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Originally published November 22, 2014 at 8:00 PM | Page modified November 22, 2014 at 10:40 PM

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Debt haunts young working couple after service in Marines

Now out of the Marines, James and Alexandra Magaña struggle with making ends meet for their family of four.

Special to The Seattle Times

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James Magaña was 23 and his future wife, Alexandra, was still a teenager when they separately enlisted in the Marines about five years ago and reported for boot camp, ready for adventure.

The Marines trained them for ground-based aviation jobs and transferred them among several bases in the South, where they met and married. Later, the Marines sent James Magaña to Afghanistan for six months as an avionics technician.

But it turned out that one of the couple’s biggest adventures was not in the Marines but close to home — when they returned to civilian life.

James Magaña left the Marines in 2012 and got a loan from a Richland credit union to establish a new life in King County. His wife left the service and joined him three months later.

In the months ahead, they got full-time jobs, rented a house in Covington to raise their two young children, borrowed money to buy two cars and ran up some modest credit-card debts.

Then, money became a nightmare.

“I was literally, daily, freaking out over finances,” James Magaña said. He began examining every expenditure, and both of them were stressed about their financial plight.

“I knew our finances were in shambles,” James Magaña said. “I was trying to dig us out and didn’t know how.”

Alexandra Magaña reached out for help and applied for a free financial makeover from the Puget Sound Chapter of the Financial Planning Association.

The chapter put the Magañas in touch with Julie Back and Jonathan McQuade of Lakeview Financial Group, which is based in Seattle.

Back and McQuade looked over the family’s finances and quickly grasped the source of the stress.

The Magañas barely broke even each month, and the family had a negative net worth. They had no savings, and their assets consisted of personal belongings, balanced against about $41,000 in debt.

To make matters worse, James Magaña’s loan from Gesa Credit Union defaulted, apparently because of a mix-up in the family’s autopayment program. Gesa sent the $3,400 outstanding balance to collections.

The couple’s military service had prepared them for a lot, but not for this.

“It’s such a shock for everyone getting out of the military,” Alexandra Magaña said. “There are so many things that you don’t even think of that you take for granted.”

As Marines, the Magañas received free health care, free education and free gym access. They were paid monthly allowances for housing and food. Once a year, the Marines gave them a clothing allowance for new uniforms. If they put in 20 years of active and reserve duty, they could retire with traditional pensions.

The civilian world, as it turned out, was not nearly as generous.

“They were taken care of, and then not,” Back said of the couple.

Luckily, the family has steady sources of income. James Magaña earns about $56,000 a year as a full-time industrial mechanic at the Starbucks roasting plant in Kent. Alexandra Magaña makes about $35,000 a year as an administrative assistant with a painting company in Maple Valley.

Back and McQuade urged the Magañas to devote their full attention to the family’s short-term financial challenges.

The first order of business was systematically reducing the couple’s debt. The Magañas quickly paid off an $80 balance on a Victoria’s Secret credit card. They are now using the money not spent on Victoria’s Secret to help them pay off a $390 balance on their Wal-Mart credit card. When the Wal-Mart card is paid off, they will use the freed-up money to pay down yet another debt.

Back and McQuade are also working with the Magañas to resolve the delinquent loan, perhaps by negotiating a manageable payment schedule with the credit union.

“They really want to do the right thing,” McQuade said. “They want to pay off these debts.”

A big revelation for the Magañas occurred when Back and McQuade made them document their monthly spending. Among other things, the couple had underestimated how much they were spending on groceries. In July, for example, their grocery bill was $911.

“That was an eye opener,” Alexandra Magaña said of the exercise. “It was, ‘Wow! That’s where the money went!’ ”

Back and McQuade also developed a budget for the Magañas that includes an automatic transfer of $45 a month into a savings account. The couple say they will stick with it.

The Magañas say their household finances now seem much more manageable after working with Back and McQuade.

“I’m not as stressed as I was,” James Magaña said.

George Erb is a Seattle freelancer.

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