Some people in the Bay are drowning in debt. Photo / Getty Images
Some people in the Bay are drowning in debt. Photo / Getty Images
Struggling Bay of Plenty families are drowning in debt - with cripplingly high-interest loans driving many to despair.
Two Bay budget services, whose clients have accumulated more than $50 million in arrears, say debt levels are soaring, along with housing costs, and the financial fallout of Covid-19 on working familiesis still being felt.
Some clients were struggling to survive, people were sleeping in cars and children were going to school hungry.
The news comes a day after the Bay of Plenty Times revealed $2.9 million a week was handed out across the Bay of Plenty in accommodation supplements in the last financial quarter of last year as the housing crisis deepened.
Tauranga Budget Advisory Service manager Shirley McCombe said the service was helping 16 per cent more people than last year and expected to provide about 4500 sessions this year.
"We are seeing people who have lost jobs due to Covid and are unable to repay loans they committed to pre-Covid,'' McCombe said.
''Equally, we see clients who have become ill and cannot work, people who have addictions, such as gambling, and people who have borrowed just to try to make ends meet.''
High accommodation costs and debt repayment were major factors driving the increase in debt levels. The service was working through $41m in client debt in March - a jump of $7m on last year.
High-interest loans over the same period had spiralled from $11.4m to $29m - an increase of $18m.
McCombe said people often spent money on wants rather than needs and then had to borrow to cover the costs of electricity and school fees; falling into the trap of high-interest loans.
Rotorua Budget Advisory Service manager Pakanui Tuhura. Photo / File
Rotorua Budget Advisory Service manager Pakanui Tuhura said total client debts fluctuated between $12 million and $19m a year.
The number of budgeting session had jumped from 55 in July 2020 to more than 110 in March 2021.
This was expected to rise over the coming year.
Most clients were just looking to just survive, he said.
''Keeping up with the Jones' went out the window with their net disposable incomes. There aren't many of our clients with excess income to spend on wants.''
Using credit and debt for discretionary spending created problems financially later on - especially if people were expecting large windfalls or higher income in the future which did not eventuate.
Housing presented a range of challenges. Tuhura said the number of families in emergency housing had grown due to the low number of rentals.
''Moving into emergency housing could disrupt children's lives; they might have to change schools or find ways to travel to/from school over greater distances.''
Living in substandard housing that was affordable could impact their health but living in an expensive house could affect family relationships if covering the cost was causing financial stress, he said.
Salvation Army Rotorua Centre manager Tania Hore. Photo / File
Salvation Army Rotorua Centre manager Tania Hore said some people were unable to get loans - even through its No Interest Loans Scheme - because they did not have enough money to service debt and make repayments.
Struggling families usually cut back on food costs to try to balance their budgets.
''Parents would prefer to have a roof over their children's heads - the worry of food comes later, and as we know homes are becoming the number one stress for families. ''
Tauranga Foodbank manager Nicki Goodwin said more low income and wage earners were seeking help.
''Some people don't have any money left, through no fault of their own and that is real worrying part. ''
She said often there was not enough money coming in to meet the rent or make mortgage payments and pay rates.
''Then food is the one thing that gets sacrificed.''
Tommy Wilson, executive director of Te Tuinga Whanau Support Services, said to the best of his knowledge no families were currently homeless in Tauranga.
High rents are really killing people
Maxine Paterson used to get depressed when she passed people sipping lattes in the sunshine or enjoying a meal at a fancy restaurant.
Relying on a benefit as her sole source of income, the mother of three's budget couldn't stretch to a cold drink.
Maxine Paterson is always on the lookout for cheap deals. Photo / George Novak
She now has a part-time job as a courier which has boosted her confidence and put some extra cash in her pocket.
However, the founder of the Facebook page Whats on special this week in Tauranga, which has 7100 members, says she knows first-hand the hardships some families are facing.
''The high rents are really killing people but they are paying because they are desperate.''
She learned valuable lessons when she was struggling to get by and still shops around for petrol and food.
She uses the Gaspy app to get the cheapest fuel available is also constantly on the lookout for food that has been reduced to clear.
Bulk buying when you could afford it and checking online for specials were other tips she followed.
''My cupboards and freezer are always full. I am also lucky to own my own home thanks to an inheritance from my mum and dad.
