Economists have long warned that the U.S. consumer was on an unsustainable spending frenzy and that savings rates were dangerously low. Now, families are being forced into financial responsibility by the housing downturn and a weakening economy.

"For many years people on Wall Street have refused to believe that American consumers could ever change their spending habits," said David Rosenberg, North American economist at Merrill Lynch . "But it's happening."

"Frugality is in, extravagance is out," he added.

Consumer spending accounts for 70 percent of the U.S. economy and, according to Rosenberg, 30 percent of that is discretionary spending -- that is, buying stuff you can live without.

Theresa Parks is a case in point. Parks, 36, paints lines on roads and highways for the city of Atlanta for a living. She bought a home in 2006 for herself and her three daughters in the suburb of Riverdale, but fell behind with her $669 monthly payment.

Her lender agreed last September to a repayment plan that required an additional $188 a month through to June 2008.

"We had to cut eating out at restaurants and we had to stop shopping," Parks said. "That was the hardest part for my teenage daughters because they love to shop. But I sat them down and we agreed we'd do anything to keep our home."

Regina Grant of the Atlanta Cooperative Development Corp helped Parks rework her budget and said most of her clients require help managing their spending.

"None of them have ever prepared a budget, but they have to now if they want to keep their homes," she said.

Just a few miles away, Ozell Brooklin, director of nonprofit Acorn Housing tells a room of some 15 struggling borrowers that if they want their banks to lower their interest rates or even forgive some of their debt, they must prioritize spending.

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