Napier Family Centre's Financial Capability Services financial mentors (from left) Benita, Theresa and Jill.
The Napier Family Centre is firing on all cylinders after reopening for business following the summer holidays.
"We are getting clients presenting with really high 'buy now pay later' debt and also a lot of overcrowding in houses, with much need for counselling. We were flooded with enquiries over the festive holidays that we are beginning to process," says Napier Family Centre manager of financial capability services Debbie Mackintosh.
Debbie says people are getting into deeper and deeper financial trouble.
"We have a constant high demand for our services, enquiry volumes do fluctuate a bit, but there is always someone wanting help. We are not necessarily seeing a significant increase in the volume of enquiries, as these were already high, but rather a noticeable increase in the complexity of client needs."
Following the Christmas break, they have seen an increase in the use of the split payment system which can be hard to juggle as some clients may have between two and nine of these commitments on the go at any one time.
"People are getting into worse situations," says team colleague Theresa.
"For some these multiple split payment system commitments are conflicting with legacy debt that has not yet been settled."
The work of this team includes helping clients with agencies and departments including WINZ and IRD. Debbie says valuable client session time can sometimes be taken up with phone queue times to other agencies, with client time allocated for financial capability sessions not always sufficient.
"It would be great if we could have a direct line, or a dedicated personal contact person to increase efficiency and to be able to spend even more time with the client."
The team has also seen an increase in KiwiSaver withdrawal and hardship withdrawal enquiries.
"Clients are being asked for many budgets and credit reports for housing providers where applicants get a point for having a budget. We see them struggling with multiple split payment plans including Afterpay/Oxipay/Genoapay/Humm, and more.
"If the split payments do not get paid off on time then a client will pay high interest rates and/or default fees."
Clients living in emergency housing are struggling to service their debt even while they are having reduced rent during their stay.
"These clients are barely making ends meet while in emergency houses. If they secure a private rental then they may be able to pay the private rental costs out of their benefit, but this would not be able to cover a growing list of split payment commitments, for example. This means they would likely use their available funds to pay for their rent, and not prioritise the debt, which would mess up their credit and Napier Family Centre would then be seeing them for insolvency," Theresa says.
There is not always a way around people's debts.
"Sometimes insolvency is the only option, sometimes that doesn't even work. You may take the car or house keys back to the bank and say, 'it is yours'. This team have had to do that in the past for clients."
One of the main reasons for the recent escalation is the increase in basic living costs, Debbie says.
"Private rental costs are high, and the cost of groceries has gone through the roof. The cost of power and petrol is also high."
Some clients have had a decline in income, some were 'okay' before Covid-19 hit but now they are losing jobs or losing work hours. People have had their hours cut back if they still have a job.
"They may have worked a base rate plus overtime previously and planned their automatic payment or hire purchase on that overtime money, and now that overtime income is gone.
"We don't think we've seen the worst of it yet. Mortgages are going up and those that are managing by the skin of their teeth, or relying on overtime income, may be in trouble later this year."
The team is concerned about the severity of income disruption that could be caused by possible rolling Covid-19 related workplace closures, close contact isolation, or Covid-19 itself.
"Our services were inundated with enquiries during the 2008 financial crisis, and we are anticipating another busy period this year," Debbie says.
The Napier Family Centre is responding by preparing budgets for housing clients to take back to their 'navigator' — but say they can only work with what clients tell them. They also negotiate with creditors to get payments down.
"We've negotiated with car creditors and all sorts. We help create budgets and make suggestions like cutting out entertainment subscriptions such as Netflix. We've learnt it's a struggle to try and take out alcohol and cigarettes from their budget as that suggestion usually doesn't work."
Theresa says while some clients seem to be just ticking boxes, others are genuinely happy to be working out a budget and moving forward financially.
"There are clients that are not even interested in how to deal with the financial situation, while others are in total denial."
The team says the main challenge for families these days is housing.
"Housing is huge, this is the top challenge for some of our clients."
Debbie says stability of houses and the expectation around housing is far from ideal.
"Some clients have been told how to live and where their children should go to school. There can be violence in these environments and some clients are terrified to do anything about it."
Theresa says children are being brought up in overcrowded environments, with no privacy.
"They can't play outside like a normal child would, they can't be children. They may not be allowed to have friends over, some are being told to change their schools to reduce travel costs, but this can cause far greater negative effects and doesn't take the child's safety and stability into account. It's a vicious cycle."
Debbie says we live in a 'now' society — the kids need it 'now'.
"Some of the kids are in motels that are asking for these items, but thought must be given to the fact that these could be being used as compensation or distraction in what is an otherwise horrible situation."
Working through the debt results in less stress for these families which has a positive impact on each family member. When clients do see the light at the end of the tunnel, there are tears of joy, Theresa says.
"The clients we can help are in disbelief that they can actually make it financially and there is an option for them. They walk in here with their heads and shoulders down, dragging their feet, and go out with a bounce in their step and a smile on their face."
Last year Napier Family Centre had 852 children in homes of clients in financial distress. The Family Services team, another part of Napier Family Centre's wraparound services, say that when debt is lifted from a family "it feels like the sun is shining again, the mood changes, and it uplifts everyone in the family".
"The desperation, worry, and pressure that debt brings affects each member of the family – from the baby, to the parents, to the grandparents. And that debt affects the family in multiple ways — emotionally, spiritually, and physically."
They have also seen how debt affects parenting ability.
"The debt weighs the parents down. When you're worried about putting food on the table, it wears you down and it's difficult to focus fully on family relationships and parenting. Little things like spilling a cup of water can cause an out of proportion reaction and unnecessary tension."
The Financial Capability team worked with Napier Foodbank Trust, New World Greenmeadows (for bread), and Nourished for Nil to deliver 313 food parcels last year.
During the last lockdown the Napier Family Centre team had to safely break their own bubbles to deliver food as there was a gap in delivery from other services. In December last year the team, led by Jill for this project, worked with many partners to deliver Christmas Cheer parcels to 73 client families which meant that 183 children and 104 adults had less pressure and more joy over the festive season where they may have otherwise had little or nothing at Christmas.
The team delivered more than 1100 sessions to 785 clients last year with a total of $19 million debt presented by these clients ($5.5m home loans). They also delivered 11 community education programmes, including work with Hawke's Bay Regional Prison, Probations, Springhill Addiction Centre and the Sunny Day's Coffee and Support Group.
They collaborate with other Financial Capability Service managers and staff from Wairoa to Waipukurau and work alongside many other services, such as Peoples Advocacy Society and Hawke's Bay Community Law, to achieve the best outcomes for clients. They extend a special thank you to their bread run, food parcel delivery, and Christmas Cheer volunteers without whom they could not deliver these valuable services.