Still in a home, by the skin of her teeth

Kari Huus Reporter • Profile • E-mail

CLOQUET, Minn. - Barbara Kennebeck relaxes in her yard in this northern Minnesota town at the end of another workday, plucking a few weeds from a small plot of daisies and tiger lilies that she has little time to tend. The flowers look a bit weary, but they are survivors. The same can be said for Kennebeck, a single mom who found that even working two jobs sometimes isn’t enough to fend off financial disaster.

“I was thrilled to see my kids leave,” the 46-year-old Kennebeck says, remembering the years when her debt slowly grew to unmanageable levels. “I love my kids, but I was counting the dollars.”

Even in the best of times, this is not an easy place to live. The summers are scorching, the air thick with humidity and mosquitoes. The long winters freeze plumbing and cause cars to seize up.  And it’s a long drive from just about anywhere to anywhere else.

The industries that long fueled the economy here — iron and steel — have been in decline since the late 1970s, resulting in the loss of thousands of high-paying jobs.

When msnbc.com’s Gut Check America put out a call to Minnesota residents to tell us how the current economic climate was affecting them and their communities, many responses came from this northeastern part of the state, known as the Iron Range. Their stories serve as a stark reminder that rising prices can quickly tip people out of the middle class and into poverty.

‘You just can't get caught up’
“It just keeps rolling up on you and you just can’t get caught up,” says Kennebeck, who fell behind on mortgage payments last winter and feared she would lose her house. “At some point, you have to decide (whether to pay) the heat, or gas to go to work, or the mortgage. It was that tight.”

It wasn’t any single catastrophe — just the relentless costs of being a single mom with teenagers — that that drove Kennebeck to the brink of disaster. In 1997, after parting ways with a longtime boyfriend, Kennebeck bought a house for herself and her three kids, Sheila, Andrew and Jesse, who were 15, 13 and 12. Taking advantage of a first-time home buyer’s loan, she was able to purchase a small single-story home in Cloquet for $60,000, with nothing down and a $500 monthly payment.

But increasing everyday expenses — the cost of food, school clothes, athletic uniforms, car insurance – slowly eroded her ability to keep up. Take-home pay from her job in Duluth as an employment counselor for the Minnesota Chippewa Tribe — just under $1,700 a month — frequently didn’t stretch far enough. She gradually ran up nearly $15,000 in credit card debt, with interest rates ranging as high as 21 percent.

Even after 2004, when the last of the kids graduated and moved out of the house, her situation did not improve as much as she had expected. Kennebeck was still backsliding under the pressure of interest payments, late fees and unexpected costs. Simple things like flat tires would knock her back. And the kids still needed a hand from time to time.

“It felt like every step forward there would be two steps backward,” she recalls. “I’d pay the minimum amount (on my credit card), it would be a late payment and then they would tack on another 35 bucks. It just kept growing and growing and growing. It was just terrible.”

A second job, but no relief
In 2005, she took a second job working overnight shifts caring for people disabled by brain injuries, working one week on and one off. Her take-home pay increased to about $2,560 a month.

Kennebeck would pore over a spread sheet on her computer each month, divvying up her pay to cover the mortgage, credit card minimums and other essentials. That would leave about $600 for heating, gas for her car, food. Surprises were not in the budget.

In 2007, when the furnace and her car broke down at the same time, she took out a second mortgage on her home — racking up another $23,000 in debt. That put her debt on the house — originally purchased for $60,000 — at more than $70,000. 

Meantime, as gas prices climbed, the cost of Kennebeck’s daily commute to Duluth — 44 miles roundtrip — more than doubled from its 2004 level. Between the winters of 2006 and 2007, the cost of heating her house doubled, she says. She fell several months behind on house payments and started careering toward foreclosure.

It took an extraordinary windfall to save Kennebeck from financial ruin. In May she received a check for $190,000 — the settlement of a class-action product liability lawsuit that had been in the works for nearly a decade. Kennebeck was among tens of thousands of Americans who were awarded damages after suffering heart and lung problems associated with the weight-loss drug Fen-phen.

The money allowed Kennebeck to quit her overnight job and pay off her credit cards and her second mortgage. She is beginning some badly needed repairs on her house — doors and windows need replacing, the bathroom needs work and she needs a new clothes dryer, for starters. Working her day job, she now hopes that she can cover her house payment and begin saving for retirement. To set a bit more aside, she now runs errands in Cloquet on a new orange scooter.

But Kennebeck also suffers from a permanent damage to one of her heart valves, causing a heart murmur, and she worries about medical costs down the road.

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