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The creeping danger of Australian households’ love affair with credit

The Brisbane Times – NSW – By Rachel Browne Social Affairs Reporter

Wesley Mission report released last week shed light on the increasing number of households which are technically insolvent or in financial stress. The report found spending outstrips earnings for more than one million households, and 44 per cent are in financial stress. This includes being unable to pay bills on time, afford medical treatment or home maintenance and going without meals. A quarter of households in financial stress are those of middle income earners, who make $52,000-$104,000 a year and have been hit by rising property prices, childcare costs and health insurance.

Principal solicitor with the NSW Financial Rights Legal Centre Alexandra Kelly has witnessed the same phenomenon. “I have been here for seven years and in that time I have noticed a shift towards middle class clients who can’t afford everyday expenses – they have no savings and no financial buffer in case of emergency,” she said. One group of particular concern is older people facing retirement but still paying off sizeable Sydney mortgages.

“They may have entered the housing market later in life because it’s taken them a while to save a deposit,” she said. “They still have a big mortgage in their 60s but they can’t find work or are reaching retirement age and they don’t have enough super accrued to draw on.” While downsizing is an option for this group, it’s easier said than done.

“They have to make very difficult choices about where and how they’re going to live when they’re in retirement,” she said. “A lot of people end up in a position where they can’t afford to sell because there’s nothing suitable in their price bracket.”

Read the entire article here: The creeping danger of Australian households’ love affair with credit