Success story: Mike Richbourg

Clipboard with job applilcation

Mike Richbourg was fortunate that he had some savings and a six-month severance package when he was laid off from his music industry job in May 2007.

But neither was enough of a cushion for what turned into 13 months of unemployment -- especially with a $960 mortgage payment looming each month.

Mike knew his priority was to avoid foreclosure by keeping up the mortgage payments on the home he had purchased in 2001.

His first step was to eliminate all discretionary spending.

"Working in the music business, it was more or less expected that I would be out in the evening," says Mike, 45, a sales and marketing executive who lives in suburban Atlanta. "It wasn't just the loss of the salary when that job ended. They were subsidizing my lifestyle to a large degree."

Without an expense account, Mike began eating all of his meals at home and making different choices at the grocery store: generic instead of premium brands, chicken thighs over breasts, hamburger not steak.

Mike also put off any home repairs that weren't absolutely necessary, and when the vacuum broke, he just stopped vacuuming.

To further help make ends meet, he took in a roommate.

"The money my tenant paid me for rent and utilities equaled roughly half of my mortgage," Mike says.

Then, midway through his period of unemployment, the payment on Mike's adjustable-rate mortgage reset to $1,040 a month.

After being laid off, Mike applied for unemployment insurance benefits, worth about $1,000 a month. But he soon experienced a mix of boredom and guilt -- though he knew his employer had been making contributions to the system -- and decided to discontinue his benefits after a few weeks.

"I opted to take a low-paying job: pizza delivery," he says. Other friends had delivered pizzas during times of unemployment and done OK, but Mike soon realized that high fuel costs would make that impossible for him.

He then waited tables and worked for a floral design shop, all while doing odd jobs such as painting and house-sitting for friends. He also asked for cash gifts for Christmas to help make ends meet.

When Mike's one credit card refused to lower the 21% interest rate it was charging, he took out a small loan from his dad to pay off the $3,600 balance.

"I know I would not have been able to make it with credit card interest eating me up," Mike says.

When one of Mike's low-paying jobs ended, he applied for unemployment insurance benefits again -- and was denied. He won his appeal, but retroactive payments were months coming.

Through it all, Mike didn't have health insurance. He'd found a catastrophic health insurance plan for major medical needs, but says it was still above what he could have afforded to pay.

"I was fortunate that nothing happened during those 13 months, but I'm also fortunate that I have good health."

Luckily, Mike, who had been sending out two to three resumes a day for positions in his field, finally landed a job with a T-shirt manufacturer.

He had little choice about how to spend his first paycheck: His car broke down that day, and he chipped a tooth. The rest went toward a new pair of pants for work, his mortgage and utilities.

Mike now is slowly making the home repairs he put off and replacing his worn-out wardrobe, because he didn't buy any new clothes while he was unemployed.

In time, Mike plans to rebuild his savings and resume contributions to his 401(k), which he never touched.

And he's hoping to get a vacuum for Christmas.

"I feel like I weathered the storm and came out on the other side," Mike says.

He offers the following tips for those struggling to make mortgage payments: