I was elated when one of the participants in the financial ministry that I direct finally landed a job. It had been two years since she was last employed.
I received another e-mail from her a month later. She wanted to quit. It wasn’t the work that was the problem. It was the stress of getting to work. When she lost her job, she couldn’t keep up with her car payments and pay her rent. The car was repossessed.
“The closest bus stop is a mile away and I don’t have steady or reliable transportation to and from work,” she wrote.
When I read the recent report from the Federal Reserve that the median net worth of families — the difference between gross assets and liabilities — dropped 39 percent from 2007 to 2010, I saw this woman’s face and the others I’ve encountered trying to rebuild their financial lives.
My friend went from earning $52,000 as a senior executive assistant for a trade association to her current salary of $38,000 working for a nonprofit.
She and others like her are the faces behind the facts. I talk to people who once had positive net worth but now only see the red of their liabilities. I console people who have gone through their savings or depleted their retirement savings to pay for basic necessities after being laid off.
There has been an awful lot of wealth lost and not all of it because people were recklessly irresponsible.
Many families did spend too much, accumulating too much debt, mostly in real estate. The Fed said because the net equity in homes has been smaller than the asset value of the house itself, the collapse in housing prices amplified the proportional effect on net worth declines.
But the Fed also attributes the losses to unrealized capital gains from real estate, businesses, stocks, and mutual funds.
People have been trying to correct bad habits. The percentage of families using credit cards for borrowing dropped.
But it’s also hard to plan when you aren’t sure what you’re going to earn. In 2010, 35.1 percent of families reported that they didn’t have a good idea of what their income would be for the next year, and 29 percent reported that they don’t usually have a good idea of their next year’s income.
So what can we learn from this report?
One, don’t replace old financial bad habits with new ones. When the economy is rebooted and thriving again, it might be easy to fall back into old habits. But don’t forget the hardships.
“I’m learning to control my spending, have a plan, have a budget, and save save save,” my friend said. “I wasn’t prepared at all for what happened.”
Now you know.Michelle Singletary writes for the Washington Post.