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Published on 01/05/00

Family Debt: Farm Crisis Hits Home

The extended drought and low prices for farm products have taken a heavy toll on many of Georgia's farm families.

"The reality is that a free market has turned into a rather brutal affair," said Gale Buchanan, dean of the University of Georgia College of Agricultural and Environmental Sciences.

"In Georgia alone, 262 farmers have gone out of business since the fall of 1998. More than 5,000 operators had trouble paying their farm expenses and experienced a cash flow during that year," Buchanan said.

Families Struggle

Farm families are struggling to hang onto the farm while they keep creditors at bay. But it isn't easy, according to UGA experts in the College of Family and Consumer Sciences.

"If you don't have enough money to go around, you have to decide what bills must be paid," said Ester Maddux, a UGA Extension Service financial management specialist.

"Creditors will usually be willing to help you find a solution to your credit problems because they want their money," she says. "They have an interest in helping you work out a plan for repayment."

You are legally obligated to pay all your creditors. But if there isn't enough money to go around, farm families will need to set priorities to pay the bills.

Prioritize Bills

Maddux says secured loans must be paid first, then those with the highest interest rates.

"Ask yourself what you will lose if bills aren't paid," she says.

"You can lose your property if the creditor holds the title of the property as security, such as the title to your car or home. Unsecured debts, like doctor's bills, may need to take a lower priority. But you're still obligated to pay them."

More farm families are taking jobs off the farm, steadying the flow of income. But a UGA Extension Service survey of farm families in Appling County found that only 36 percent received income monthly or more frequently. Irregular income requires careful budgeting, Maddux says.

Leaking Pockets

Another problem is the little things.

"People often aren't aware of where their money goes," Maddux says. "They keep track of the big things like mortgage payments. But they aren't aware of how much money leaks out of their pockets daily. Meals out, costly little habits and other items add up. Separate your household budget from your farming budget so you know where your money goes."

Two Web sites have more information. Go to http://www.fcs.uga.edu/outreach/coopex/fm/farmfinance/ to learn how to manage farm family finances during a financial crisis.

Information on the farm crisis is at http://www.griffin.peachnet.edu/caes/agcrisis/. Or call your county Extension Service agent to help you access these sites.