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No Recession? Try Telling That to American Consumers
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Tanisha Warner (713) 394-3202 |
Release Date: June 23, 2008 |
Money Management International (MMI), the nation’s largest nonprofit credit and debt counseling and education firm, announced today the results of a survey designed to measure consumer sentiment toward the current economic instability.
Experts contend that our economy isn’t yet in a period of recession. However, while consumers differ on how they define recession, 86 percent of survey respondents confirmed that their family is feeling the effects of an economic downturn. Almost half (46 percent) of respondents defined recession as “when the cost of living rises,” signaling that, regardless of typical indicators like lack of economic growth or rising unemployment, consumers respond when things touch them personally.
High gas prices and rising food costs are impacting all Americans, but for some, those increased costs can lead to rising credit card balances and even home foreclosure. Although the Federal Reserve’s benchmarks for declaring a recession haven’t been met, it’s clear that for consumers, that is merely a formality.
The experts at MMI outline the following steps that consumers can take now to insulate themselves from possible long-term financial hardship and strengthen their financial foundation.
• Be honest with yourself. According to the MMI survey, approximately one out of five people have already resorted to paying for necessities with credit. Are you putting groceries and gas on credit cards? Have you missed any payments on those cards, or other monthly bills? Take a good look at how much is coming in, and how much is going out. Look for areas where you can cut back, or consider putting luxury habits and expenses on hold.
• Make a plan. If your current income simply isn’t enough to cover your families’ needs, consider taking on a second job, or adjusting your lifestyle. Join the twenty-three percent of surveyed consumers who are carpooling to work and driving less, in response to rising gas prices.
• Build a safety net. Only 24% of surveyed consumers said that they are coping with the economic downturn by adding money to their savings cushion, yet most consumers can find ways to “trim the fat” from their current spending habits. Start putting small amounts (or large, if you can) into a savings account, or consider having a set amount deposited directly into a savings account each pay-period. Having a cushion available will ensure that a minor setback doesn’t become a financial disaster.
“When money becomes tight, be sure that you are allocating your money responsibly,” said Cate Williams, vice president of financial literacy for MMI. “Your mortgage or rent, electrical and other bills, and necessities like food come first, for the well-being of your family. Then, put money toward paying down your credit card bills, so your credit rating isn’t damaged. Consult a credit counselor if you need help prioritizing your expenses or creating a budget that works for your family.”
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Money Management International, is a non-profit community service organization that provides confidential financial guidance, counseling and debt management assistance to consumers. MMI helps consumers trim their expenses, develop a workable budget, lower their debt payments and repay debts. Services are available by phone. To visit with an MMI counselor, call toll-free 1-800-762-2271- 24 hours a day, 7 days a week. Spanish speaking counselors are available. Consumers can also learn more by visiting the MMI home page at www.moneymanagement.org.
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