Cash-Poor, yet Intent on Enriching Family’s Life
Patricia Charles has no stocks, bonds, money market funds, commodities, CDs, pensions, retirement plans or insurance policies. She has no credit cards. Her checking account balance is $34, and she shares a subsidized apartment in Downey with her two young children.
But that’s an improvement over three years ago, when Charles fled with her children to a Long Beach shelter for domestic-abuse victims. Scared and with little money, she left her troubled marriage to make a better life. She credits some of her progress so far to the training and support she received from shelters and social workers.
After several months of living and working in shelters and receiving public assistance, Charles moved to Section 8 housing for low-income families.
She worked briefly last year as a ramp agent at Los Angeles International Airport, at $6 an hour. But the bulk of her $12,197 earnings in 1998 came from her job as a part-time mail carrier for the U.S. Postal Service, which pays her $11 an hour. The hours are sporadic, however, and she receives no benefits.
Charles, 36, has become more independent since moving here from Mexico at age 20 and receiving her U.S. citizenship. She has reduced the public assistance she receives to a subsidized apartment, which costs her $188 a month, Medi-Cal health coverage and free school breakfasts and lunches for her two children.
But her dreams of raising her children in more comfortable surroundings and pursuing a career elude her. Her driving goals are to continue her own education and to save money to send her children, Daniel Miramontes, 9, and Patricia Miramontes, 8, to college.
“It is hard. But I have to try for my children, especially because they are very good kids. I want to teach my kids the example that you never have to stop going to school,” Charles said.
Priority No. 1: Boosting Her Income
Without a college degree or marketable skills, Charles has held jobs that typically have been low-paying. And as a single parent, she faces the additional challenge of balancing work and raising her children alone. Her estranged husband provides no financial support for her or the children, and her efforts to locate him and receive child support have been futile.
Financial consultant Victoria Collins of Irvine, who was asked by The Times to review Charles’ situation, praised Charles for her tenacity and determination.
“You are moving in the right direction, and you are taking action,” Collins told Charles. “I liked that you wrote your goals clearly, and it seems you have given a lot of thought to them. I know that there is a lot that can be overwhelming about financial matters, especially when time is precious.”
Charles told Collins that her immediate goal is to become a full-time postal employee, which would guarantee her a bigger paycheck and benefits. She recently took the exam and hopes she will qualify. If Charles worked full time at $11 an hour, Collins calculated that her annual income would be about $22,880.
With more money, Charles would buy a computer to help her children and would pay off loans--a $6,895 student loan and about $3,000 borrowed from her brother and a former boss. She also hopes to eventually save enough money for a down payment to buy a house.
Unfortunately, her hours vary from week to week. Some weeks she works only 22 hours and grosses just $242, leaving no room for saving.
“That’s why some paydays are really difficult for me to handle,” Charles said.
Another obstacle for Charles is the fact that she receives no financial support from her estranged husband, despite some initial efforts. Charles said she thought she did not have enough money to file for divorce.
Charles’ low income qualifies her for help in pursuing a divorce, according to Crystal Sims, director of litigation for the Legal Aid Society in Orange County. She could get advice and assistance on seeking child support from the L.A. County district attorney’s Family Support Office. Charles might want to start by contacting the Family Law Facilitator, which operates at county courthouses and could help her navigate the system.
“It’s terrible for these women, and in many cases the lack of child support is what puts them below the poverty level,” Sims said.
For 1998, Charles will not owe income taxes, but she still is eligible for a federal tax break called the earned-income tax credit. The credit can turn into a payment when low-wage workers do not owe taxes, but a tax form must be filed. The IRS has a volunteer income-tax assistance program that could help her prepare the tax forms.
Based on Charles’ 1998 income of $12,197, Collins said she should qualify for a credit of $3,756.
Expenses Cut Close to the Bone
Because money is so tight and she cannot count on a stable income, Charles said that what she can spend for food, clothing and other items for her family varies from paycheck to paycheck.
She estimates her electric bill at about $30 a month. Phone bills range between $20 and $80 a month.
For food, Charles spends what she has available. “Some weeks, I can spend $100 for food. But if I don’t have it, I have to spend only $30 a week,” she told Collins. It helps that her children receive free breakfasts and lunches at school.
One of her biggest expenses is gasoline. Gas expenditures are about $30 to $35 a week, she said, mostly spent getting to and from work in Los Angeles. She depends on her 10-year-old van for the flexibility to work and take care of the family. It runs, but is in need of repair. She worries that she will not be able to afford to fix it.
Charles primarily relies on her mother to care for her children while she is working. She said she compensates her mother depending on what she can afford--about $45 a week.
What money is left goes for clothing or other needs. “I try first to cover for them [the children], rather than me, because they need more things than me,” she said.
On the plus side, Collins commended her for not increasing her debt load. She also praised Charles for her commitment to her children’s education and interest in continuing her own. Education is a valuable investment for the future, noted the advisor, more important right now than long-term saving for this family.
Charles said she spends time helping her children with homework and has set high expectations for them in school. She takes them to the library and hopes someday she can afford to pay for music lessons, gymnastics or other activities.
“I want to give them these things. They are good children. I don’t have problems with them in school. My little girl is very good in school. She has won some honors.”
Her son, Daniel, is good in saving and managing his money, Charles said. “If he has some money, he saves it. He gets things for his grandma. He is very good like that.”
As for Charles’ education, she said she received training and was licensed in Mexico for a position in airport operations. After she came to the United States in the early 1980s, however, she was told she would need further study to be qualified for a similar position in this country.
Charles said she enrolled in an airline industry training program at a vocational school in Long Beach, but when she graduated, could only get a position that paid $6 an hour. She still owes $6,895 for a student loan obtained through the school, a debt that weighs heavily on her. She says she regrets having borrowed so much money.
College for Herself and Her Children
Collins recommended that she consider classes at a junior or community college that could provide education and training in computers--a field that interests Charles.
“I recognize that your time is valuable, but that would be one area that would help you get into a higher-paying job--if you develop those skills and get very good at it,” Collins said.
“I know it would be good to have it,” Charles responded. “I love to go to classes. But I need time to go to school, and with this job I don’t have much time or a set schedule. Sometimes I start early, sometimes I start work late.”
Janet Foster, director of Continuing Education Center for Women at Long Beach City College, works with many women who face similar challenges in finding the time, money and child care to enable them to go to school. Foster suggested that Charles explore the programs, financial aid and low-cost child care available at many community colleges.
Though she is struggling to make ends meet, Collins urged Charles to try to save money each month--even if only a minimal amount. Eventually, Charles can begin to invest in low-expense mutual funds, Collins said.
When she is ready to invest, which should be after she has saved about six months’ living expenses in an emergency fund, Collins said, “I want you to remember to use no-load and no-transaction cost” funds. She suggested that Charles first consider no-load funds such as those offered by Vanguard.
“I know that you want to save money for both of your kids to go to college,” Collins said. “Probably the best way to do it is for you to save money in a retirement plan for yourself, because then they will be more likely to be eligible for financial aid.”
College aid programs are the most generous to students with the fewest resources, so it doesn’t make sense for Charles to save too much money directly for her children’s college costs. By focusing on saving for her own retirement, however, Charles improves her own situation and retains the flexibility to help her children later.
Setting a Good Example as a Parent
Also important is teaching her children about managing money. “Even at the ages your children are, it is important that they learn to be responsible about money and begin saving themselves, whenever they have money.”
One of the books she recommended Charles read is “Piggybank to Credit Card: Teaching Children the Financial Facts of Life,” by Linda Barbanel (Crown Publishers, 1994).
In planning for the future, Charles said she purchased a will-writing package and is in the process of completing a will. Collins stressed that the most important thing for Charles to do is name a guardian to take care of her children in case something happens.
“Taking action is definitely a step forward,” Collins said. “I think you are a good role model for your children. . . . As a single mom, to try to do all that you are doing is not an easy job.”
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This Week’s Make-Over
* Participant: Patricia Charles, 36
* Occupation: Part-time temporary mail carrier for the U.S. Postal Service
* Gross annual income: $12,197
* Financial goals: Increase income and save money to send children to college, buy computer, pay off loans and buy a house.
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Current Portfolio
* Debts: $6,895 on a student loan, $3,000 in personal loans.
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Recommendations
* Continue to seek full-time position with the post office.
* Pursue efforts to obtain child support.
* Enhance opportunities for higher-paying jobs by getting education and training at a community college with help from scholarships, grants, child-care assistance and other aid.
* Save as conditions allow. When more money is available, focus on retirement savings rather than college fund for children, so that savings won’t interfere with their financial aid eligibility.
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Meet the Planner
Victoria Collins is a certified financial planner and a partner in financial planning firm Keller, Collins, Hakopian & Leisure in Irvine. She was named one of the nation’s top 200 financial advisors by Worth magazine in 1996, 1997 and 1998.
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Jeanne Wright is a freelance writer based in Los Angeles. To be considered for a published Money Make-Over, send your name, age, phone number, income, assets and financial goals to Money Make-Over, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053. You can also e-mail to money@latimes.com, or you can save a step and print or download the questionnaire at https://www.latimes.com/HOME/BUSINESS/FINPLAN/make-over.htm.
