Survey reveals Australia’s “unhealthy” relationship with debt
Escalating personal debt is having a huge emotional impact on Australians, , with over 65% of Australians dealing with a form of financial stress, according to research conducted by the Centre for Social Impact.
Leading Australian debt solutions company Debt Rescue says our relationship with debt is rocky, with a growing number of Australians suffering psychological health issues, low self-esteem, anxiety and isolation because they are in over their heads.
More than just a financial problem
Debt Rescue General Manager Brett Gavin said debt had more far-reaching implications than a loss of assets or financial security, putting the health of thousands of Australians in jeopardy each year.
Currently 68% of Australians are facing some form of debt stress.
“Debt isn’t just about owing other people money. It’s about what people owe to their families, their friends, their partners and themselves,’’ Mr Gavin said.
“Often people don’t realise this until they hit the lowest of the lows so it is important to seek professional help and take positive steps to address debt stress before it gets out of hand,’’ he said.
Financial Stress in Australia
A recent online survey of Debt Rescue clients found that 83% of respondents said their debt levels had caused them stress. Two thirds said it had caused them to be depressed and they had experienced anxiety from their debt levels.
The majority of respondents indicated that debt had caused some kind of relationship issue for them.
More than half of the respondents indicated that it was difficult to find a service that would assist with debt issues.
86% of respondents said it was important that services addressed the psychological and emotional impact of debt, rather than just the financial implications.
“These results tell us that Australians have an unhealthy relationship with debt, but the good news is, there is help at hand,’’ Mr Gavin said.
“There are some important tips to keep in mind and some ways of managing the process that can deliver real, tangible solutions to what might otherwise seem impossible circumstances”.
Tips to manage you debt
Don’t ignore your debt
“People sometimes feel that heavy debt burdens and aggressive creditors render them helpless in dealing with the situation. Many avoid dealing with their debt problems, which only further compound the situation,” Mr Gavin said.
Instead, he suggests you call each creditor and explain your situation. All banks and utility providers have hardship hotlines you can call and will often offer extensions and payment arrangements to help you pay your debt.
Being proactive with your creditors can yield some surprising results.
Don’t borrow money to repay debt
Borrowing money to pay off debt creates a vicious cycle. The interest and fees involved in payday and cash loans compounds quickly and you will be left in a far worse situation, with twice as much debt and bills you still can’t afford.
Again, Mr Gavin suggests calling your original creditors to organise a payment arrangement. If your unsecured debt exceeds $10,000 and you are struggling to manage the repayments, you might also be eligible for a Debt Agreement to help repay your debt at a reduced rate.
Know what you owe
When questioned, many people are unclear of exactly what they owe and to who. Outstanding debts are often sold to debt recovery agencies with aggressive recovery strategies. This not only makes it difficult to keep track of who you owe money to, but with large interest and late fees compounding, you might not know what you owe either.
Mr Gavin suggests you request free copy of your credit file, so you have an idea of where your debts are currently held.
“The important thing to remember is that there is light at the end of the tunnel for those who take positive steps towards dealing with their individual debt situation,” Mr Gavin said.
Anybody experiencing problems with debt can contact Debt Rescue toll free on: 1800 00 3328. For further information visit www.debtrescue.com.au.