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Credit concerns climbing

It is not the best of times to be a consumer. Woes in the housing market, which are, in turn, fueling recession concerns, have affected consumer confidence and are leading more and more people to seek professional counseling and assistance.

M.L. “Matt” Ballew III, JD, LLM, chairman of Security Ballew in Jackson, says high debt loads and lack of savings have consumers in the crosshairs.

“Folks are in debt up to their eyeballs, and savings are at historic lows,” Ballew says. Wrapping it up succinctly, he adds, “Consumers are just tired.”

While financial advisors are fielding increasing calls from worried investors, consumer credit counselors are working flat out to meet an ever-growing demand for their services.

Take the CredAbility Network for example. CredAbility Network is a family of consumer credit counseling agencies serving consumers in Central Mississippi, North Georgia, South Florida and East Tennessee as well as nationally via telephone and Internet.

In 2007, CredAbility served more people than ever in its history, and by a large margin. Nearly 405,000 individuals received credit counseling or attended educational classes in 2007, a 37% increase over 2006. Housing counseling sessions jumped an eye-popping 223%, counseling and education sessions rose 33% and the number of people seeking help with budget and debt issues jumped 31%.

“All three of our primary counseling services — housing, bankruptcy and budget and debt counseling — experienced significant increases in 2007,” says Chris Burford, program director for Consumer Credit Counseling Service (CCCS) of Jackson. “As more people face the prospect of losing their homes and other financial crises, we expect the demand to continue to increase throughout 2008.”

Cries for help

CCCS of Jackson is a part of the Atlanta-based CredAbilty Network, and the local office is experiencing the drastic increase in calls for assistance its sister offices is seeing, according to Burford. He says a number of factors are contributing to calls for help — recession fears, ever-increasing divorces and over-spending during the holidays.

“All of these are contributing to growing delinquencies,” Burford says. “Right now, people are feeling the effects of the holidays. Money was already tight, yet people spent any way. Now, they can’t pay their bills.”

Burford says the typical client is still employed, but is stressed out over mounting debt, and concerns continue to rise among homeowners struggling to make their mortgage payments.

He stopped short of saying clients are in a panic, but says concerns are definitely escalating. And news of a shrinking economy are only fueling fears.

“People hear the word ‘recession,’ and they immediately think job loss,” Burford says.

Burford says there is a negative connotation in people’s minds when they think of budgeting. He says they hear “budget,” and they assume that means a loss of fun — unable to buy what they want and do what they want to do. Burford says that is not always the case, and few common sense measures can be fairly painless but effective in easing spending problems and bringing budgets back in line.

Easy answers

Indeed, some of the strategies pushed by CCCS are simple — at first glance, seemingly too simple. But CCCS stance is pennies add up. Cutting a little here and there can create more savings and/or disposable income without calling for a drastic change in spending behavior.

The CCCS of Greater Atlanta has released “10 Ways to Save Money in 2008,” which promotes simple, sometimes un-thought of, ways to tighten the financial belt. For instance, it recommends eliminating long distance service and the associated fees and taxes by purchasing a prepaid calling card. Another recommendation is to save $1 per day by tossing loose change in a cup daily. Other tips include buying in bulk, and paying bills online.

Burford says belt-tightening does not have to be painful nor complicated. It is mainly changing behavior and mindset. A little prevention goes a long way, and the economic environment is only going to get more challenging in the future. So, time is of the essence.

“Things cost more this year than the did last year, and things will be even more expensive next year,” Burford says. “Now is a good time to start an emergency fund, getting prepared for harder days ahead.”

Contact MBJ staff writer Wally Northway at wally.northway@msbusiness.com.


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