More Working Families in Debt Crisis

More Working Families in Debt Crisis

Enquiries to Family Budgeting Services have risen by more than 16 per cent this year to over 293,000.

Services throughout the country are also seeing more working families than ever before. The 12 months to 30 June 2008 saw a surge in salary and waged clients to over 30 per cent of the total client base.

“We’ve seen the largest percentage increase in waged workers ever,” said Raewyn Fox, chief executive of the Federation of Family Budgeting Services.

The increase in mortgage repayments appears to be one common factor among these clients, said Fox.

Soaring food and petrol price increases and high interest rates are cutting deep into working family’s budgets. Food prices rose 10.6 per cent in the year to August 2008, petrol rose more than 30 per cent, while floating mortgage rates are still over 10 per cent. This has been compounded by a number of large layoffs with thousands of job losses around the country.

When added to irresponsible lending practices by some finance companies this environment has left many hard-working families struggling to afford repayments and buy essentials.

“Many families are finding it hard to cover basic food costs, such as bread, milk and cheese.” We are also hearing that landlords are passing on higher mortgage costs to their tenants and rent costs are increasing, Fox said.

Two of the higher debt categories owed by Family Budgeting Services’ clients in the last 12 months were to retail providers and accommodation providers.

Debt arrears, the portion of client debt that is overdue, amounted to more than $48 million. Of this overdue debt, Family Budgeting Services were able to retire more than $5 million for their clients.

The average debt was over $20,000 per client from a total debt presented figure of more than $234 million.

Family Budgeting Services offer free, confidential, culturally aware and non-judgmental advice to all New Zealanders. For more information visit their website www.familybudgeting.org.nz or call the free phone service 0508 BUDGETLINE (0508 283 438) and speak directly to a certificated budget adviser.

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