FIRST PERSON

I Want a Bailout

An associate professor would be happy to have the federal government ease her financial crisis

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By MELISSA NICOLAS

My financial crisis started way before the housing bubble burst. I can trace my fiscal woes back to the day I signed my first tenure-track contract, signifying that I was going to use my doctorate to become a professor.

Since that fateful decision, in the fall of 2002, I have declared bankruptcy, lost a home in a foreclosure/short-sale proceeding, cashed out three modest retirement plans, and been delinquent on my student loans. While I have had the good fortune of being on the tenure track since earning my Ph.D., I would have to argue, from my vantage point, that exactly what that "fortune" consists of is open to debate.

The first position I held after graduate school offered a decent starting salary of $44,000 a year. However, to take the position, I had to relocate from the Midwest to northeastern Pennsylvania, where the cost of living was slightly higher than I was used to. And my husband, who is not an academic, had to quit his job to move with me.

We got a decent mortgage and purchased a home, assuming we would be a two-income family. But the local economy was in a slump, and after three months of unemployment, my husband had to take an hourly position. The hours he was offered each week varied, and some weeks, we had to resort to credit cards to buy groceries. Right after Christmas, my student-loan debt of $65,000 began to come due.

As we were living paycheck to paycheck — often not making it in between — I learned that the program in which I was hired to teach was not going to be realized after all, and I decided to go on the market again.

So after being in my first position for only two years, I relocated to the deep South and took a $5,000 pay cut. While the cost of living was a little lower, it wasn't as low as everyone had led me to believe. My monthly car-insurance premiums doubled, and the health-insurance benefits were truly horrible. Simple maintenance medicines that we had received for nominal co-payments started costing us more than $250 a month.

The economy in our new location was even worse than in the town we had left. And this time, it took my husband, who has a master's degree, more than four months to find a job that paid $27,000 a year.

We did the best we could to live within our means. But we could not find ways to cut expenses, since we were already living as frugally as possible. We even started taking our medicines every other day.

We reached a point during our first year in the South where we simply could not pay our bills anymore. Our credit-card debt alone reached upwards of $25,000; we had no savings account and no prospect for things to improve anytime soon. Finally we took the drastic step of declaring bankruptcy.

Bankruptcy, for the uninitiated, is not a get-out-of-jail-free card. To begin with, we had to come up with $600 in cash to retain a lawyer and cover court costs. And while a discharge of bankruptcy does clear your unsecured credit-card debt (at least it did in 2005; the laws have changed since then), your student loans are not discharged when you file for bankruptcy. As a matter of fact, while my student-loan payments were deferred during that period, they were still accruing interest.

Four months after our bankruptcy, Hurricanes Katrina and Rita blew through the South, and our home was damaged after we had evacuated for Rita. Given the nonexistent potential for increasing our income there, and our fear of having to go through another such hurricane season, I went back on the job market.

This time, the roll of the dice landed us in western New York. It was a promising move. My salary increased by more than $20,000, and my husband's company in the South allowed him to keep his job and work from our new home. He wouldn't be unemployed for any extended period this time.

Thinking that we were finally coming out of our economic coma, and expecting our second child, we bought a home. Because we had just filed for bankruptcy, we had to get a subprime mortgage, but our lender assured us that we would be able to refinance it to a fixed conventional mortgage within a two-year period before the loan adjusted. We took the bait.

Six months into our new life, my husband got laid off, the housing market tanked (which meant we couldn't get anyone to refinance us), and we found ourselves in the all-too-familiar position of scraping to get by. We defaulted on our mortgage, were served a notice of foreclosure, and moved into a rental.

My husband did find work — a one-year contract position with no guarantee of renewal. Feeling a desperate need to get closer to family, I went on the market one more time, ultimately finding a tenure-track position in the same town where I started my career. I had to take a $10,000 pay cut, but my husband did quickly find full-time, permanent employment with good benefits.

Since the bankruptcy, we have been supremely cautious about using credit. Nevertheless, with three moves, two rounds of unemployment, and a new baby, we owe about $8,000 in credit-card debt. Additionally, I have exhausted the deferments on my student loans and, with all the interest that has accrued, my grand total is now about $70,000. My husband's student-loan bill is a much more modest $30,000. What little retirement money I had saved in each of my positions I cashed out to help keep us afloat.

My brother-in-law — a muckety-muck in the corporate world — has been telling me for six years that I could easily double my salary if I went into business as a technical writer. I've resisted such a move, believing that being a professor is my vocation. I enjoy working with students and think I am a reasonably effective teacher; I have been able to produce some modest research; I don't hate committee work; and my colleagues seem to like me. Academe and I have always been a good fit.

However, my husband and I have been having serious discussions about a potential career change for me. I don't want to leave academe. I've already sacrificed so much to be here, but as we keep running on the financial treadmill, the incline keeps increasing, and we do not seem to be getting anywhere.

Last night, right before turning out the lights, I was fairly close to resolving that I had to change careers to save my family from even more financial distress than we have already experienced. Then, as I was driving to work the next morning, I heard about the federal government's decision to bail out yet another financial institution.

Basically the government is going to lend AIG enough money so that it won't collapse. The downside for the company is that the government now gets a say in all of its major decisions because the government, in exchange for the loan, becomes the controlling owner.

Maybe some folks at AIG see that as a bad thing, but it sounds like a sweet deal to me. The government already controls how much money I bring home in terms of my taxes, and how much it awards to higher education. The government decides if I can get a mortgage (I can't). It dictates how much my health care will cost. Heck, it even controls what my kids learn in school.

Since the government already has so much control over my life, I have no problem accepting the terms it gave to AIG: I would like the federal government to bail me out of my financial crisis. I won't even ask for a golden parachute.