noticed how his thinning hair was turning gray. But the sight and sound of the pounding surf was having a calming effect on him. He began to reflect on key events that had transpired in his life.
Alex and Kim had met their freshman year in college. They were always bumping into each other around campus. They were good friends for two years before their relationship turned romantic and they became a couple. They married soon after graduation. At first they didn't have a lot of money, but they didn't mind. They were young, smart, ambitious, and, most importantly, in love.
They had come to this very hotel for their honeymoon. Alex remembered how happy they had been, remembered the feeling that their whole lives lay stretched out before them and anything was possible. Nothing else mattered as long as they could face life together. How lovingly Kim had looked at him then, and how much fun they had together. Alex smiled as he remembered the night Kim dared him to go skinny-dipping in the ocean, and how she had grabbed his swimsuit from the beach and ran back up to the hotel with it. They made sandcastle villages, rode bikes through the tropical forest, and snorkeled with the most colorful fish he had ever seen. It had been unforgettable.
Once Alex got his first job, the income was great. But Alex reveled in it and spent every cent he made, enjoying every luxury he could. He didn't save a dime.
Alex's decision to get his master's degree only added to their debt, but with an advanced degree came better paying jobs and more opportunities. Just as Kim started to advance in her own career, she became pregnant with Laura. Three years later Michael came along. A few years later Kim went back to her work as an accountant, but even with her income it never seemed like there was enough. A mortgage, car payments, household expenses, and credit card debt started piling up higher each year.
Despite Kim's efforts, Alex never managed to establish any habits around saving and investment. Each time he got a bonus or a job promotion, the extra money seemed to evaporate. Alex and Kim's expenses were now growing out of proportion to their income. He began charging frequently and liberally on his credit cards.
From the beginning, Alex justified and defended his spending. Luxuries became necessities. He needed his country club membership so he could golf with his business associates like Chaz. To keep up with his coworkers, he had to take the same sort of expensive vacations and cruises. He loved high-end watches and the latest technology gadgets. To Alex, who'd been brought up in this lifestyle, these expenses weren't extravagant. But 20 years into their marriage, Alex and Kim had zero savings, no retirement money in the bank, and a pile of debt.
When Alex's company was going through financial difficulties during the recession, he was laid off without any warning. Alex had always been a top performer, so he assumed he would not be susceptible to occasional downsizing or restructuring. He never imagined that his company would become disrupted, obsolete, irrelevant, or that he could lose his high-paying job.
Alex remembered that time all too well. His mind flashed back seven years.
He had arrived home from work much earlier than usual. He normally got home around 6:00 or 6:30, but never as early as 3:30 in the afternoon. Kim, who had been working from home that day, was in the laundry room folding a huge pile of clothes from several wash loads.
“Hey, honey,” Kim smiled. “What are you doing home so early?”
“I just got laid off,” he blurted out in a state of shock.
“What?” She dropped the shirt she was folding. “You're kidding, right? You're one of the star executives at that company. How could they possibly lay you off?”
“I know. I know. It's not about me. Apparently the company ran out of cash, so the whole thing went bust. We all lost our jobs, just like that,” Alex said, bewildered.
Kim seemed lost in thought. “Did anyone see this coming?” she asked.
“I certainly didn't. I'm sure my boss must have known,” Alex said.
“I mean, I knew company cash was tight, but to completely run out of money? It's ridiculous,” he fumed. “How can you run a business and not have a plan for getting more cash? It's downright irresponsible!”
The company Alex worked for had been around for 35 years and in its heyday had generated almost $500 million in annual revenue. Despite its respectable revenue stream for a privately held business, it had always managed its expenses poorly. In its most recent year, the company had generated around $350 million in revenue but had not adjusted expenses or downsized the number of employees accordingly.
“So what do we do now?” Kim asked, a hint of fear in her voice.
“I guess I start looking for a new job,” Alex responded dejectedly.
“It's pretty brutal right now. Have you seen how many jobs we've lost as a country in the last six months? Who knows how long the job hunt could take? I guess we could cut back on eating out so often, and we could cancel that expensive country club membership.” Kim began pacing as she calculated other ways to save.
“Kim, Kim,” Alex said, reaching for her hands. “Don't worry about it. No need to do anything extreme. We'll figure it out.” He could see in her face that she wanted to believe him. But there was a twinge of something else there, too.
Alex snapped out of his reverie. They had figured it out, but it took a lot longer than Alex had imagined. For eight months, he searched and searched for a new job before finally landing with his current employer six years ago. He probably would have kept looking for something better if Kim hadn't insisted that he swallow his pride about the pay package. He had been a successful sales executive for seven years. Why weren't companies willing to pay for his valuable skill set?
Alex's unbridled confidence and cheery optimism took a big hit after he was laid off. What bothered him most, now that he was earning only 60 percent of his previous salary, was the pressure to put the brakes on his comfortable lifestyle. He couldn't stand the thought of resigning his country club membership, or abstaining from luxury vacations and the newest technology. That would be asking too much. Sure, too much debt was no good, but throughout his life he'd always managed to juggle some debt.
Lately he'd been so stressed out about his work – and then there was the fight with Kim – that he hadn't faced the enormity of his situation. He started to add up all the debt he'd accumulated. The family had $50,000 in credit card debt, a $278,000 mortgage, and two car payments totaling $900 a month. Laura would be in college in 18 months. How was he going to pay for that? She had her sights set on a university in New York City that several of her high school friends were planning to attend. But the out-of-state tuition was astronomical, and without any savings, Alex and Kim clearly couldn't afford it. He didn't know how they could afford in-state tuition, for that matter. Why hadn't he planned ahead and put away some money for Laura's education?
Alex couldn't believe how unprepared he was. How could he have been so foolish and shortsighted? And what would he do about paying down the debt?
He contemplated, just for a moment, the idea of raiding Michael's bank account. His son was very secretive about how much he had saved, but at only 14 years old, Alex was sure there was at least $15,000 in his account. Michael was a saver who rarely spent anything. He also had a knack for capitalizing on money-making opportunities. Since Michael was 10 years old he had made money for himself by mowing the neighbors' lawns and selling off the gadgets his family no longer used.
Alex pushed the desperate thought aside. He was on vacation, for goodness' sake, and he didn't want to focus any more on his financial woes. This was finally his time to recharge, refresh, and recover from all the hard work and difficulties
