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After two decades, time for couple to stop living day to day

The Tejedas have accomplished much as a family, but they never learned to properly manage money, and that's gotten them into trouble. First, says planner Brad Hartman, they need a system that shows them where the money's going.

June 19, 2011|By Kelly Barron
  • We try to save, says Josephine Tejeda, at home in Ventura with husband Jerry. But every time we do, we end up dipping into savings to pay the bills.
We try to save, says Josephine Tejeda, at home in Ventura with husband Jerry.… (Ricardo DeAratanha, Los…)

When Jerry Tejeda was a teenager, financial stability was just about the last of his concerns.

He was in a gang and was sent to juvenile hall several times for a variety of crimes. At one point, he was homeless. Then, when he was 18, he and his girlfriend, Josephine, had a son.

"The birth of my son changed my life; it was a spiritual and emotional awakening," Tejeda said. "I didn't know how to be a husband or a father, but I didn't want my son to feel the fear and loneliness I had felt. I didn't want him to see what I had seen."

Tejeda turned his back on gang life. He and Josephine married, and he got his high school equivalency degree.

Skip ahead about two decades to the present. Jerry, 39, and Josephine, 45, live in a house they rent in Ventura. They have six children, three of them still at home, and four grandchildren.

Jerry works as a graphics coordinator for the Oxnard School District, and he has started a janitorial business. Josephine was laid off from her job as a medical insurance processor and will soon go back to school.

The Tejedas accomplished much as a family, but their finances are still a mess. They never learned how to properly manage money, and it has gotten them into trouble.

Ten years ago, they filed for bankruptcy protection when they couldn't pay $18,000 in credit card debt. More recently, a creditor has been phoning them to recover an unpaid credit card bill dating back to 2009. With accrued interest, the $325 bill has doubled to $650.

Jerry said he owes the Internal Revenue Service $3,750 and the state of California $1,250 for back taxes from his janitorial business.

And the Tejedas have almost no savings.

"We try to save," Josephine said. "But every time we do, we end up dipping into savings to pay the bills."

Recently, Josephine withdrew $5,000 from her 401(k) retirement account to put new tires on her car and meet other expenses. That withdrawal from a tax-sheltered account was rife with penalties.

The Tejedas decided it was time to get their financial lives in order and asked for help.

Brad Hartman, a financial planner in Glendale, reviewed the couple's situation.

This year the Tejedas will make about $64,000, down $10,400 from last year. Josephine lost her job in November. She currently gets $1,096 a month in unemployment benefits, but that runs out at the end of this year.

They have only about $250 in savings and they owe $14,000 on car loans.

Monthly expenses include $1,500 in rent, an estimated $600 on groceries, $335 on restaurant meals and $50 to groom their dog.

But in large part, they don't know where their money goes, and because they don't have credit cards, there is little in the way of a paper trail.

"All these years, they've been living day to day without any plan or way to track their spending," Hartman said.

He suspected that they spend more than they estimated in several areas, including on groceries and eating out. Also, they spend a good deal on gifts for family members, and Jerry spends an undetermined amount on "Star Wars" memorabilia.

Hartman said part of the problem is that the Tejedas don't have a shared budget and have separate bank accounts. "They have no visibility into what each other is doing with their money," Hartman said, expressing surprise that after 20 years together they don't have a joint bank account.

The couple need to change their ways if they want to achieve their goals. One day, they would like to own a home. Jerry wants to go back to school so that he can try for a management position within the school district. He also wants to learn how to run his janitorial business more efficiently.

Last year, the business generated about $15,000 in income for Jerry, though it meant he often spent weekends cleaning office buildings.

Hartman said the good news is that the Tejedas are relatively young and still have time to advance their careers and save for their future. They're also hard workers.

But to get ahead, they'll have to start at the financial beginning. Hartman said the couple need to work as a team to create a common budget and meticulously track spending. They also need to boost their earnings.

Based on current family income, Hartman created a budget that allows the couple to save $425 a month. To do this, he cut back the cable and cellphone plans, saving the Tejedas $1,140 a year. He also slashed their monthly restaurant tab to $100 from $335.

"That's way too high for their income," Hartman said.

He nixed Jerry's spending on "Star Wars" memorabilia. And he told Josephine that grooming for the couple's dog was too pricey.

Hartman did put in the budget the cost of books for courses Josephine will be taking, starting in August, at a local community college. She obtained a financial waiver for the cost of the courses, and taking the classes could increase her hourly wage by 29%, she said, when she goes back to work.

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