Estimated read time: 3-4 minutes
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In Utah, it's likely you still have a job, you're managing to make ends meet, and you're simply hoping your 401(k) recovers well before you retire.
But without that job, economists say nearly a third of you wouldn't have enough savings to rely on. Many who are working are making a lot less money right now, and subprime mortgages and big consumer debt are hovering over a lot of households locally.
For some it is already crisis time. "My house is three months past due, we've been able to get a payment in lately, but it's four months in October, and I'm freaking out," says a Salt Lake woman who asked we not use her name. She's one of a handful of homeowners who showed up at a workshop on avoiding foreclosure.
She says, "We have our own business, and we're just not doing any. You know, we're just not getting income on the business." Her husband is a builder. Fewer jobs have meant less money. All of this as their adjustable-rate mortgage increased by $200 a month. The Utah Bureau of Economic and Business Research predicts some 13,000 Utah houses could go into foreclosure by next year.
In Utah County, Vicky greets her children outside a community theater. She calls the play a distraction from her financial situation.
"We're very buried right now, in debt," she says. She and her husband are going to school. They owe $19,000 on a credit card, have an interest-only loan on their condo and face a $500-per-month car payment.
"We've been making it," Vicky says. "We've been getting by, but right now we're ready to crash."
Recently they missed a payment on their card. Now the interest rate has been kicked up from 7 percent to 30 percent. The payment increased by $500.
"I think a lot of people get really excited when they can get a new car loan or a house loan, and it's like they just jump into it without even thinking," says Vicky. "And if I were to go back, I wouldn't have done that." Right now, they're considering bankruptcy.
"The main change that we're seeing is desperation," says Will VanderToolen, director of counseling services for the AAA Fair Credit Foundation, and that desperation is spread among all incomes. "When they've run into money problems in the past, you know, credit has been easy to obtain. If they needed money, if they needed additional resources, you just go out and apply for another loan or another credit card, and people have been willing to hand you that money and let you go into debt."
Vicky admits they let themselves get into just such a situation, but so did lenders, at least until now. AAA Fair Credit Foundation CEO Preston Cochrane says lenders are definitely changing their ways. He says, "I think they're taking a close look at to whom they're issuing credit and who their borrowers are going to be."
He says that's good in some ways. "I definitely think changes in credit market are healthy, I think they've gone on much too long for certain people."
But just like a treatment for a disease, the cure itself may be a painful one.
Tune in to KSL Newsradio 102.7FM/1160AM tomorrow morning at 5:40 a.m. and 7:40 a.m. for part two of "Emergency Family Finances" and things you can do to prepare your family for a financial emergency.
E-mail: mgiauque@ksl.com
