How the Crash Changed Lives: Readers' Tales (On the Street)

Published Sept. 15, 2009 at 4:00 a.m.

It’s an anniversary that hardly anyone would celebrate...But when it comes to the crash of 2008, marked by the collapse of Lehman Brothers, one thing is certain: No event in recent history changed the lives of Americans quite as much.

Recently, we asked SmartMoney.com readers to tell us on how the crash changed their lives. We received many letters, each with a unique story, but all with one underlying theme: taking charge of your financial life. Some of you dumped your broker and started managing your own portfolio, others took on more work for less pay; many curbed their spending and focused on building an emergency fund.

Here’s a sampling of what readers wrote:

TWICE BURNED : Alan Martin, Fairfield, Iowa
How the crash changed his life: unemployed since March 2008

In March 2008, Alan Martin, 53, was working as the vice president of sales at a business services consultancy in Fairfield, Iowa. When his company’s line of credit was cut in half, Martin was laid off, and today he is still unemployed. It helps that his wife has gone back to work, earning $8 an hour as a school assistant, “but it is nowhere near the $150,000 a year earnings that I would normally expect,” Martin writes. “We have cut our spending considerably with no eating out, delayed all maintenance on the house, no luxuries, limited vacations and a strict budget.” He worries about health-care coverage — for something affordable, the couple took a policy with a $10,000 deductible — and the long-term ramifications of being jobless...“The lack of employment is now impacting my Social Security entitlement and will cause a double whammy of lower savings and lower benefits when I retire,” he writes.

Making his financial situation even worse, Martin paid $20,000 to start a business and another $5,000 to a recruiter. Both plans turned out to be scams. “Now, I refuse to talk to anyone who wants payment upfront, but I still get a lot of calls from people trying to take advantage of the unemployed,” he says. “Madoffs exist everywhere, secure in the knowledge that the law does not apply to them, regardless of any ethical consideration.”

ROLLER COASTER: Jeff Holmes, Worcester, Pa.
How the crash changed his life: employer has filed for bankruptcy

Jeff Holmes of Worcester, Pa., uses two words to describe his life after the crash: roller coaster. “My outlook changes on a daily or weekly basis with the changes in both the stock market and my job,” writes Holmes, whose employer in the past year has declared bankruptcy and closed the facility where he works. Though Holmes has been assured of keeping his job, for now, he is job hunting and believes he has “some time to be choosy.” In the meantime, Holmes has begun building up an emergency fund, set up spread sheets to keep track of his finances and “ has tried to reduce discretionary spending and pay off some debts,” he writes.

But Holmes has also made some short-term financial decisions with questionable long-term consequences. To build up the emergency fund, he has “reduced or eliminated contributions to my 401k and reduced my withholding for taxes,” he writes. As a result, he may have to retire with a smaller nest egg, not to mention that by not contributing to his 401(k) in the past six months he has likely missed on the market’s 50% gains since the March 2009 lows.

TWO MORTGAGES: Terri Koller, Gardners, Pa.
How the crash changed his life: unable to sell her house

Before the market crashed, Terri Koller had been planning to sell her home in Gardners, Pa., and buy a small farm where her children could raise horses. Unfortunately, “when we finally found the perfect place, the housing market was so bad that the only way to sell our current house was to all but give it away,” she writes...Instead, the family rented their home, but that plan backfired when the tenant failed to make rent payments. Now, the Kollers are saddled with two mortgages.

“I think the worst part of the meltdown is the greedy people who caused it are still skipping around with smiles on their faces and money in the bank, while many of the people who just tried to make a decent living for themselves and their families lost everything. Homes, jobs, retirement, savings,” Koller writes...“The old saying was proved true: The rich keep getting richer and the poor keep getting poorer.”

BLESSED: Carol Kujawa, Everett, Wash.
How the crash changed her life: more work, less pay

After Carol Kujawa’s company laid off workers in November 2008, her employer told her she would have to take on part of a former colleague’s job -- essentially doing more work for less pay. She was also required to take two weeks’ unpaid leave this summer, as did all of her co-workers. Yet, Kujawa views both instances as a blessing in disguise. “I acquired new skills in short order, which make me more valuable to my company,” she writes.

Kujawa adjusted the percentage contributions to her 401(k) toward bonds and away from stocks for a while, but continues to contribute 15% of her wages, and gets a match from her employer...“In the end, I am very thankful that I work for an excellent company, and I really appreciate my job,” she writes...“I count my blessings daily.”

MORE SELF-RELIANT, Chad Ahr, Amsterdam, N.Y.
How the crash changed his life: dumped his broker

After the market crash, Chad Ahr, like many consumers, began to question the wisdom of paying for professional investment advice...Ahr, who lives in Amstedam, N.Y., started by taking over his self-directed IRA, saving the $500 quarterly fee. He has since left most of his positions intact and bought some exchange-traded funds...“I realize it was my fault,” writes Ahr. “I told my broker I wanted to stay all in, up till the day I left him. I am much wiser and almost whole.”

UP $110,000 : Douglas Tomlinson, Olathe, Kan.
How the crash changed his life: doubled his savings

Like Ahr, Douglas Tomlinson of Olathe, Kan., decided to manage his own funds. His first order of business: selling an annuity, valued at $280,000, in October 2007, but had dropped in value to $150,000...To minimize the penalties, Tomlinson waited until February 2009 to sell, and received $124,000 after he closed the account. “I took the original investment of $100,000 and went to buying stocks myself starting on March 1, 2009,” he writes...“As of today, I have more than doubled my money and I’m up about $110,000. I look to have all of my money recouped by the end of this year and continue forward with my portfolio. I will now be in a better financial position and can fall back on this money when needed for emergencies...I have a continuous stream of income with dividends and stock options, which makes it easier to manage the ups and downs in the market.”

SMARTER FOR IT: Marc Brown, Alpharetta, Ga.
How the crash has changed his life: is now a smarter investor

Marc Brown of Alpharetta, Ga., writes that he extracted some invaluable investing lessons from the crash. Here are a few: “Invest in what you know, … buy quality and minimize risk, … stocks are not the only way to make money, and most importantly… never forget how you felt when things were at their worst so you do not put yourself in the same position again.”

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