Energy costs killing the middle class:
Many more asking: What can I cut out?
Insurance, health care and gasoline costs are forcing wage earners to make sacrifices.
By HELEN HUNTLEY, Times Personal Finance Editor
Published September 27, 2005
Here's what reality looks like for many people as basic living costs increase at a far faster pace than wages and Social Security checks:
--What do I do about insuring my home?
--Do we buy gas today or pay the rent?
--How high can we turn up the thermostat?
--How long can we put off going to the doctor?
Those with modest and even middle-class incomes are getting squeezed as energy prices skyrocket, insurance companies hike their rates and basic utilities from electricity and telephone service to garbage collection are on their way up.
"I remember when making $30,000 was a milestone in my life," said Philip Coldiron of Largo, who said his family of four lives on $32,000 a year. "Now I have to choose between gas and rent."
Holiday retiree Imre Kajdi has nudged the thermostat to 82 degrees, given up homeowners insurance and started mowing his own lawn again. Now he says he is prepared to slash expenses further if necessary.
"Not that I like it," he said, "but sometimes you just can't continue doing what you used to do."
The 72-year-old Kajdi, pronounced KA-dy, said he doesn't mind shopping at the dollar store or enduring a little heat, but he is worried about doing without homeowners insurance. When his insurer canceled his policy this year, the best quote he got for a replacement was $1,995. "It's just a small two-bedroom house built in the '60s," he said.
Kajdi's solution is to count his blessings, which include good health and a mortgage-free house, and hope a hurricane doesn't come his way.
Many people share his worries. Rising insurance rates top the list of concerns for homeowners.
"I thought I was set for life," said Edward Pauley, 67. Last year the insurance on his St. Petersburg home cost $688. When the company canceled him this summer, he said his only option was an $1,800 policy with the state-run Citizens Property Insurance. Even worse, Citizens won't insure him at all until he upgrades the wiring in his 80-year-old house.
Pauley, who had a heart transplant three years ago, went back to work part-time as an accountant to earn the $4,000 he needs for the wiring job. In the meantime, like Kajdi, he has no coverage.
Those who have coverage are paying for it dearly.
"Now I pay more each month for tax and insurance escrows than I do for principal and interest," said Mary Osher of New Port Richey.
For those who don't already own homes, the affordability issue starts with the cost to buy or rent a place to live.
"I think I can comfortably afford a house that's maybe $135,000, but there's no such thing," said Kontonia George, 29, a third-grade teacher at Perkins Elementary School in St. Petersburg. "Because I'm a teacher I can get funds for down payment assistance, but if the home price is $180,000 and a single teacher makes $35,000, the numbers just don't add up."
The median sale price of an existing house in the Tampa Bay area climbed 30 percent in the past year to $215,600, according to the National Association of Realtors.
Tammy Grenon, 47, is despairing over rental costs in the Tampa Bay area.
"I plan to move out of this area by next summer and head to the Midwest or North," said Grenon, who lives in St. Petersburg and commutes to her job at a communications company in Clearwater by bus. "I already live frugally, so there is not anything to cut back on."
Grenon said she doesn't have a car or cable television. In fact, she doesn't even have hot water since the gas to her apartment is turned off.
While rising utility bills are pinching many Tampa Bay residents, others look at them as a challenge.
Phyllis Kosa, 59, of New Port Richey says she sets her air conditioning thermostat at 80 to 81 degrees. When she does laundry, she dries clothes for 10 minutes in the dryer, then hangs them in the garage.
"The only reason I dry them at all is so that I do not have to iron them," she said. To cut electricity use in the kitchen, the retired beautician does more of her cooking by microwave and barbecue grill and favors quick-cooking recipes.
Gasoline prices are the big worry for other Tampa Bay area residents, particularly those who have long commutes.
Michael Cook drives 45 miles each way from his home in Tampa to his job in Dade City as assistant dean of student development for Pasco Hernando Community College.
"It has a real impact," said Cook, 38, who has to fill up twice a week.
Last year when gas prices rose, he parked his SUV in the garage and bought a 1988 Honda Accord for commuting. Now gas prices are 50 percent higher and even the little Honda costs $37 to fill up. He said he has given up going out to lunch to compensate.
"I bring my lunch or go without," he said.
Others have taken more drastic approaches.
John Berglowe, 29, relies on a motorcycle for his 10-mile commute to his job as a communications specialist at Raymond James Financial in St. Petersburg.
Ernest Graetz, 64, rides a bicycle 61/2 miles each way to his job as an engineer at Honeywell in Clearwater.
"I am lucky there are showers available (nearby) so I can shower and change before coming into work," he said. "Further, I plan to check out the bus schedule and try to ride the bus a few days a week."
Lots of other people already have thought of that. The Pinellas Suncoast Transit Authority said August ridership was up 19 percent over the same month last year. Many riders take their bicycles along with them.
Betty Honig, 75, said she walks or rides her bicycle every place she can. Honig, who lives in downtown St. Petersburg, said she takes regular hikes to grocery and drugstores.
"Even though I don't drive that much, I still can only budget the same amount per month to spend on gas, so I'm walking more and biking more," she said.
Many people have become more careful trip planners, doing all their errands one day of the week or while driving to and from work.
"I make every trip count," said Lynn Lijewski, 62, of Safety Harbor. She said she and her husband, who is 65, had hoped to retire in January but probably will postpone the date.
Like many others, she worries about being able to pay for health care.
"We aren't fortunate enough to retire with benefits and the cost of our health insurance has gone up 33 percent plus every year," Lijewski said.
Pat Miketinac, 58, of Brooksville, said he is paying $650 a month for health insurance in retirement - and that's through a union plan from his former job maintaining elevators. But he keeps his utility costs low with an unusual earth-insulated home.
"Medical insurance will soon become unaffordable, no matter how we try to budget for it," said Kathleen Hainisch of Dunnellon, who complains about price gouging "insurance tyrants."
Other Tampa Bay area residents say they are spending less on entertainment, eating out and other forms of fun. Some say they don't mind, but others are very unhappy about lifestyle changes they have had to make.
"Believe me, if you are starting over in a new community and live alone, nothing is more depressing than not being able to afford just a simple thing like a meal in a restaurant," said Cynthia Melendy, 55, of Tampa.
Sandy Abbott of Clearwater said she had to cancel the 10th birthday party she had hoped to give her son.
"My mom lives in Brandon and my brother lives in Spring Hill and I have not been able to see them in what seems forever," said Christine Bandaly of Clearwater. "I am working two jobs and attending graduate school. I have no idea how I am going to make it long-term if prices keep rising. The only trips I take are to work and the grocer."
Jon Wilmoth of Pinellas Park said higher gas prices forced him to cut his church attendance to every other week. Sometimes he doesn't have enough money to buy gas to get to work, he said.
"I make $25,000 a year where I work," he said. "I don't see how the average person is going to be able to live. It seems to come down to eat or buy gas for the car."
Ernaclaire Highsmith, 58, said she cut back her socializing from two nights a week to one.
"I've learned to stay home and enjoy entertaining myself," she said. "I get into books I'd put off reading and projects around the house, which are free." Highsmith, a fourth-grade teacher at Melrose Elementary School in St. Petersburg, said she also changed her diet to save money, cutting back on consumption of red meat.
Many of the frugal say they do without things that their neighbors take for granted, from dishwashers and clothes dryers to cell phones, cable television and high-speed Internet access.
"I canceled my cable as it has become a luxury I can no longer afford," said Michael Dzwonkowski, 42, of Pinellas Park. "I no longer have a home phone. If one more thing goes up, I honestly don't know what I will do. I used to be part of the middle class, but each day I slip into poverty."
Margie Pinter, 74, of New Port Richey, said she decided to cut her own hair and give up trips to the beauty shop. "My only saving grace is I have no debt."
Those who work complain that wage increases haven't kept pace with fast-rising living costs. The median hourly wage in Florida is expected to rise 2.4 percent this year.
Some have returned to work or taken second jobs, although they say higher expenses still leave them strapped.
Cynthia Beso of New Port Richey said her second job is as a mobile notary, driving to people's homes to get signatures for mortgages. Higher gas prices are costing her dearly, she said.
"I have had to cut down the range of coverage, which cuts into my income, and raise my rates, which cuts into my income because some title companies don't want to pay more," she said.
Carolyn Funk of Homosassa, formerly a stay-at-home mom, said she hoped going back to work would help her family get ahead:
"I went back to work, thinking it was a good thing, but now I have a car payment, child care expenses and the expenses of having a second car," she said. "After the expenses, I contributed to the household finances a whole $64.95 a week!"
The bad news for those who already feel squeezed is that more pain is coming. Many of the increases in utility bills have been approved but haven't shown up on customers' bills yet.
Those who are carrying credit card debt also will be facing higher minimum monthly payments. The Federal Office of the Comptroller of the Currency is requiring banks to set higher payments by the end of the year so that borrowers are at least making some headway on principal, not just paying interest.
Short-term interest rates are rising too. That is positive for those who count on interest income, but negative for those who have adjustable rate mortgages, credit cards and other loans.
The situation is taking a psychological toll.
"The declining financial status of our country is depressing," said Kandi Byrd, 43, of Tampa.
But some say they try not to let the drumbeat of price increases get them down.
Teacher Highsmith said she frequently tops off the tank in her Nissan. It doesn't save any money, but it means she isn't spending that much at once. She also signed up for Progress Energy's budget billing program, which equalizes electric bills over the year.
And Lijewski said she makes a point of planning activities that are both cheap and fun.
"We try to invite family and friends in and have fun with games and maybe watch a movie and pop some popcorn," she said.
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