Lessons learned from the foreclosure process.
In this file photo, Marquita Ealy tours a foreclosed home during a bus tour of foreclosed and blighted properties in Richmond, California. (Photo: Justin Sullivan/Getty Images)
In a September 2009 editorial I co-wrote with author Barbara Ehrenreich, we highlighted stories of several individuals who were hard hit by the recession. One of them was Willett Thomas, a nonprofit specialist based in Washington, D.C. Though she owned a home and a rental property in Gainesville, Florida, a hard run of luck quickly left her in dire straits: she fell ill, couldn’t find a job, and the house she lived in fell into foreclosure.
Three years later, Thomas now counts herself among the fortunate. “I basically got out of the situation by the skin of my teeth — I was able to sell my house because I’d been in it for nine years and had equity and was able to buy another house with the proceeds in Baltimore,” she says.
One of the lessons Thomas took away from the experience? Money in the bank doesn’t necessarily mean you’re secure. “What brought me to my knees, literally, was when I got sick when I had no health insurance,” she says. From 2008 to 2011, Thomas had three major stays in the hospital. Though she had approximately $20,000 in savings, the burden of paying off hospital bills coupled with a very tough job market caused her to fall behind on her mortgage payments.
“I think for sure I got caught up in living paycheck to paycheck,” Thomas admits. “If you don’t have health insurance you’re going to be in terrible shape. I should have gone ahead and purchased a policy, even if it was going to be expensive,” she says. Thomas isn’t alone by a long shot — medical problems caused 62 percent of all bankruptcies in the U.S. in 2007.
The second lesson Thomas learned? Be proactive and pragmatic when it comes to your money, even when it’s tied up in possessions that carry memories. Thomas was able to land on her feet more quickly because she called her real estate agent soon after she began falling behind on her house payments to figure out a solution. Within 30 days, Thomas found a buyer for her house who paid in cash, allowing her to buy her current home in Baltimore — a much cheaper housing market only an hour away from her home in D.C.
The decision wasn’t easy. “I loved that house,” says Thomas. “It was a cute little Tudor house. I really thought I was going to be carried out of that house feet first. But it was also an investment — the most money I’d invested in anything. And the world is full of cute houses.” In the end, her determination to recoup her investment and avoid foreclosure prevailed over sentimental attachment. “There was no way I was going to let someone take all that equity away from me,” she adds.
When Thomas’ real estate agent brought up Baltimore as an affordable alternative to Washington, D.C.’s pricey housing markets, Thomas was initially skeptical. However, she eventually relented and fell in love with her new Baltimore residence in the West Side district, an up-and-coming neighborhood that’s quickly becoming a mecca for young artists. “You can’t walk without bumping into a painter or a writer,” she laughs.
Lesson number three: Don’t let the perfect be the enemy of the good. By keeping an open mind in her quest for affordable, sustainable housing, Thomas was able to discover and become part of a vibrant community she would have otherwise overlooked.
This brings us to Thomas’ fourth lesson: true wealth sometimes means cutting back and giving back. Thomas has founded a nonprofit organization, Write of Passage, a communications consulting company that assists under-served artists. She explains that for now she wants to avoid “getting caught up in the money thing,” preferring instead to live within her means. “I think a big question on the minds of my peers is, am I going to be happy sitting behind that desk for another 10, 20 years? I feel as though I’m doing what I came to the earth to do. I feel content,” she says.
In the end Thomas’ experience helped her be more proactive about her savings and assets and spurred her to redefine her long-term personal and career goals. Even if you’re struggling to overcome a major financial crisis at the moment, remember that your transition to recovery can eventually lead to a more sustainable, financially secure future.
American Money is a weekly column written by Dedrick Muhammad, the senior director of the NAACP Economic Programs. To learn more about preventing foreclosure and personal finance, check out the NAACP Financial Freedom Center Facebook Page or on Twitter @naacpecon.
The opinions expressed here do not necessarily reflect those of BET Networks.
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