Performer with a volatile income yearns to own a house
As an original cast member of the Broadway musical “Rent” and performer in numerous other shows, Gwen Stewart has traveled the world singing and acting. In some years, she was on the road so much that she barely inhabited her Van Nuys apartment.
“Out of the 11 years I’ve lived here, I’ve probably spent five in the apartment,” said Stewart, 48, sitting on her couch across from moving boxes that have long lined a wall.
But Stewart — who is best known as the soloist in the “Rent” song “Seasons of Love” — has decided she has reached the season of her life to put down roots and buy a house.
“I feel like a nomad,” she said. “I don’t feel like I have a place to call home.”
She said she yearned to have a house where she could have “summer barbecues in the backyard and green grass.”
But can she afford it, or should she continue to, well, rent?
Stewart’s income, like that of many performers, has been volatile. In addition to her stage work that has
included four Broadway shows, she has had parts in
a few movies and in some television shows, such as “Law & Order” and “24.”
In a good year, Stewart made as much as $83,000, but in lean years it fell to about $5,000.
She said she wanted to sing and act until “they have to carry me off the stage.” But given that she’s in a business that is often youth-oriented, she wondered how long she could count on her current career for income. That has further clouded her decision to commit to a home.
Last year, Stewart made about $40,000. She has nearly $117,000 in cash accounts, $31,400 in a retirement account and about $1,900 in stocks. She has no debt.
“You’ve managed the swings in your income really well,” certified financial planner Lara Lamb told Stewart during a two-hour meeting. “One of the great things you have going for you is that you have no debt.”
But before Lamb, whose office is in Encino, was ready to talk about buying a house, she had a more immediate concern: health insurance.
Because Stewart’s employment has been unpredictable, she sometimes hasn’t worked enough to qualify for her union’s health insurance plan. One year, she worked just a week less than needed to be covered.
“That’s too risky,” Lamb told Stewart. “If you don’t have insurance and land in the hospital for a week, all your savings could be wiped out.”
A top cause of bankruptcy is medical costs, Lamb told her. And because of a preexisting condition (Stewart will eventually need knee replacement surgery), it could be difficult for her to get healthcare on her own.
Lamb suggested that Stewart consider getting a steady job, with benefits, that allows her to use some of her talents. Doing so probably would cut back on her chances to perform in shows, but it would greatly add financial security.
“Her need for healthcare insurance is driving the need for a career change,” Lamb said. “It’s time for a transition.”
Stewart had been pondering starting her own business as a vocal coach. If she had a business and hired one employee she could obtain healthcare through a group plan that Lamb estimated would cost her about $380 a month.
Then, on to the house.
The news on that front was not good. Lamb said that although Stewart has money to make a down payment on a house — thanks to an inheritance received after her mother died — she doesn’t have the steady income to support a mortgage.
Lamb estimated that Stewart would need to make at least $86,000 annually to afford a mortgage, property taxes, insurance and maintenance on a $250,000 home.
“Oh, geez,” Stewart said, sorely disappointed.
Renting a house, Lamb said, would be better. The monthly rent might be higher than what Stewart is paying for her apartment, but the increase would be partly offset by getting her furniture out of storage. Currently, she pays about $420 a month for storage space.
Alternatively, Stewart could find an apartment she likes much more than her present one.
“It sounds as though she’s using her apartment as a motel room between jobs,” Lamb said. “She’s struggling to keep her expenses low, but she’s not having the quality of life she wants in terms of living arrangements.”
Other expenses will probably come up soon. Stewart’s 15-year-old Mazda 626 is on its way out. Before driving to the appointment with Lamb, Stewart had to turn the key seven times before the engine started.
Lamb advised her to make buying a car a financial priority. She recommended that Stewart pick an inexpensive used one.
As for Stewart’s retirement, there was unexpected good news. She had mistakenly thought her 401(k) retirement account was her union pension. When Lamb informed her it wasn’t, she checked with the Actors’ Equity Assn. and learned that at age 65, she’ll receive a $1,900 monthly pension. Additionally, she’ll get $1,850 a month in Social Security payments.
That would give her an annual income of $45,000 in retirement, not to mention her savings. Factoring in inflation and assuming her budget stays roughly the same, Lamb said she could live comfortably.
Over the years, Stewart has managed her budget well, drawing on lessons she learned as a child when she ran the cash register at her father’s grocery store.
Today, Stewart spends about $3,300 a month, adding up to about $40,000 a year for living expenses.
“I’m not so concerned about her retirement,” Lamb said.
But she does want Stewart to reorder her finances. Lamb advised her to sell two time shares — on which she spends $1,400 a year — that she’s never used. Because the time-share market is so depressed, it’s unlikely she would ever recover her initial $38,000 investment.
Another option is for Stewart to use the time shares to take a vacation, something she hasn’t done in years.
“I’m either working or looking for work,” she said.
Lamb also advised Stewart to reallocate her retirement account. More than 80% is invested in stocks, a level that’s too risky. Lamb suggested a mixture of 60% stocks and 40% bonds.
As for the $117,000 Stewart has in cash, Lamb said it should be reinvested. She suggested keeping at least a year’s worth of income in an accessible savings account to carry her through lean times.
If Stewart doesn’t buy a home, 60% of the funds should be invested in low-cost, indexed mutual funds, with the rest invested in bonds to provide Stewart additional security in retirement.
For Stewart, the appointment with Lamb was eye-opening. She was grateful for some of the advice, and for finding out about her pension.
But in many ways it was not a happy meeting.
“I’m disappointed,” Stewart said about the
prospect of buying a home. “I was hoping I’d get the two thumbs up.”
She is not ready to give up the dream. Her plan is to continue to improve her credit score, partly by buying a car and making regular payments. And she said she would look for a home under $200,000, even though that could be difficult to find in the Los Angeles area.
Stewart also wasn’t ready to look for a job that might keep her from performing. She is a self-taught singer whose family was not able to pay for lessons when she was a girl. Instead, she took a corporate job and wound up planning the entertainment for company parties. Her singing at those parties led a colleague to point her to auditions.
She got parts and never looked back. Giving up on such a hard-won career, even partly, is near unthinkable.
“I really liked the response I got from people when I sang,” Stewart said.
“It was joy.”
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