Lisa and Stephen Furry have hit financial rock bottom, even though they’re not acting like it.

The couple filed for bankruptcy a little more than a year ago, wiping out $50,000 in credit card debt, yet their household spending outstrips their income. They shop at Whole Foods, spend freely on beauty products and splurged on a wedding anniversary getaway to Santa Barbara — at a four-star hotel.

They haven’t paid the mortgage on their North Hollywood home since September, and a default notice could come at any time.

Things have gotten so bad that Lisa recently borrowed $200 from her 7-year-old daughter’s savings account to cover household expenses.


“We’re a paycheck away from the homeless shelter,” said Lisa, 45, only half jokingly as she sat in her living room next to her 135-pound mastiff named Madison.

Brad Hartman, a financial planner in Glendale who reviewed the couple’s finances, found no humor in the situation.

“It’s a little surreal,” he said. “They barely have enough cash to buy groceries.

“They need a reality check.”


So, how did the Furrys get to this point?

Stephen, 32, earned $62,000 last year working as a grip and lighting technician on film and TV crews, but the work is sporadic. It came to a near-halt during the 2007-08 writers’ strike, not long after the Furrys bought the house with a high-risk mortgage.

Lisa does not earn a salary — she home-schools their daughter.

In addition to the mortgage, the couple took on the medical costs of in-vitro fertilization therapy in an attempt to have another child. The expenses helped tip them into the bankruptcy filing.


Currently, the Furrys have just $900 in checking and savings accounts and $4,300 in retirement savings. They have a $440,000 mortgage, a $40,000 home equity line and a $3,000 car loan.

“I know we have these financial issues and I feel the stress of it,” said Stephen, who suffers from chronic lower-back pain.

When he’s not working, he gets roughly $1,800 a month in unemployment benefits, but that doesn’t even cover the couple’s mortgage, property tax and insurance costs, which if they were paying them would amount to nearly $2,600 a month.

The house, purchased in 2005 for $575,000, was a financial stretch, to say the least. The Furrys took out a negative-amortization loan that had an initial low monthly mortgage payment. The payment rose over time, and deferred interest was tacked on to the principal.


“I don’t quite understand why they bought the house,” Hartman said.

Like many buyers, the Furrys banked on appreciation and the ability to refinance. When home prices dropped, they were underwater on a house they couldn’t afford.

The couple stopped paying the mortgage in the fall in hopes of unloading the house — now estimated to be worth less than $400,000 — and the mortgage in a short sale. That type of transaction involves selling the home for less than what’s owed, but it requires approval by the lender. That approval can take months to obtain, if at all.

Even without the house payments, Hartman figured the Furrys were spending as much as $1,000 more a month than was coming in, with the difference coming out of the family’s dwindling savings accounts. The expenses included nearly $300 on household supplies, not counting groceries. And Lisa spent about $275 a month on beauty products and services.


The couple’s pets, which include a rabbit, cost about $200 a month.

“That just doesn’t work,” Hartman said of the overall spending. “They need to change their entire thought process.”

His financial plan for the Furrys slashed monthly expenses by about $1,500, including taking household supplies down to $150 and beauty expenses to $75. There were also cuts to grocery, clothing and magazine subscription outlays.

Then, to get the couple to live within a budget and consider every purchase, Hartman pulled out a Depression-era technique: envelope budgeting.


Hartman divided the Furrys’ expenses into 13 categories — such as groceries, entertainment and restaurants — each with its own envelope and designated amount. At the beginning of every month, the amounts are to be put into the envelopes, either in the form of cash or index cards upon which debit card purchases are to be duly noted (the Furrys have no credit cards).

Hartman, who has used the envelope technique with families earning as much as $300,000 annually, believes the Furrys will spend more wisely using the method, and even start saving.

He advised the couple to keep saving until they have six to eight months’ worth of their after-tax income, or about $32,000, in an emergency fund. Because Stephen’s work is unpredictable, they also need to establish a separate account to save enough to cover three to four months’ expenses.

Aside from cutting expenses and saving money, the Furrys also need to work harder.


“Every day Stephen doesn’t have work he needs to be looking for it,” Hartman said.

Lisa, too, needs to get at least a part-time job. Because she cared for her mother for nine years, Hartman suggested she look for work helping the elderly. Also, Hartman suggested that the couple reconsider home-schooling their daughter so Lisa can work full time.

“My main fear is that they don’t have enough money coming in,” Hartman said, adding that an extra $2,000 a month would be a tremendous help.

The Furrys need to get rid of their house and move into a cheaper apartment. A short sale, if the lender allows it and a buyer can be found, would have less of an effect on their already damaged credit than going into foreclosure.


All this advice was a lot to take in. But the Furrys said it helped them face up to the realities of their situation.

Most important, they took action.

Since meeting with the planner, the Furrys began using the envelope system.

“It kind of put me at ease to see where the money goes and know what to do,” said Stephen, who also stepped up his search for work.


Lisa, meanwhile, landed a part-time job, working on weekends through an agency as a home-care companion for elderly clients.

“This has been a long time coming,” Lisa said.

Do you need a money makeover? Each month the Sunday Business section gives readers a chance to have their financial situations sized up by a professional advisor at no charge. To be considered, send an e-mail to makeover@latimes.com. You also can send a letter to Makeover, Business Section, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012. Include a brief description of your financial goals and a daytime phone number. Information you send us will be shared with others.