How Sonoma County residents are managing financial pain during coronavirus shutdowns

Michael Hunter saw the layoffs coming. So a few weeks before the winery cook and the rest of the hourly staff at Ram’s Gate Winery in Sonoma were let go last month, he took a close look at his budget.

Hunter found he spends about $1,000 - close to half his monthly income - on fixed expenses including rent, auto insurance and car payments. He also identified the things he could live without, including his Amazon Prime and Netflix DVD subscriptions, which he canceled after getting laid off.

Facing the possibility of months without work, he’s drastically cut back his spending.

“I remind myself not to buy anything extravagant when I go shopping,” he said. “And I don’t drive anywhere unless absolutely necessary, to save on gas.”

As Sonoma County residents grapple with the fallout of the coronavirus pandemic, people of all economic backgrounds are being forced to make tough financial decisions. Some are ?restructuring their mortgages or dipping into their retirement savings. Others are putting off paying bills to help buy groceries or turning to friends and family members to ask for help. Many are relying on unemployment insurance or government loans for small businesses, but are often frustrated dealing with the layers of bureaucracy to obtain aid.

The sheer number of job losses has been staggering. One in 10 workers in Sonoma County - nearly 25,000 people - filed applications for unemployment benefits last month. Nationwide, that figure has grown to over 26 million, overwhelming many state employment offices.

Financial markets, meanwhile, have seen record losses. On March 23, the Dow Jones Industrial Average closed 37% below its all-time high in February, wiping out recent gains in many workers’ retirement funds. Stocks have since regained some of that ground, but bond yields continue to fall as many investors flock to traditional safe assets.

Hunter doesn’t expect to need to tap his employer retirement account now that he’s receiving unemployment checks, which make up about three-quarters of his normal income. He also received his outstanding sick and vacation pay on top of his $1,200 stimulus check through the CARES act passed last month.

While he was working, Hunter made a point of putting $200 from each paycheck into his savings, which he will start spending if he doesn’t return to work soon.

“It can keep me going for a few months, but it’s not going to be indefinite,” ?he said.

Many living paycheck to paycheck don’t have that same security. According to a much-cited 2018 survey by the Federal Reserve, 40% of Americans aren’t equipped to a cover an unexpected expense of $400.

One of them is Martin Hernandez of western Sonoma County. He missed out on about three weeks of pay after the cannabis cultivation company he works for temporarily closed due to coronavirus safety concerns. During that time, he skipped paying rent and instead used his last paycheck on groceries for his wife and two kids. His parents in Arizona also pitched in $110.

“That little bit of money for food really helped a lot,” he said.

Hernandez is relieved to be back at work, but he is still in a financial hole and counting on unemployment insurance for the missed paychecks. The problem is his application for benefits was denied because he wasn’t actively looking for work. Hernandez says he was just following county shelter-in-place orders and didn’t want to put his wife, who has a compromised immune system, at risk.

“I still can’t get a hold of anybody to let them know,” Hernandez said of the California Employment Development Department, which has been inundated with claims. “What was I supposed to do, lie to them?”

Bo Laurent, 63, still has her job as a remote IT worker. She’s in a more stable position than Hernandez but is concerned about her main retirement fund, which lost 20% of its value as financial markets cratered.

Working with her financial planner, Laurent rebalanced her account by selling fixed-income bonds and investing in riskier mutual funds. Her thinking was that those investments will see a better return once the economy eventually rebounds.

She said she aims to make rational investment decisions rather than reacting to day-to-day market fluctuations.

“Especially after (the 2008 recession), I’ve learned it’s not worth me getting all upset about,” she said. “It’s going to do what it’s going to do.”

Spencer Sherman, a founder and executive chairman of Abacus Wealth Partners in Sebastopol, said he’s been flooded with clients anxious about the shock to financial markets. Much like Laurent, he’s advising them to stay calm and hang on to their investments through the rocky times ahead.

“I tell them yes, I know it’s scary, and yes it seems like this time is different, but the only thing we can go by is the most likely scenario, which is that the markets will recover,” he said.

Sherman’s firm is also helping people refinance their mortgages to take advantage of historically low interest rates and lower their monthly payments, as well as guide them through new rules making it easier to pull funds early from 401(k) accounts.

In addition, the firm is advising business owners on applying for emergency loans through the Small Business Administration and Paycheck Protection Program, which Congress replenished with an additional $320 billion last week after initial funds ran out quickly.

Jeff LaGrave, owner of Jeff’s Twin Oaks Garage in Penngrove, applied for government-backed loans online almost a month ago and said he still hasn’t heard back from his bank. As a result, he’s had to lay off half of his staff and has begun using his own savings to keep the business running.

“I’m looking at failure,” LaGrave said. “It’s so frustrating when I don’t know where I stand.”

This past month, he’s resorted to repairing some of the diesel trucks and RVs still coming into the shop himself. He expects to temporarily close the garage starting in May, which would cost him personally about $11,000 a month, including continuing full health care coverage for all of his employees.

LaGrave said the shop has made it through difficult stretches during the 2008 recession and recent wildfire seasons, thanks to its close ties within the Sonoma County community. It hires local workers and services trucks for the Gold Ridge, Bodega and Graton fire departments.

He’s confident he’ll find a way again. But if the business doesn’t receive a loan soon, LaGrave thinks he can keep it afloat for just the next three months.

“I feel like I’m out on a limb all by myself,” he said.

It’s a feeling shared by many - a financial worry compounded by forces that appear outside of our control.

“You have to learn how to manage your thoughts, and that’s hard when you’re afraid,” said Sharon Davis, a licensed therapist in Santa Rosa.

Recognizing anxiety as a natural response to the uncertainty around us is the first step, Davis said. To take control of those stressful thoughts and feelings, she recommends finding time to get outside, staying physically active and connecting with others, especially now that people are increasingly isolated at home.

Sherman had similar advice for those feeling financial hardship.

“Telling someone you’re struggling is important,” he said. “We all want to help.”

You can reach Staff Writer Ethan Varian at ethan.varian@pressdemocrat.com or 707-521-5412.

On Twitter @ethanvarian