Our composite couple, Joe and Tanya Smith continues: (To get the full sense of their lives see the first article on July 17 by going towww.theroyalgazette.com and type in 'Martha Myron' under 'Search'). It started very quietly... one of Tanya's co-workers was made redundant. This was the same rather well-paid non-performer that she had incessantly complained about to her whole, patient family. Tanya was always tired and she found the time-wasting antics of other staff incredibly annoying. And while she was very well regarded at her firm, she felt her limited education was impeding career advancement. Still, she felt bad about her colleague and very anxious for herself on hearing this news.

Over-drive and over-time makes for a dull lady: She was frequently depressed, perhaps because when most people knocked off each day she was only half done. Still, she worked four nights each week at the bar, but the days of the endless party attitude were long gone. Years ago, she fought off fatigue with strong coffee and by adopting the hospitality mindset. Now, poor sleep patterns impacted her coping skills with the children and her invalid mother-in-law.

Yet the bar was a cash cow year-in and year-out - a favourite hangout for locals, expatriates and even a few tourists. They relied on the bar job for all the extras, if you could call school extras. She felt justified sending Crystal to private school - the child still had attention deficit problems. Crystal was easily frustrated, had already been labelled as a difficult child. "Maybe she takes after me," she said. "I sure hated school." And George was exhibiting the same symptoms. Where would they find the money for two? And university fees later?

The challenges of a small-business owner: Joe's landscaping business had steadily improved but he could not quite make that quantum leap into the big money projects. He needed to raise his prices but competition was rampant from new entrants on scooters carrying a single bush cutter (and no business card) to large-scale mechanised operations. He was putting any excess capital into new equipment. Machines take a terrible beating in this climate, but his experience was that machines kept jobs efficient and profits consistent, especially during gaps in employee performance due to immigration processes, elevated pension and health insurance costs and job walkabouts. "You lose the good employees to better construction money and then you see the same ones out on the street months later. Only this time they open a rival operation with their pay-off money.

He realised that he didn't have to offer stellar job benefits, but felt it was the right thing to do. His employees had generous pension and good health benefits right out of his own pocket. Your reputation does generate success. He had picked up at least eight large grounds maintenance contracts on recommendations from expatriate executives who worked with Tanya.

Define prosperity: They did feel that they had reached some level of prosperity - at least compared to some of their friends, but excess cash was always in short supply. The main thing, though, was that they were healthy. The children were receiving a good start in life, giving them what they didn't have (didn't take was more like it). Any extra was applied on the mortgage, which now carried three further charges - one from assuming costs for Joe's mother who required overseas medical attention.

Redundancies revisited: Two months later, Tanya reported to work on a Monday morning to find half the staff - locals and expatriates - moving out. They were gone in a matter of hours and the office eerily still. Anxiety mounting, she called a close friend. There are layoffs at her friend's firm as well. More stories of redundancies circulate in construction, even though that industry seems to hire and fire almost at will. A few more weeks go by and things have settled at the office, but traffic seems slower down at the bar. She and Joe talk far into the weekends trying to formulate a plan, hoping against the inevitable. Scanning the want ads is a daily ritual.

They review their finances: They have a personal net worth of a little over $600,000. Gee, it looks good on paper, but they have little emergency cash, a substantial mortgage and business loans on several machines. Default on those and Joe can't work the jobs. He also has thousands of dollars tied up in outstanding receivables, some of them several months old. Exhausted after long days, it is almost too much effort to collect on them. Besides, his customers always pay - eventually. He is finding it a constant juggling act to bring in new business while maintaining relationships with current customers.

Cash flow issues: Their cash flow statement is tight, little or nothing left at the end of each month. Besides Tanya's pension, they have not been able to save for more than a year. Inflation is eating into their purchasing power by the day. Joe relies on supplies from Canada. With the recent strength of the Canadian dollar, he is absorbing 25 percent increases in costs. He is aware that the some bigger firms use hedges to control currency exposure, but he has never felt he understood investments well enough to try it.

The bottom of the barrel: The bar calls Tanya. It's true, business is way off and they cut her hours down to only one day a week. Their tenant is talking of giving notice - he found a less pricey apartment. Joe loses six of the eight executive maintenance jobs since it's cheaper for the landlords to do the work themselves. Several of them still owe him money. The drop in income will take them close to the bottom. Will it take them out? What do they do now?

Stay tuned next week.

Martha Harris Myron CPA CFP is a Bermudian, a Certified Financial Planner (US licence) practitioner and VP, Personal Financial Services at Bank of Bermuda. She holds a NASD Series 7 licence, and formerly owned a US financial services practice meeting the needs of 400 individual and corporate clients. Confidential e-mail can be directed to marthamyronnorhrock.bm

Composite case experiences are derived from many years of providing financial planning services. It is in no way intended to resemble any living or deceased individual and any resemblance is purely coincidental.

The article expresses the opinion of the author alone, and not necessarily that of Bank of Bermuda. Under no circumstances is this advice to be taken as a recommendation to buy or sell investment products or as a promotion for financial plans. The Editor of The Royal Gazette has final right of approval over headlines, content, and length/brevity of article.