By Angela Singer
Doctor and lawyer are two professions we associate both with success and with a degree of wealth, rather than people likely to need the help of a budgeting service.
Yet a doctor and a lawyer are two recent clients of Presbyterian Support Northern’s budget service manager Maureen Little, who has since taken over management of their money. The Money Management Service requires every salary chfeque to be paid directly to the service, with Maureen then paying the client’s bills from this money and giving them an amount with which to buy food.
“It’s something we have quite a few of our Housing NZ clients on”, says Maureen, “and we have seen a gradual increase in the numbers of professional people who also need the service. It’s definitely climbed in the last three months. The recent spate of redundancies has made people nervous and they are wondering if they are next; revaluating their financial position they realise they might be in trouble”.
The biggest debt Maureen has encountered this year is that of a young woman who owes $285,000, “and there wasn’t a mortgage in that”, Maureen says, “nor a student loan. It was all credit card debt and personal loans. Her income was very low so all she could do was go bankrupt. Someone was going to eventually force her to so she just got there first”.
Generation Y (those born between 1978 and 1994) make up the largest number of new clients the service is seeing because, Maureen says, credit has been very easy for them to obtain. “They are now the biggest owners of debt that we see. It’s quite disappointing that they are so blasé about the amount they owe. For the past five years I’ve been calling for credit companies to cut back on the credit they give to young people and now finally, with the credit crunch, lenders are not making it so easy for them”.
Those unable to pay off their mortgage make up another group of clients that the service sees. Maureen says, “I have had four clients in recently, all far behind on their mortgage repayments. We’ve done a budget, then they have gone to talk to their bank; the bank couldn’t help them so they have dropped the keys to their home into the bank and said ‘it’s all yours’. The banks don’t want this, they want people to work their way out, but in the end if there isn’t the income to pay the interest or the principle, something’s got to give”.
Maureen says she is also seeing older people who are having problems paying their mortgages. “People who have revolving mortgages get to 65 years old and suddenly realise that their mortgage is as big now as it was 10 years ago, and that NZ Super is not going to cut the mustard”.
Maureen says it should be easier for two income families to cope with mortgage debt but that is not always the case. “I tell them it’s best not to need to commit both wages and that they should try to manage on just one wage, then the other wage is all for fun. But a lot of people now have both wages fully stretched and live week to week. If they lose one wage they are in difficulty”.
Helping people over an unexpectedly large bill or a temporary “hump” is something that congregations have been involved in, says Maureen. “We have had churches that have paid the power bills of families. Churches often like to see the money go directly to a family they hear about through our service. It helps the family over the hump for a month and makes it a lot easier for them to sort their other bills out”.
“When I go out into the community and give my speeches I often say that it’s lovely to ‘adopt’ a child from overseas, but it helps to ‘adopt’ a family here in NZ, in your community, and make a real difference to their lives”.