Two against the economic storm
He works for a company in the middle of the financial meltdown. She's lost her Wall Street job. Here's how they cope.
NEW YORK (CNN) -- Kevin and Lucy Aikman are emerging from the financial scare of their lives.
Not only were they heavily invested in stocks when the market tumbled last fall, but Kevin's employer of 17 years -- AIG, the insurance behemoth that nearly collapsed before the federal government rescued it and took control -- was at the epicenter of the financial crisis.
"The first thought is fear," said Kevin. "What about all these years I've put in hard work? All the money I invested. Is there going to be any money left at the end of the day?"
Aikman, 45, is no million-dollar bonus AIG executive. He's a manager for AIG's home insurance business, overseeing replacement cost valuations in New York and Connecticut for the company's Private Client Group.
Kevin's sudden job insecurity was particularly jarring to the Aikmans. Lucy, 57, lost her position two years ago as a trader on the floor of the New York Stock Exchange and has not worked since, though she would like to find a job.
"Terrible anxiety. I ended up having to go get pills because I couldn't sleep, so much anxiety," said Lucy.
There was more gloom all around her. Her grown daughter from a prior marriage also lost her job as a stock trader. Lucy's best friend who had worked at Prudential Financial was laid off. And Lucy's sister, who worked at Bear Stearns when it collapsed, was unemployed.
"We went out to dinner once and he (Kevin) was the only person with a job at the table," Lucy recalled. "Everybody is fearful and everybody is falling like soldiers around me....It's Armageddon or something, it played so much on my psyche."
The timing of AIG (AIG, Fortune 500)'s near-collapse couldn't have been worse for the Aikmans. Just two days before the crisis broke in mid-September, Kevin and Lucy paid a contractor $10,000 to chop down trees and excavate a pit to create a pond next to their home in Hurley, N.Y., ten miles from Woodstock in the Catskill region.
Today, it's still an unsightly hole in the ground -- and a $10,000 hole in their pockets.
"Two days later, I kind of regretted my decision," said Kevin.
Changes: The Aikmans responded to the crisis by overhauling their approach to money -- how they spend, invest and insure themselves. They've done more than tighten their belts; financially, they're wearing belts WITH suspenders.
The Aikmans have waved goodbye to their personal trainer; now they exercise at home on their own. Goodbye to their plan for a screened porch; it will have to wait along with the pond. Goodbye to their leased Mazda 6 Sport; they own just one vehicle, although Kevin has a company-provided car.
Goodbye to their phone plan; they've switched to a cheaper provider. And, goodbye to dining at restaurants; today, they meet friends for drinks instead.
Added up, the couple estimates they slashed monthly expenses by $1,200.
Lucy, a fashionable dresser, now shops at discount retailer Marshalls. Kevin, a former carpenter, does most home repairs himself. He's even painting the exterior of the house instead of hiring someone. Behind the house, Kevin and Lucy have planted a brand new vegetable garden.
"One of our biggest expenses is food," said Lucy. "It sounds strange, but we eat a lot of fresh produce and, as you know, to eat healthy it costs money."
The Aikmans say they lost about a half-million dollars on paper in the stock market after having seen their investments grow steadily.
"It's like someone came into your house and robbed you. You know, it really is," said Lucy.
For help, the Aikmans turned to financial planners Doug Flynn and Rich Zito of Flynn Zito Capital Management.
"If you're losing sleep, you probably don't have the right portfolio, and we need to find the right portfolio for you," Flynn said at his Garden City, N.Y., office.
Flynn and Zito have restructured the Aikmans' investments by adding bonds and reducing their exposure to volatile stocks, while still holding enough equities to participate in the market's long-term potential growth.
"We figured out what would be the easiest way to have the biggest impact to reduce the risk, but not give up as much return," said Flynn. "There were investments in there that we could easily get rid of that were bringing more of the risk in the portfolio, and so that was an easy way to say let's get rid of these and redirect those assets."
"The thing you have to do, is you have to take a look and say how conservative can I afford to be to reach my goals? And that's what financial planning will do for you," said Flynn.
New policies: The Aikmans have no children to put through college and they have no mortgage on their home. Still, to sleep better, they added to their insurance, increasing liability coverage on their auto and homeowner policies and buying "umbrella" coverage for extra protection against a catastrophic event.
"You feel very vulnerable, you know?," said Lucy describing her fear that the financial security she and her husband had sought "was crumbling."
Extra insurance has calmed her anxiety. "I feel less vulnerable," she said. "I felt, like OK, they are not going to come and take the house."
One more reality check for the Aikmans: Kevin is shelving his dream of retiring in just ten years when he'll be 55.
"The 401(k) just about fell in half," he said. "So when that happened, I reassessed and said 'OK, maybe I'm going to need to put a few more years in.'"
He still hopes to retire at 60. With his portfolio readjusted towards risk aversion and the stock market beginning to rebound, Kevin is hopeful he can still achieve early retirement.
"I like to hit the big home runs and I've sort of backed off from that in this environment," said Kevin. "I'm more conservative than I used to be, so I think that makes me a little bit more secure."
Yet Lucy no longer trusts the stock market where she made her living for 30 years.