JUST before 9 a.m. on a recent March morning, Mark Flake was working the phone at his office here in northwest Arkansas. The phones have been ringing lately, and that’s a good thing because Mr. Flake is a real estate agent and a property manager — and it wasn’t long ago that things were painfully quiet.
“I will never complain about being busy,” said Mr. Flake, 41, a trim sandy-haired man in khakis and a yellow polo shirt with a Weichert Realtors logo. In fact, Mr. Flake had one of his best income years last year — a relief after the brutal slowdown of 2008 and 2009, when his income plunged by about 30 percent.
The drop in pay, with mounting medical bills and a curve ball in their personal life, led Mr. Flake and his wife, Amy, to exhaust their savings. As they shifted spending to credit cards their debt mounted, and conversations about retirement saving took a back seat to making the mortgage payments on their home in nearby Rogers.
But with his income now beginning to stabilize, Mr. Flake has been taking stock. He and his wife aren’t as bad off as some — they still own their home and, while they’ve lost equity, they don’t think it’s worth less than their $150,000 mortgage. Mr. Flake has some real estate holdings, including a pair of rental duplexes and part of a limited liability company that owns commercial property. He expected those holdings to pay off in the long term, but they wouldn’t yield much if sold at current prices.
He has added to his income by managing clients’ properties as well as his own. His emergency cash, though, has dwindled to $1,000, and he has no formal retirement fund. He knows he should save for retirement, but says the very notion of retirement is alien to him. “I don’t think I’m ever going to retire,” he said, shaking his head.
Still, he can foresee a future in which, perhaps, he won’t have to be constantly on call for clients or tenants, as he is now. But a major impediment to saving for that day is that the Flakes must first pay off debt they accumulated during the property bust — roughly $55,000, excluding their mortgage and a car payment.
A chunk of the total is student loans, but much of the debt was run up on credit cards covering expenses like medical treatment and operations for two of their children. “It adds up,” said Mrs. Flake, 37, in a telephone interview from her home. “The last couple of years have been tough.”
Adding to the strain on their budget was the unexpected addition of a family member. In October 2008, they learned that a relative of hers with an 8-month-old son was going to prison. If the Flakes could not take the baby, he would be placed in foster care. The Flakes did some soul searching and decided to seek custody of the boy, delaying a plan by Mrs. Flake to resume working. “It’s not every day,” Mr. Flake said, “you have the chance to do something that can really change someone’s life.”
Last fall, though, Mr. Flake realized his financial situation was precarious. A credit counseling service helped him negotiate a consolidation loan to pay off his nonsecured debt at an interest rate of about 3 percent. He expects to pay it off in about four years. “You really can’t save effectively until you’ve got that off your back,” he said.
Ann Garcia, a financial planner in Portland, Ore., with Maas Capital Advisors, said in a phone interview that the Flakes’ predicament “isn’t terribly unusual,” given the lingering effects of the housing collapse.
Ms. Garcia’s own family has seen its share of economic ups and downs — her husband works in technology, as she once did, and has endured six layoffs in the last 15 years. That’s why it’s crucial to have a cash cushion, she says, and that should be the Flakes’ first priority.
Ms. Garcia supports Mr. Flake’s commitment to ridding himself of debt. But she advises keeping that goal in perspective as his income stabilizes. (He made about $65,000 last year from his real estate holdings, property management business and home sales commissions combined, and expects to make about the same this year.)
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