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Originally published Saturday, March 13, 2010 at 10:03 PM

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Money Makeover

Financial makeover: Family faces tough time with hope and a plan

A Bellevue family is struck by serious illnesses, old debts and the possible end to their only job.

Special to The Seattle Times

About this series

THIS IS THE LATEST in a series of monthly "financial makeovers" by The Seattle Times for readers who want to get real about their money.

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IF YOU WOULD BE INTERESTED in a free financial makeover in exchange for having your story and photo published in The Seattle Times, answer a few brief questions at


When it comes to personal-finance matters, Matthew Lang says he and his family try to follow three rules.

"The first rule is to live within our means," says Lang, a 51-year-old instructional designer from Bellevue.

To that end, Lang and his wife, Leona, have stopped using credit cards, though they do have old balances on three different cards they are having trouble paying off. This ties in with the next tenet.

"Rule No. 2 is to pay down debt," Lang continues.

Along with the couple thousand they owe on the three cards, the Langs are saddled with more than $40,000 in student-loan debts. Some of the loans are more than 20 years old and one recently went into default.

The third rule, Lang says, is to save.

"We never get to rule No. 3," he said.

Progress on this goal has been stymied by what Matthew calls an endless stream of Job-like calamities over the years.

The Langs' 18-year-old son, Aaron, was diagnosed with leukemia in 1995. At the time, they didn't have health insurance, but received help through their church.

Though Aaron has been in remission for years, Leona, 56, has faced health issues as well.

Five years ago, she fell at work and injured her back. Through treatment, she learned she had arthritis in her hip and spinal stenosis.

Though Matthew's health insurance through his job at the time covered Leona's subsequent back surgery, they were responsible for more than $5,000 in deductibles and out-of-pocket costs.

Since Leona has been unable to return to work as a para-educator helping handicapped students, her husband has been the sole provider.

After a series of permanent and contract jobs, he was laid off in 2008. In June of last year, Matthew Lang secured a yearlong contract position at Microsoft, making $44 an hour without benefits, a position he says he's glad to have.

But what happens when his contract is up this summer is a big question mark.

"We have no buffer when calamity strikes," he said.

Adding to the discouragement was a spate of car trouble late last year. The Langs spent $1,200 on motor mounts for their car, which had a lot of miles on it but was paid for, only to have the transmission go out shortly after.

With not enough money to replace it and a poor credit rating, the Langs were forced to take a high-interest loan for a used car.

"Currently, I and my family have no health or dental insurance," Matthew Lang said. "We own no home and have no particular assets."

Matthew Lang said he'd welcome financial counseling that would help them be rid of debt once and for all and prepare for retirement.

David Moretsky, president and co-founder of ICON Consulting, in Bellevue, sat down with the Langs to review their financial situation.

Moretsky, who's also a member of the Financial Planning Association — Puget Sound Chapter, cautioned the Langs that they are financially on the brink and agreed they must face their debts.

"They can elect to simply ignore (student-loan) debt, but this will ultimately result in a very challenging lifestyle," Moretsky said, adding that lenders could take measures such as wage garnishment that would reduce their income, destroy their credit rating and wipe out their ability to ever own a house.

Moretsky developed a number of short-term action items for the Langs, as well as a projected financial plan that incorporated a proposed schedule for paying off their debts and putting aside money for an emergency fund, a deposit on a home and for retirement.

Among the immediate recommendations, Moretsky suggested:

Debt counseling: Moretsky referred the Langs to the National Foundation for Credit Counseling, a consortium of low-cost or free certified agencies that would work with the Langs and their creditors to try to get all fees (such as late, past due or over-limit charges) forgiven and work out lower interest rates and a payment plan.

At least one of the Langs' credit cards has such a high interest rate that making the minimum payment each month does nothing to lower the balance on the card.

"As part of the process, all the accounts in question are closed, which can have an initial 'ding' on your credit (score), but this is necessary to make progress," Moretsky told the Langs.

Matthew Lang says he's already called a credit counselor and set up an appointment for next week.

"When we went into this, we were really looking for real help," he said. "If someone recommends something that can help us, we're going to work on it."

Contact student-loan lenders: Moretsky discovered that the Langs' student loans are all federally backed and therefore, out of the credit counselor's scope.

Moretsky advised Matthew Lang to call the lenders directly to discuss deferment (where loans are put on hold for a period of time with interest paid by the government) or forbearance (where loans are also deferred for a period of time, but interest continues to accrue).

Lang said he's followed through with that advice and is working with the lender to get the student loan that has defaulted back into rehabilitation.

"Basically, we need to lay out some money here in the short term to get it back into normal status" before seeking deferment or a forbearance, Lang said.

Get health insurance: It's critically important that the Langs obtain coverage, Moretsky said.

He found an individual plan that provides family coverage for $760 a month and recommended that type of policy unless or until the Langs can get on a plan that is sponsored by an employer.

Though it's a hefty sum, Moretsky calculated that it's within their budget at Matthew Lang's current income.

Since Leona Lang has been unable to work, Moretsky suggested she check into her eligibility to receive disability benefits from Social Security.

Matthew Lang says his wife already has filled out all the paperwork and had a phone interview regarding her eligibility. They'll know within four to six weeks whether she qualifies, he said.

Also on the horizon is the question of Lang's employment contract. When his year with Microsoft is up this June, he says he'll have to leave for 100 days before returning as a contractor.

Ideally, the Redmond-based software giant would hire him or he'd find a permanent position elsewhere.

Lang said his earning potential is his financial bright spot, and Moretsky agreed.

"I believe their best bet would be to leverage Matthew's expertise and ability to work and earn a good living," Moretsky said. "If he can move his contract work to something more permanent, even if it requires a reduction in pay, this could be quite beneficial to their overall situation."

Moretsky said it would allow Lang to obtain many benefits, such as health insurance, an employer-sponsored retirement account, and life and disability insurance, at little to no cost.

"This could further free up money to put towards debt reduction and earlier retirement," Moretsky said.

For his part, Lang says the plan Moretsky created for them seems a little overwhelming, but it could work if positive things happen.

"We've taken more than our share of hard knocks," Lang said. "My struggle is in having faith that the positive things will happen."

Lang said that he and his family are thankful to have a plan laid out for them, and that Moretsky couched it in terms they could understand.

"And now we take the first steps and hope they work," Lang said. "And take us to the next step."

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