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PROVIDENCE -- Plates of brightly decorated Christmas cookies linedthe tables, bags and boxes with gifts covered the floor, and excitedgiggles from small children gathering around Santa lingered in the air.

But beneath the cheery facade of this holiday party at a homeless shelter here, was a grim reality.

Eighteenfamilies are celebrating the holiday in this shelter designed for 15.After this Dec. 12 party was over, one family pushed aside the diningroom tables to sleep on the floor. The 18-year-old mother of a month-oldinfant bedded down on an air mattress in a small, cluttered playroom.Another squeezed onto the floor of a computer room.

The number ofhomeless families seeking a place to sleep in Rhode Island's sixshelters this winter has "broken every record," says Anne Nolan,president of Crossroads Rhode Island homeless service organization,which runs this shelter.

"It's trickle-down economics at its worst," she says. "It takes people awhile to be pushed out of the bottom."

Thisholiday season, many families, especially low-income ones, are fightingto become a positive statistic in the nation's slow economic recovery.But many lower-income families are just now starting to deal with thefull effects of the recession. USA TODAY checked in with families atdifferent income levels to see how they were were approaching -- orcoping with -- the holidays in the still-precarious economic climate.

Whilemiddle- and upper-income households are benefiting from rising homeprices, refinancing and have been able to get ahead of their debt,lower-income and younger households continue to be crippled by studentloans, have less access to credit and often have relatives coming tothem for support, says Diane Swonk, chief economist at Mesirow Financialin Chicago.

Savings are dwindling, and even those who lost jobs and found work again are still struggling to catch up.

Someof these families turn to charities and shelters such as Crossroads fora warm place to sleep on winter nights or a chance to give their kidssome semblance of a normal Christmas. A few blocks away from Crossroads'headquarters, the non-profit agency Children's Friend was in the midstof a holiday drive that collected gifts for about 1,100 families,including some of the state's poorest and most vulnerable children.

Starlie Becote's five children were among them.

"I don't even have a dollar to buy them anything," says Becote, 30. "I've always had something for them."

Asa case manager for a community mental health center, Becote earns$13.57 an hour and drives up to 800 miles a month visiting people withmental health or drug problems and helping them with errands. Once amonth, she's reimbursed 51 cents a mile, which she says barely coversgas costs for her fuel-thirsty minivan. With her five children in tow,Becote ran out of gas on the way to the interview for this story and hadto call one of the children's fathers to borrow money.

Startingwhen Becote was 12, she moved by herself through state emergencyshelters. At 16, she married a man she had known for a month, but lefthim to live on the streets after he assaulted her so brutally, her headwas nearly split open. But it's now, even with an apartment and job,that the single mother feels as if she's ready to crack under the weightof responsibility for five kids under age 12 and $35,000 in studentloan debt.

"I feel like I've been through so many things," says Becote. "Why, at this point, am I breaking?"

Jobless numbers

Unemploymenthit a four-year low with the latest jobs report, dropping to 7.7%. Butthat's due in part to 350,000 Americans who left the labor force -- theyeither retired or stopped looking for work altogether.

"That'snothing to write home about," Swonk says. "Unemployment hasn't fallenfor the right reasons, and now, we're struggling with the people we'vebeen supporting."

Many unemployed are also facing the end of theirunemployment insurance, which is "further stressing these lower-incomefamilies," she says. They've either already exhausted the number ofweeks they're eligible to receive benefits for or will be affected by afederal extension to states' unemployment insurance that expires at theend of the month unless it's renewed as part of the fiscal cliffnegotiations.

Across the country, financial hardships are hindering holiday plans.

VelmaWilson, 40, wanted to replace her kids' Wii system and games forChristmas after they were stolen when their house was broken into overthe summer. But she had to cancel the Kmart layaway order the items wereincluded in when she realized she couldn't afford the $600 bill.

Wilsonand her husband, Clarke, of Antioch, Calif., have had a difficult timestaying on top of bills since both lost their jobs in 2009. Velma found ajob on the sales floor of an auto dealership in March 2011. But a kneeinjury on the job two months later has left her unable to work, fightingin court for workers compensation benefits, and facing her secondsurgery in a year next month.

"It's been extremely hard," Velmasays. "My kids have gone through a lot because they've had to experienceMommy and Daddy both losing their jobs. They've had to deal withholiday seasons where the economy is so bad, what we would try to do forChristmas we couldn't do because we didn't have the means. We were justtrying to live."

Clarke Wilson now works as a dispatcher for atransportation company, making about $200 more a month than Velma doesin workers compensation. She gets a little less than $2,000 a month, butshe made about $4,500 a month when she was working at the autodealership full time. With her benefits and her husband's income, thefamily is on the lower end of what is considered middle class -- medianfamily income in the past 12 months is about $61,000, according to theCensus Bureau.

The couple are a month behind on their rent and have to make trade-offs to cover utility bills.

Holidayretail sales suggest that even higher-income families are cutting backor shifting their holiday spending to other categories. Retail sales areup, but not as much as last year, and department stores and discountstores have taken a hit, while home improvement stores have seen gainsbecause of homeowners feeling more comfortable investing in remodels ornew home goods, Swonk says.

Then there's the looming fiscal cliff,which the non-partisan Tax Policy Center estimates would raise taxes byan average of about $3,500 per household if Bush-era tax cuts aren'textended by Dec. 31.

Particularly for lower-income adults,though, fears about the fiscal cliff have affected spending decisionsthis holiday season. A recent survey by Bankrate.com of about 1,000adults shows that one in three cut back on personal spending in the last30 days due to fiscal cliff concerns. Those most likely to have saidthey were cutting back were households with less than $30,000 in annualincome.

Children's Friend CEO David Caprio says his group is"seeing families we never would have served before." He says people areharder hit now because of high unemployment, reductions in governmentfunding for social programs due to state and local deficits and cuts inthe amount struggling businesses are able to give to charities. Nearlyall the families that use the services of Children's Friend don't haveanyone working, even part-time. Child-care subsidies, which have beenreduced, "are what allows many people to enter the workforce," he says.

Someof the requests Children's Friend receives for gifts and reactions whenthey get them underscore Caprio's point. One little girl asked only fora towel of her own so she didn't have to share with her brothers. It'sso rare for them to have new clothes, children sometimes keep the tagson clothing gifts to show others they weren't secondhand, says StacyCouto, a Children's Friend vice president.

Just the basics

AliciaBryant, 34, knows how that feels. She says it's hard sometimes to findthe money to buy soap and the higher-quality diapers her son needsbecause of a skin condition She's supporting a multi-generation familyof five with food stamps and the $7.85 an hour she earns as a seasonalretail cashier at Kohl's. Crossroads rented an apartment for Bryant, her3-year-old son, two teenage nieces and her father because there was noroom in its shelters.

Although it took more than 100 applicationsto find a job, she's glad to have even one that may end after theholidays. She should be: Unemployment in Rhode Island was well above thenational average, at 10.4% in November and the second-worst in the U.S.after Nevada. This month, Forbes' annual ranking of the best states for business ranked Rhode Island second to last, ahead of only Maine.

AfterAlvin Harris, her father, lost his job, her mother died in the springof 2011. The family could no longer afford their house without hersalary and sold it in a short sale. They lived in a hotel for six monthsuntil they contacted Crossroads when they were down to about $40.

Theonly decoration evident in the apartment is a photo of President Obamaon the wall. Although the family has been there since July, they have toprove each month that they're saving money and making efforts to findwork and their own housing. Alicia is hoping to renew her lapsed licenseto be a certified nurse's assistant, which would pay more than hercurrent job, and go back to college. She says she is thankful hercupboards have food when she knows some of her nieces' friends arehungry.

The apartment had only inflatable mattresses when thefamily arrived, but the storage company let them get their beds and someof their belongings out with what little money they could scrounge up.Through tears, she explained how thankful she is for what she doeshave. At Kohl's, she sees people who are often worried about what littlethey can give members of their family. She says they are focusing onthe wrong things: "You need to show your family love and tell them howgreat it is to be with them."

Motioning around the apartment,Bryant notes, "It may not seem like a lot to someone else, but to us, itseems like a million dollars."

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