Money Makeover: After the Fire, Big Tujunga Homeowner Must Rebuild Her Finances

Article as seen on Articles.Latimes.com, By Ann Marsh

Bronwen Aker is forced to move out because of the threat of flooding and may have to sell the house, which has been in her family for decades.

Fire and the resultant threat of flooding and mudslides forced Bronwen Aker from her family’s longtime home in the Big Tujunga Wash — and devastated her finances.

FOR THE RECORD:
Forest fees: A Money Makeover profile of Bronwen Aker in Sunday’s Business section said Aker pays $350 a month to lease U.S. Forest Service property on which her family has a home. Aker pays $350 a year for a permit to use the land.

Single after two divorces, she was living in the forest home she inherited from her grandmother when the Station fire rushed through last summer. The house survived, but the fire denuded the ground and severely increased the risk of flooding, compelling her to move out.

Now, the 45-year-old Web developer is paying rent on a house in Canoga Park while also shelling out for taxes and other expenses on the home in Big Tujunga. She’s got $23,000 in credit card debt — some of it accumulated while she was nursing her grandmother through a long illness and decline — along with other bills.

Her first task is likely to be the hardest, emotionally at least, according to financial planner Alfred McIntosh, who analyzed Aker’s finances for The Times: Give up the family home.

“You can’t move forward,” McIntosh said. “Not with that house.”

Aker has a new job managing Web developers for the company Final Draft, which makes script-writing software. She earns $80,000 a year, a good salary but not one that is large enough to cover her expenses.

Aker spent 11 years nursing her grandmother — the last two full time.

Along with the credit card debt, she accumulated $11,700 in student loans, and she owes about $10,000 in probate fees on her grandmother’s estate. Aker pays $1,750 a month for the house in Canoga Park.

The Big Tujunga house is paid off, but the land is leased from the federal government, which costs $350 a month. Property taxes are $50 a month and flood insurance is an additional $123. Her grandmother’s antiques and other items that had been in the house are in a storage facility, which costs $100 a month.

After income taxes are deducted from her paycheck, she brings in $4,833 a month.

McIntosh estimates that Aker’s expenses exceed her monthly income by $500 to $1,000.

“You have a negative cash flow that is unsustainable,” he told her.

The best way to get out from under the burden of expenses that exceed her income, McIntosh said, is to sell the house. It’s a heartbreaking prospect for Aker. The home has been in her family for more than three decades, and she loved living in the forest.

“It’s paradise. I would dearly love to return to it,” Aker said. “And yet at the same time I can see the value in making a clean break.”

Even if Aker wanted to move back to her home, she believes she could not safely do so for at least three years based on U.S. Geological Survey estimates that it would take that long for sufficient vegetation to grow back and reduce the flood risk.

She can’t afford the $63,000 in her current rent that it would cost her to wait that long, McIntosh said.

That leaves Aker praying for rain. A total loss of the property from a flood could bring her as much as $250,000 in insurance money. But, assuming that’s not going to happen, the planner urged her to sell soon so she can buy elsewhere.

“It’s a historic time,” McIntosh said. “You’ve got historically low interest rates. Real estate is at its lowest point in years. And you have a president who is pressuring banks to lend.”

It’s not clear, however, whether the Big Tujunga house can be sold. A buyer would have to carry the same risk that drove Aker out of the home.

Aker’s house wasn’t burned in the Station fire, but it does sit in a flood plain. If it is damaged by high water or mudslides, the Forest Service might not allow the new owners to rebuild, said Michael McIntyre, district ranger for the Los Angeles River Ranger District. Two real estate agents interviewed by The Times said they would not take listings on federal land.

If Aker is unable to sell, McIntosh urged her to move to a smaller place for at least $500 less than she is paying now for rent. This may mean giving up a yard for her three dogs.

“She will have to adjust to having less until her finances allow her to have more,” McIntosh said.

If Aker can sell the house, her first order of business would be to buy a new home away from the forest, the planner said. If she paid $300,000 and put down $60,000, her monthly mortgage would be $1,400, he said. She would also pay less in income taxes, though her property taxes on a new home would be about equal to the money she formerly paid to the Forest Service. The balance of any proceeds from the home sale should be used to pay off her credit card debt and to fund a retirement savings account.

Aker could save a significant amount on rent each month if she brought a roommate into the Canoga Park house, McIntosh said.

The planner also urged Aker to sell her grandmother’s antiques that she has in storage, both for the proceeds and to eliminate the storage bill. And he suggested that she contact the Internal Revenue Service to see if she can write off the loss of her refrigerator, microwave and coffee maker, which were damaged in a power surge after the fire.

Aker said she thought she could reduce her monthly food bill by $100. But she did not believe that she could reduce any of the $1,200 a year she spends on food, medicine and veterinary bills for her dogs, a shepherd mix and two Chihuahuas.

Aker’s main source of entertainment outside of her home is monthly wine tasting with a friend in Santa Clarita for $30 to $50.

Other than that, Aker said, she could cut out her $109 premium cable bill and switch to Netflix. She also said she could reduce her trips to see movies in theaters from two or three times a month to one.

She’s also planning to go back to teaching computer skills at Glendale Community College on weekends. At $270 for a day in the classroom, that can bring in $10,000 to $12,000 in additional income every year.

She has been in her job at Final Draft for just a few months, ever since a junior high school friend read a posting Aker wrote about the Station fire and its aftermath online. She had said in the posting that she needed work.

Aker also hopes to promote three e-books she has written on Web topics and build a speaking career around her computer expertise.

“I want to capitalize on my ability to translate techno-babble,” she said.

At McIntosh’s urging, Aker appears to have worked up the resolve to sell the Big Tujunga house, though it’s not clear whether there’s really a market for it.

Aker said she might choose to move back into the house temporarily during the dry summer season to save enough money to pay the probate fees on her grandmother’s estate.

She had always calculated that living in the home would help her conserve money, but now she says the risks of remaining there are too great.

“The house has been in my family for 32 years, but it’s time to move on and stand on my own two feet.”