Nearly a year ago, Alicia Cardenas knew it was time to take drastic action to prevent her fragile financial condition from crumbling into dust.
She struggled to make monthly payments on her high-interest adjustable-rate mortgage, and often wound up at a payday loan store to get money to buy groceries and gas up her dusty, 7-year-old minivan. She lost sleep fretting about losing her home, where she lives with her three children and 80-year-old mother. For help, she turned to Money Makeover, a monthly feature in The Times.
"It was the best thing I ever did in my life," said a now-relaxed Cardenas, 46, sitting in the sunny dining room of her North Hollywood home.
With help from Los Angeles financial planner Jennifer Hartman, Cardenas staved off foreclosure by negotiating a more manageable fixed-rate mortgage. She also created a household budget, slashed her expenses and started tracking her spending. In the process of fixing her finances, Cardenas found peace of mind.
"I'm not panicked anymore," she said.
The Times went back to Cardenas and other people who had volunteered over the last two years to disclose their money problems in return for free help from financial planners and other professionals. The aim was to see how they were faring, especially as the nation's economy fell into the worst recession since the Great Depression.
The main finding: Regardless of whether they followed their financial plans, Cardenas and others said they were now less anxious and more financially grounded, breaking some of the bad habits that put their finances into disarray. A few even managed to achieve such dreams as buying a home sooner than advisors had expected.
You may not need a financial planner, but you do need a financial road map, said Delia Fernandez, a fee-only financial planner in Los Alamitos. (The Times works with fee-only planners because they do not receive commissions or any income related to the financial products they sell.)
"People don't realize that life doesn't take care of itself," Fernandez said. "If you don't know where you're going, you may not end up where you want to be."
The makeover plans enabled many people to take charge of their lives and their finances even in the face of significant change.
Soon after her makeover, Cardenas lost her job at a local dairy, where she worked as a human resources manager. But within five weeks she landed a more fulfilling job at the Los Angeles Regional Food Bank. She's making about $6,000 less a year, forcing her to keep an even closer eye on her spending. But Cardenas says she's a lot happier.
"It was a blessing in disguise," she said.
Other makeover volunteers went through a lot too. Glen Golightly, who handles public relations for a Southland aerospace company, also feels the heat of the recession and worries about layoffs. Mark and Jessica Stone bought a house and welcomed a new baby, although they already were stretched by bills and other financial pressures. Steve Haibach suffered an injury that put him on disability and delayed his retirement. And Michael Sausser continues to battle the ill health that wreaked havoc with his finances in the first place.
But Sausser, like the others, feels more in charge of his money.
"For the first time, I pulled my numbers together and saw where I stood. That was important. It gave us the impetus to move forward no matter what," said Sausser, 47, an AIDS survivor.
Advice, not consent
Not everyone, however, went with the program their advisors drafted for them.
In August 2007, Los Angeles financial planner Erick Bruck wanted retiree Debbie Loss to sell her rental home in Encino, where she had difficulty getting her tenant to pay his rent. But Loss decided to hold on to the home, believing that the renter would eventually make good and that she'd turn a profit on the property.
"I definitely didn't follow the advice," said Loss, 53, "Emotionally, I just couldn't do it."
Steve Haibach, 57, and his wife, Judy, 56, also couldn't resist the temptation to go against their planner's advice. They pulled their investments out of the declining stock market instead of staying put.
"The challenge with moving in and out of the market is that you have to make two decisions right: when to get out and when to get back in," said their financial planner, Brent Kessel of Pacific Palisades.
The Haibachs may have saved themselves from some losses, but they acknowledge that they also missed some gains as stocks moved up.
Nevertheless, the makeover participants are more comfortable with their money management skills, they said, largely because of the actions they took and new financial habits they developed after going through the planning process.