-

Credit counselors say money woes go beyond overspending during the holidays

Date published: 1/10/2008

By PAMELA GOULD

Just as many people associate the ringing of sleigh bells with December, credit counselors have traditionally linked January with a surge in ringing phones.

But while telephones have been steadily ringing in the new year, credit counselors say the post-holiday credit crunch is only one part of the current high demand for their services.

"The normal Christmas rush is being [exacerbated] by the housing market and the economy," said Russell Graves, executive director of Atlantic City, N.J.-based Consumer Credit and Budget Counseling Inc.

His company has been inundated with people dealing with foreclosures and bankruptcy.

People filing for foreclosures have been hit by medical expenses and job losses, whereas those involved in bankruptcy are coming from both sides of the housing market--homeowners and people who build homes, sell them and finance mortgages, Graves said.

Demand for financial solutions is so high that Consumer Credit Counseling Service of Greater Atlanta reportedly is seeking to hire another 130 employees.

"We've been awfully busy at the end of 2007 and going into 2008," said financial specialist Sandra Johnson in the Fredericksburg office of Richmond-based Clear Point Financial Solutions.

Rising gas, food and utilities costs are sapping incomes that aren't rising at the same pace or are simultaneously being hit with expenses such as unexpected medical bills, Johnson and other credit counselors said.

And people are finding they overspent during the holidays or are tackling a New Year's resolution.

"This is our busiest time of year," said Clarky Davis, spokeswoman for Care One Credit Counseling based in Columbia, Md.

But she said the past two years have been steadily busy and 2008 is expected to be even busier.

Johnson, whose office is in the General Washington Executive Center on Princess Anne Street, said she's seeing the trend nationwide.

Only 19 percent of the people the nonprofit served last year came for in-person assistance. The rest were nearly evenly split between online (38 percent) and telephone clients (43 percent) from across the country, Johnson said.

The good news is that credit counselors can help people set budgets and assist in arranging payoff plans with creditors.

The bad news is, it takes an average of three to five years to get out of debt.

Russell Graves said there's a reason his New Jersey company included the word "budget" in its name. Creating a budget and sticking to it is the key to avoiding financial problems, said Graves and other credit counseling pros. Below are some other tips they offered. Now is the perfect time to plan for holiday spending in 2008, said Faith Etheridge of Consumer Credit Counseling Services, which merged with Money Management International. Tally the money spent on gifts and entertainment from this past holiday season and then divide by 12. Set aside that amount each month this year to be ready for the next holiday season. Stick the credit cards in the freezer--literally--if you're in debt. Using cash eliminates the risk of overspending. Each month, place the cash in different envelopes designated for each essential such as the rent or mortgage, food, utilities and gas to make sure they're covered. To establish a budget, record all spending for two months. Then look where the money went. Trim frivolous spending to start setting aside savings for long- and short-term goals. For a quick review of the basics of budgeting and credit, check out the following online resources: Clearpointfinancialsolutions.org provides general information and a number to call the Richmond-based company for phone assistance or to arrange a meeting with a counselor in Fredericksburg. Debtadvice.org offers "Credit 101." The site is affiliated with the National Foundation for Credit Counseling (nfcc.org). Moneymanagement.org offers weekly online budgeting classes for free.

Date published: 1/10/2008