Australians face Christmas personal debt crisis

Australians face Christmas personal debt crisis

By staff writers
5 Dec 2006

Australians face Christmas personal debt crisis

-05/12/06

As Christmas approaches, Australian families are turning to church financial counsellors in increasing numbers who say that a new set of families has emerged who need help: those with steady income, but unmanageable debts.

"We're seeing far more complex stories than ever before," Barbara Jones, manager of financial counselling for Mission Australia told Matthew Fenwick of Ecumenical News International. "We counsel people with a mortgage, a car on loan and 10 or 12 credit cards."

Consumers are being drawn further into debt by increased opportunities for borrowing. Some use one credit card to make repayments on other cards. Rising credit limits and high interest 'buy now, pay later' plans are an attractive short-term solution to financial difficulties. Christmas is often the catalyst for further borrowing, say counsellors. Accumulated stresses induce extravagant spending, adding to households' debt.

"People think 'at least we're going to give the kids a good Christmas', but they don't understand that it's only for one day," said Jones. Christian welfare organisations say that poor budgeting skills are partly responsible for household debt. "Often people take out a mortgage on their home which they can only just pay on their current salary and they don't allow for anything else to happen in life," she added.

Dane Hiser from the Roman Catholic St Vincent De Paul society told ENI: "One of the hardest times of the year for people in disadvantages actually comes right after Christmas as people get hit with credit card bill."

One in three households in Sydney, Australia's largest city, felt unable to manage their financial affairs, according to research conducted by Uniting-Church-based Wesley Mission. The research also found that four in 10 Sydney families surveyed would be unable to meet an unexpected one-off expense of 2000 Australian dollars.

Many households have the latest electrical appliances, but need food assistance parcels or money to pay phone bills. "It's very much a consumer-driven thing," said Jones. "People get on this merry-go round of debt. What we do is give them the financial advice to help them get off."

[With grateful acknowledgements to ENI. Ecumenical News International is jointly sponsored by the World Council of Churches, the Lutheran World Federation, the World Alliance of Reformed Churches, and the Conference of European Churches]

As Christmas approaches, Australian families are turning to church financial counsellors in increasing numbers who say that a new set of families has emerged who need help: those with steady income, but unmanageable debts.

"We're seeing far more complex stories than ever before," Barbara Jones, manager of financial counselling for Mission Australia told Matthew Fenwick of Ecumenical News International. "We counsel people with a mortgage, a car on loan and 10 or 12 credit cards."

Consumers are being drawn further into debt by increased opportunities for borrowing. Some use one credit card to make repayments on other cards. Rising credit limits and high interest 'buy now, pay later' plans are an attractive short-term solution to financial difficulties. Christmas is often the catalyst for further borrowing, say counsellors. Accumulated stresses induce extravagant spending, adding to households' debt.

"People think 'at least we're going to give the kids a good Christmas', but they don't understand that it's only for one day," said Jones. Christian welfare organisations say that poor budgeting skills are partly responsible for household debt. "Often people take out a mortgage on their home which they can only just pay on their current salary and they don't allow for anything else to happen in life," she added.

Dane Hiser from the Roman Catholic St Vincent De Paul society told ENI: "One of the hardest times of the year for people in disadvantages actually comes right after Christmas as people get hit with credit card bill."

One in three households in Sydney, Australia's largest city, felt unable to manage their financial affairs, according to research conducted by Uniting-Church-based Wesley Mission. The research also found that four in 10 Sydney families surveyed would be unable to meet an unexpected one-off expense of 2000 Australian dollars.

Many households have the latest electrical appliances, but need food assistance parcels or money to pay phone bills. "It's very much a consumer-driven thing," said Jones. "People get on this merry-go round of debt. What we do is give them the financial advice to help them get off."

[With grateful acknowledgements to ENI. Ecumenical News International is jointly sponsored by the World Council of Churches, the Lutheran World Federation, the World Alliance of Reformed Churches, and the Conference of European Churches]

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