Bouncing Back From Losing Everything: What One Couple Learned After Declaring Bankruptcy During The Great Recession
“We had, up to 2008, done everything ‘right’”
In April 2009, The New York Times and CBS News asked Americans what the “American Dream” meant to them. The phrase is so colloquial that its meaning has been obscured to the point of ambiguity. How many of us picture a white picket fence and a golden retriever—arbitrary markers of a kind of success many of us aren’t concerned with pursuing? However, the concept actually has its own dictionary definition: “The ideals of freedom, equality, and opportunity traditionally held to be available to every American.” The phrase was coined by historian James Truslow Adams in 1931, just after the beginning of the Great Depression.
When the survey was conducted in 2009, the nation was reeling from the recession of 2008—the deepest since the Great Depression. Unemployment would peak in October 2009 at 10 percent (compare that to the 4.7 percent unemployment rate as of December 2016). Despite widespread unemployment and bleak economic conditions, according to the survey, 72 percent of Americans still believed in the American Dream—in this case defined as “possible to start out poor in the United States, work hard, and become rich.” Only 3 percent of respondents said that it did not exist or was an illusion.
In 2007, James Smith* was on track to achieve almost any definition of the American Dream. He was 49 years old, employed and well paid, married with two kids in college, and he owned his home. He and his wife lived in a small town in Southeast Michigan. They put down $85,000 on their home in 1997 and borrowed an additional $25,000 for improvements. They were on a 30-year fixed interest conventional mortgage and were 10 years into paying it off. The house was easily affordable on his and his wife’s salaries, approximately $90,000 and $42,000 respectively. They were never late on a payment.
In 2009, after the recession hit, Smith lost his job and his wife took a severe pay cut. They were not alone—in February 2009, 326,392 workers lost their jobs in the United States. Both Smith and his wife worked peripherally to the auto industry, one of the hardest-hit industries in the 2008 recession. Smith sold parts to Ford, Chrysler, and General Motors, and his wife worked at the Hilton directly across from Chrysler World Headquarters. Smith’s company closed its doors after the auto companies began declaring bankruptcy and when they stopped paying their suppliers. His wife took a pay cut when the hotel she worked for was sold and taken over by new owners.
“We never thought,” Smith said, “that the decent jobs were gone, for years.” After a year of unemployment, depleting his savings and his retirement, along with two attempts to refinance their home, Smith and his wife were forced to declare bankruptcy and give up their house.
“Like most people of my age and background, bankruptcy meant failure. It hurt … Letting go of the house was terribly difficult. When I was raised it was equivalent to failure,” Smith said of the time. A home and job are, arguably, the two most quintessential symbols of having achieved success in this country. Smith, in one year, lost both.
When asked what the two years following the recession were like financially and emotionally, Smith said “Devastating. Emotionally? I don’t know if I have really recovered yet.”
Smith and his wife spent nearly a decade moving between cities, between jobs, trying to stay afloat. He sold roofs in Phoenix, Denver, and Rapid City, South Dakota. For 10 months, they lived in a pop-up camper on a campground in Rapid City. Smith eventually got licenses to sell life and health insurance and licenses to adjust homes and cars. He and his wife recently moved to Florida and bought a home in an 55 and older community. In reflecting on the past decade, Smith says, “Interesting part was that we had, up to 2008, done everything ‘right.’ Great job at $90,000 for me, $42,000 for my wife, college, kids, home, all bills paid on time, every time.”
In 2005, when the respondents of The New York Times and CBS News survey were asked “What does the American Dream mean to you?”—19 percent gave answers about financial security and a steady job, compared to the 20 percent that gave answers related to freedom and opportunity. In 2009, in the midst of the worst economic recession in 80 years, those who gave answers relating to financial security decreased to 11 percent and those giving answers relating to freedom and opportunity rose to 27 percent. Most people believed it was still possible, but in times of economic uncertainty, a significant portion adjusted what that dream entailed.
Smith’s story started to turn around when he and his wife lived in the South Dakota campground for 10 months. They started over. “I will say that it was easily one of the best times of our lives. We were working enough to get by pretty well, and had no real worries. Both kids in college with scholarships, very few expenses. We had time to relax and get to know each other again. Kind of a new beginning, after over 22 years of marriage and raising two kids.”
During 10 years of hardship—a struggle to protect his home and his savings and find a lucrative job—Smith’s happiest memory is of living on a campground with his wife, unfettered by material responsibility.
The beginning of the 2008 recession was approximately nine years ago. There have been 11 recessions in between the Great Depression and the 2008 Recession, and we would be naive to think there won’t be many more in our future. Smith experienced some of the worst that 2008 recession had to offer, despite, as he says, doing everything “right.” Perhaps the best way to protect ourselves is to accept that the American Dream is elusive; we cannot always control our financial stability or our job status, but we can control how we define success. According to the survey, Americans are starting to change what they believe the American Dream looks like. Smith thought he had found it, but success reliant on material wealth is rarely a guarantee, no matter how hard we may work to protect it. Sometimes achieving success might be the freedom that comes with living on a campground.
*James Smith’s name has been changed.