Local help available for people in debt and those trying to avoid it

As consumers spend down savings and take on more debt, local experts say help is available for people who are already struggling to pay bills or looking for ways to avoid spending more than they can afford.

“Track where you money goes,” said Pat Holmes, family and consumer sciences educator at Ohio State University Extension-Montgomery County. “Now you know where the money is going and over weeks and months you can start seeing things that you might be able to change.”

During the COVID-19 pandemic, when federal government assistance benefited large swaths of the public, people saved at an unprecedented level, according to this newspaper’s analysis of data compiled by the Federal Reserve Bank of St. Louis.

The personal saving rate, which is the percentage of disposable income people save, declined from 33.8% in April 2020 to 4.6% in May. That is about half of what the rate was before the pandemic.

Total household debt and debt delinquencies are on the rise, federal data show.

Credit: Alexis Larsen

Credit: Alexis Larsen

“Roughly 4 in 10 Americans (42%) say they have less in savings compared to a year ago, 17% say they have more in savings, and 39% say they have about the same amount in savings,” according to a Quinnipiac University survey released in June.

“More than one-quarter (27%) of Americans say they have more debt compared to a year ago, 21% say they have less debt, and 49% say they have about the same amount of debt.”

One rule-of-thumb is to have enough savings to cover three months of living expenses, although 22 percent of U.S. adults surveyed by the personal finance company Bankrate in May said they have no emergency savings at all.

The survey found that 48% of adults say they have enough savings to cover three months worth of expenses.

“There is no one answer but it is always important to live within your means and avoiding the temptation to live beyond them. One simple (doesn’t mean it’s easy) philosophy of our firm is the 50/30/20 rule,” said Andy Platt, managing director at Northwestern Mutual-Dayton/West Chester.

“The 50/30/20 rule is to help clients stay within a budget of spending 50% on fixed expenses, 30% on discretionary expense, and saving 20%. Although no situation or client is the same, we are confident that in the long-term most clients will be able to enjoy life now while saving appropriately for the future.”

Sometimes people have such tight finances that they can barely cover necessities like rent, utilities and food, said Megan Goettemoeller, family stabilization and support case manager at Catholic Social Services of the Miami Valley.

“It’s always been a challenge to help with utilities but this summer in particular has been extremely difficult. The high cost of groceries and the cost of high utility bills (but) with income that just isn’t matching that cost,” Goettemoeller said.

Catholic Social Services of the Miami Valley offers up to $200 for utility bills, and its Choice Food Pantry is one of the multiple Dayton, Springfield, and Butler County region pantries that various agencies agencies operate to help people with groceries.

“Food insecurity continues to challenge our community. The cost of groceries, gasoline, inflation is forcing people to have to choose between utilities and food, prescription medications and food or filling up their car with gas,” said Laura J. Roesch, CEO of Catholic Social Services of the Miami Valley. “And so we are as an organization really privileged to have an opportunity to provide essential support to keep families healthy by providing nutritional food and supporting children. ”

Local resources

Income-eligible people can access state and federal public assistance, including cash and food benefits and child care subsidies by contacting their local county’s office of job and family services.

A variety of agencies across the region offer help as well.

The Miami Valley Community Action Partnership runs the Home Energy Assistance Program and offers other help with utilities, emergency home repairs, financial counseling, legal assistance, down payment assistance and homebuyer counseling.

CountyCorp’s HomeOwnership Center offers mortgage counseling and consumer credit counseling.

“Professionally trained and certified counselors provide a holistic approach to financial counseling. We offer free financial counseling, foreclosure prevention counseling, student loan counseling and financial education in person or by telephone,” according to the HomeOwnership Center website. “Other services such as our Debt Management Program are provided at a minimal cost.”

Ohio State University has extension offices in all 88 Ohio counties providing a variety of resources on multiple topics.

One is the Real Money. Real World financial literacy program, a school curriculum that includes spending simulations and gives kids a chance to make spending choices and budgeting decisions, said Holmes.

Eleven schools in Montgomery County were participating before the COVID-19 pandemic led the office to create a virtual program, but Holmes expects to be back in schools with the program soon.

She said those lessons seem to stick with kids.

“Part of it is what the students start to recognize is the cost of things,” Holmes said, adding that kids will often start talking about getting a savings account after they go through the program.

Holmes also takes a money basics presentation to adults in the community, visiting churches, schools or community centers.

Key to her lesson is the budgeting and planning process. She said keeping track of every penny spent allows people to see where their money is going and determine what they may be willing to cut back on.

She recalls one person who did it and realized how much she was spending when buying expensive coffee a couple of times a day.

“(You see) ways you’re spending money that you’re not completely conscious and aware you’re spending,” Holmes said. “Ask yourself, ‘How much am I willing to change?’”

She said if a budget plan is in place and isn’t working people need to look at other options, which may mean making more cuts, getting a second job or seeking public assistance.

“The red flags are you can’t pay your bills,” Holmes said. “You’re spending without thinking about it and later wondering where your money went.”

Credit: Alexis Larsen

Credit: Alexis Larsen

She advocates credit counseling for people struggling to get out from under debt or looking to better manage their money.

She said one mistake people make is they become so overwhelmed by debt that they simply ignore bills that come in the mail, missing the opportunity to ask if the company would be willing to set up a payment plan.

“It’s always better contacting the company you have the bill with and say, ‘I’m having trouble making the full payment this month,’” said Holmes.

Consumer debt resources

The Path Forward project seeks solutions to the most pressing issues facing our community. This two-day series examines the problem of rising consumer debt and declining savings and looks at what resources are available to help.

Sunday: After saving an extra $2 trillion during the pandemic consumers are spending down savings and going into debt.

Monday: Local help available for people in debt and those trying to avoid it

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