Medical bills and lost income leave family on the edge

By outward appearances, the Bensons seem to be solidly middle class.

Graham Benson, 41, and Tracy Benson, 42, are college-educated, involved in their church and devoted to their kids, one of whom is off at college and two of whom are in private school. But the couple are struggling to support six kids (with a seventh due Christmas Day) on Graham's salary as a copywriter for a direct-marketing company. Aside from a very part-time child-care job, Tracy stays home, in the family's four-bedroom Bloomington house, caring for their youngest children.

Combined, they make $65,000 a year, about what they made when they married 12 years ago.

In the early years, money wasn't an issue. Tracy was working as the lead art therapist at a Des Moines hospital and was president of the Iowa Art Therapy Association. Layoffs in the late 1990s prompted the family, then five strong, to move to Minnesota to be near relatives and for better job prospects. Because of moving expenses and a higher cost of living in the Twin Cities, "we had to max out two credit cards," Graham says.

Tracy's career hasn't been the same since. She says she would have had to go back to school to meet Minnesota requirements to work in art therapy. Instead, she opened a home day-care business, only to close it during a difficult pregnancy.

She mostly blames her chronic under-earning on complications during pregnancies, two of which ended in second-trimester losses. "I have been on bed rest and on low activity for months, or maybe totaling years," Tracy explains.

Complications left the Bensons with more medical bills and less income to pay them. Medical concerns overshadowed their finances. "I'm sure this is the same for many families when there is a crisis; dealing with anything financial really goes out the window," Tracy says.

Her part-time work originating mortgage loans during the real estate boom has all but dried up. Currently, she contributes a couple of hundred dollars monthly from her $8.00-an-hour child-care work.

Despite the change in family size and income, the Bensons didn't seriously downgrade their suburban lifestyle. Instead, they turned to credit for car repairs, groceries and clothes. "Right off the bat, it was the expenses that should have been coming out of the paycheck, but there wasn't room," she explains. They racked up $32,000 on seven credit cards with interest rates up to 27 percent.

With homes appreciating quickly, they tapped their home equity. The Bensons now owe $253,000 for their home, which they purchased in 1998 for $146,500. Its assessed value is $237,000.

"It seemed like a reasonable thing to do," Tracy says. "I thought it was temporary -- my decrease in income."

Once the Bensons pay their mortgage, minimum credit card payments and medical bills, there's very little left for necessities, let alone private school tuition, school activities fees, birthday celebrations and the yearly cabin getaways their children cherish. Their monthly expenses routinely are $1,000 above their take-home pay, if not more. "We're up to our eyeballs in debt," Graham says.

After nearly a decade of using borrowed money to pay for day-to-day expenses, the family is teetering on the financial edge, paying the minimum balances on one credit card with another, charging necessities such as bread and gas and choosing which bills to send in late, or to pay at all some months.

On Tuesday, Graham and Tracy Benson meet with financial counselor Tara McCarthy, who says they must increase their income and start discussing money if they want to continue their current lifestyle, combat their debt and keep collectors at bay.