Coping With $30,000 of Debt

The average New Zealander seeking budget advice has over $30,000 of debt, up 26% from the previous year.

The New Zealand Federation of Family Budgeting Services is a collection of budget services around New Zealand, and has collected some startling statistics for the July 2009 to June 2010 year.

The average debt presented by budget service clients is $32,670, up from $25,913 in the previous year. “The most disturbing thing about this trend,” said Chief Executive Officer Raewyn Fox, “is the fact that nearly $5,000 of this debt is overdue, per client. This puts families in crisis situations, which creates a lot of pressure and stress for families.”

The New Zealand Federation of Family Budgeting Services has around 150 member budget services, with over 700 highly trained budget advisers. “Over 65% of our budget advisers are volunteers,” Mrs Fox said, “and they worked with over 31,000 families and individuals last year. Feedback from our budget advisers over the past few years has been related to the complexity of client cases. Whereas five years ago client cases were relatively simple, the abundance of easy credit and heavily advertised loan schemes, redundancies from the recession, and changes in personal circumstances have all contributed to clients juggling numerous debts and complicated financial situations.”

“However, we are encouraged by the performance of our budget advisers, who have worked with their clients to retire over $17,500,000 of debt arrears, an average of $1,300 per client,” Mrs Fox said.

Aside from mortgages, most of the debt is owed to government departments, finance company loans, bank loans, and courts.

“We don’t have a typical budgeting client,” Mrs Fox said. “Our clients come from all walks of life, and our advisers work with salaried workers as well as beneficiaries, those in crisis situations and those saving towards a goal.”

“The common trends we see each year are: the numbers of clients go up, their average debts are larger, and their financial situations grow ever more complicated. Most recently, the economic recession could have caused some of these situations but a number of factors contribute, and it is different in every case,” Mrs Fox said. “It may become worse as GST increases. It is possible that retailers are going to round their prices up to the nearest dollar for the sake of simplicity, and the combined effect of that will be felt by everyone.”

Already budget advice services are attempting to be proactive. “Last year our members provided over 1,000 community education courses, to schools, training providers, prisons, workplaces, and other community groups,” Mrs Fox said. “This is the most we’ve ever completed and reflects the demand for impartial preventative education.”

New Zealand Federation of Family Budgeting Services member budget services cover all of New Zealand and provide free, confidential, non-judgemental advice to anyone. If you would like to visit a budget service, visit www.familybudgeting.org.nz, call 0508 BUDGETLINE (283 438) or look in your local white pages under budget advice services.

ENDS

© Scoop Media