DEL.ICIO.USUpdated: 9:51 p.m. September 23, 2008
More in middle class seeking help with debt
Average income of those getting credit counseling is on the rise, Atlanta agency reports
The Atlanta Journal-Constitution
Tuesday, September 23, 2008
More middle-class Americans are suffering financial pain and reaching out for help, according to new numbers from the Consumer Credit Counseling Service of Greater Atlanta.
The average annual household income of people who contacted CCCS last month was $49,308, an 18 percent increase over August 2007.
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That’s “an amount far above historic levels for people seeking this service,” CCCS reported. The agency counsels people from all over the country.
“Rising unemployment, the continuing mortgage and credit crisis, and rising food and fuel costs are causing people with good incomes to seek help paying their debt,” CCCS president Suzanne Boas said.
“People with middle-class incomes are finding it more and more difficult to meet their financial obligations. Pay as you go is a rude awakening.”
During the first eight months of the year, CCCS conducted more than 37,000 budget and debt counseling sessions, a 39 percent increase over the same period last year, the agency said.
“No one’s immune from the broader decline in the financial markets,” said Ryan Sweet, senior economist with Moody’s Economy.com. “Very little is going right for consumers. There’s little doubt we’re in a recession.”
In August, unemployment hit 6.1 percent, an increase of 1.4 percentage points over 12 months, with most of the increase coming during the past four months. The credit counseling figures are a reflection of that change, according to Dorsey Farr, a principal at French Wolf & Farr, an Atlanta-based investment adviser.
“What you’re seeing is the impact of job loss over the last eight or nine months translating into credit problems. It’s catching up with folks who are higher income earners,” Farr said.
Sweet said the CCCS figures indicate to him that a greater proportion of those seeking help are homeowners instead of renters. And many homeowners are taking a drubbing in the financial markets, adding to their woes, he said.
Michael Reksulak, assistant professor of economics at Georgia Southern University, said some seeking counseling might be individuals who took on adjustable-rate mortgages a few years ago and are reeling as the loans ratchet upward while their wages stagnate.
“There are very rational people who said ‘this makes sense for me’” when they agreed to the loans, Reksulak said. “But if they try to refinance in the current situation and they have a blot on their credit report, that’s a problem. They couldn’t see this coming.”
Homeowners also are having a tougher time accessing home-equity lines of credit as home values plummet and bankers exercise greater caution. “This is limiting another source of income for the already-strained household,” Sweet said.
So credit cards balances and other expenses, instead of being paid down, are growing beyond the scope of manageability.
The average monthly housing cost for those who contacted CCCS in August was $1,423, a 25 percent increase compared to the same month in 2007.
Additionally, food and fuel costs went up to $638 last month, which is 20 percent higher than in January, the agency reported. “While people seeking help paid less for fuel in August than July, the amount spent on food continues to climb,” CCCS says.
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Comments
By Understanding
Sep 24, 2008 10:17 PM | Link to this
A person may have taken out a loan with intentions to pay the loan back. The rising cost of gas, food, loss of employment, and the mortgage crisis. Many people's finances have changed. If a person loses their job, how are they going to pay back something they donýt have? IT IS NOT THAT SIMPLE!!!!!!
By joey
Sep 24, 2008 3:00 PM | Link to this
ýThis is limiting another source of income for the already-strained household,ý Sweet said.
Oh my God, HOME EQUITY IS NOT A SOURCE OF INCOME.
What the hell is wrong with these people?
By Enough is Enough
Sep 24, 2008 2:02 PM | Link to this
Fedup you are so right...that poor grammar is why he or she is voting for OBAMA. What a country!
By paY IT BAK, DOUCHENBAGS!!!
Sep 24, 2008 1:31 PM | Link to this
You borrowed it. now pay it back. it's that simple!!!
By JH
Sep 24, 2008 12:51 PM | Link to this
That why the middle class need to vote for OBAMA,Because the middle class is taking care of the rich and poor that why it's called the middle class.
What an idiotic post! Didn't you read??? The middle class cannot even take care of themselves - how do you suppose they support the rich & poor? The upper class is sick & tired of taking care of you! They pay more in taxes than anyone else! How many times does that fact have to be drilled into your dense head for you to understand it?
Obama WILL NOT HELP YOU. McCain cannot help you either. McCain got one thing right - we have a nation of whiners! Wake up and start taking care of yourself!!!
By Michael R. Smith
Sep 24, 2008 12:22 PM | Link to this
Living beyond our means has been an issue since the advent of credit cards back in the late '60's. Unfortunately, most people live from paycheck-paycheck and as energy costs more than doubled, these same people were suddenly put in a position of constantly "taking from Peter to pay Paul". An energy hungry America, so used to cheap and readily available energy, is now paying the price of such short-sightedness. Things are not going to get any better, they are just going to continue getting worse.
The food we put on our table comes from more than 1200 miles away on an average. What happened to local food products for local people? No, that isn't the case since the farmer sells to someone who sells it to someone else, who ships it elsewhere for processing and packaging, then ships it back. INSANITY! All this just to create jobs?
The ONLY solution is for everyone to work toward local, sustainable communites with local sustainable enconomies and less waste of energy. We have danced the dance of abundance but the bill is coming due.
By We're all just Sheeple
Sep 24, 2008 11:58 AM | Link to this
Wake up folks...
The state we're in now isn't the fault of politics...right or left. It's because we're all so caught up in the concept of "MORE" that we're spending all our time buying things we don't need with money we don't have. Credit is King! No matter who is in power, when the house of cards we've built by creating entire industries tasked with nothing more than moving imaginary money around from place to place falls, we're all in a world of hurt. If you can't afford it...DON'T BUY IT!!! No one is entitled to something just because they want it. Do what our forefathers did...WORK FOR IT, SAVE FOR IT, AND PAY CASH!
Of course, since most folks won't read a book and just form opinions solely from whatever 30-second sound byte or endlessly forwarded e-mail is circulating at the time, we deserve what we get.
Sheeple...we're all Sheeple!!!
If you want to learn about what REALLY matters, Google "The Parable of the Mexican Fisherman." Perhaps that will open even one set of eyes.
The existing system is broken. Irreparably broken. It has to be destroyed before something else can be built. This $700 billion band-aid won't work. We, as a society, need to quit watching commercials, wanting MORE, MORE, MORE, and start living within our means.
As for me, I'm getting "off the grid" as fast as I possibly can. I'm sick and tired of working 8-5 and watching my tax dollars go to a bunch on whiney babies who are too irresponsible, or stupid, to take control of their own lives. I can't always put food on the table, even working a full-time job, yet a good portion of my salary is being doled out to those who don't work, reproduce like rabbits, and scream for MORE, MORE, MORE!
By Buster
Sep 24, 2008 11:52 AM | Link to this
Our greed has become our downfall. We became addicted to easy credit to buy stuff we don't need and houses we really can't afford. We have forgotten the lessons learned by past generations about how to manage money. Check out Dave Ramsey to see how to get out of this mess. It sure helped us. Remember: debt is dumb; cash is king.
By Chuck
Sep 24, 2008 11:23 AM | Link to this
Since we are supposed to be a "God fearing nation" Let the IRS do as churches say we should do. Give 10 percent. Or the joke goes toss it up in the air and let the "Leader" and take what the can catch.
By Shawn
Sep 24, 2008 11:17 AM | Link to this
The middle class doesn't pay for much anymore. The top 1% of wage earners (incomes above $333,000/yr) pay nearly 40% of all income tax collected. The bottome 50% of wage earners pay only 2% of all federal income tax collected. We have a "host/Parasite" society in which the masses feed upon the efforts and talents of a few....
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