills couple held on to real estate as a long-term investment, and they've done quite well with those holdings. George, 62, and Virginia, 57, own two homes for themselves and rent out two former residences.
"They've been a bit lucky they haven't gone off the deep end with their stock investments. It's really the real estate that's saved them," said Dirk Huybrechts, a certified financial planner with HFM Advisors in Brentwood.
During this downturn, the couple have more than just experience to rely on. The Filarts now earn nearly $228,000 in combined annual salaries and $27,000 in rental income. They also have amassed nearly $1.8 million worth of real estate and $536,000 in savings.
Their debts -- car loans, credit card balances and two mortgages -- amount to $685,000.
"We came from families that know how to value money. Even when we didn't have much money, we wanted to make what we had grow," George said.
Huybrechts noted: "It's really the old story that if you start young and save consistently through thick and thin you can survive the downturns."
The couple are used to buckling down during hard times. When George endured a year of unemployment, he became an expert coupon clipper and hand-delivered his resume to random companies in nearby business parks.
After another layoff, he took a job in another state for two years while Virginia doubled her shifts at the hospital to help keep the family afloat.
All along, they held on to their real estate.
The Filarts still own the first home they bought in West Covina in 1977 for $67,000, as well as a second home in Pomona that they moved into several years later when their family swelled with three children. The couple have paid off the mortgages on those properties and rent them out. They also own, besides their Chino Hills home, a vacation home in Las Vegas, where they hope to retire.
The pair have stashed $496,000 in retirement accounts and an additional $40,000 in checking, savings and investments.
But the market routs on Wall Street combined with their investment strategies are sabotaging them.
Their retirement holdings are out of whack with more than 70% invested in stocks. That's a risky allocation as they near retirement and one that's given them less shelter from the stock market tumult, Huybrechts said. He estimates the Filarts' retirement accounts have lost at least 20% just in the last five months.
George also has made bad bets with other investments. He sank $10,000 in stock of Washington Mutual, which was seized by regulators in September and sold immediately to JPMorgan Chase & Co. The stock now is nearly worthless. An additional $25,000 languished for years in a brokerage account, where losses have reduced the value to $11,000.
After years of scrupulous saving, the Filarts rewarded themselves recently with new purchases that piled on the debt. The couple treated themselves to a BMW 328i and a Lexus 430, creating $81,000 in car loans. They also splurged on a player piano and luxury watch from Tourneau, adding roughly $13,000 in credit card debt.
George said he had already paid off $9,000 of the credit card debt and the remaining balance carries 0% interest for two years.
Huybrechts figures the couple can handle their car loans, though they'll be saddled with that debt in retirement. Given their income, Huybrechts said their other obligations were manageable as well. They have fixed-rate mortgages on their Chino Hills and Las Vegas homes, paying roughly $2,700 and $1,200 a month, respectively.
With a fluctuating construction industry and the devastated economy, Huybrechts said, the Filarts should temper their spending. They also need to get a better handle on their household finances: Neither George nor Virginia track their expenses, and they save by touch and feel rather than in any measured way.