Rotorua Budget Advice client debt up $5.5m in five months as more wage earners and homeowners seek help

Some people are drowning in debt and are being encouraged to seek help. Photo / 123rfK

More wage earners and homeowners with mortgages are being hit by the rising cost of living and are seeking help from the Rotorua Budget Advisory Service - with client debt levels jumping by $5.5 million in five months.

The service is now encouraging members of the community and other organisations to refer people to them as early as possible and not treat the service like ‘‘the ambulance at the bottom of the cliff’’.

Figures show for the five months from July to November clients accumulated $11.8m in debt compared to $6.3m over the same timeframes in 2021.

Manger Pakanui Tuhura said it had been a tough year for its clients due to the rising cost of living and it helped more than twice as many clients in those five months this year, up from 333 compared to 126 the year before.

Rotorua Budget Advisory Services manager Pakanui Tuhura. Photo / Andrew Warner

‘‘More of our clients are wage earners with mortgages. It has been hard on people who have already cut their spending budgets to the minimum. Harder decisions around food budgets and in fact decisions around where cuts can be made for necessities (accommodation, food and power) are becoming more prevalent as non-necessities have already been cut.’'

‘‘The difference between wage increases and price increases has become wider as has the gap between the haves and have-nots.’'

Some were looking at taking on multiple jobs to raise their household incomes while others had cut their food bill, altered their diet, taken off expensive food commodities, and switched power companies.

Tuhura said there were also people who looked to sell investment properties as mortgage interest rates climbed.

‘‘Frankly, they are doing whatever they can within their control to make ends meet, including seeking food parcels when that would have (felt it was) been beneath them previously. Dignity is the first thing to go out the door during a crisis.’'

Those struggling to make ends meet also faced other challenges.

‘‘If they are able to cope with the repayments they feel in control of their money but still uneasy about the future. If they are unable to cope with the repayments it causes stress, depression, and anti-social behaviour, with a higher level of self-denial about the state of their household finances.’'

The earlier the service got involved the better.

‘‘We help people best by being involved early and helping them build a longer-term plan to achieve a better life in the long term with much less stress on the client. If we are brought in too late then we are limited in what we can do and the client’s stress affects their health, relationships, and life in general.’'

Tuhura said some of its successful outcomes included one client who was still paying off debts that had been repaid years ago to get those closed off. Another wanted to save for a house but was in so much debt it was a pipe dream but that has since turned into reality as they worked through a budget and gained more confidence and self-esteem.

‘‘These are great examples of clients and budget advisers working side by side to create a better future and life for our clients.’'

Hana Seddon, corps officer from Rotorua Salvation Army. Photo / Mead Norton

Rotorua Salvation Army corps officer Hana Seddon said the Rotorua Budget Advisory Service was really important for people wanting to get control of their financial circumstances.

‘’Personally 20 years ago, as a young single mother of two, I remember being absolutely overwhelmed and struggling with debt. It was a budget adviser who helped me to bravely face my own situation and make a plan to get back on track.

“I became a budget adviser a few years after that to help others to find freedom and I always have a high regard for anyone who does that kind of mahi.’'

Ministry for Social Development client service delivery acting director Karl Oliveira said its clients were referred to Bay Financial Mentors and it received Building Financial Capability funding.

Building Financial Capability Services helped individuals and whānau to improve their financial wellbeing.

These services take a strengths-based approach to empower people to get control of their money, set goals and achieve long-term, sustainable change, he said.

Its benefit data reveals in the September quarter in the Bay of Plenty $505,816 was given out in food grants compared to $540,816 in the September quarter last year. Over the same timeframes, it paid $1.4m and $1m for accommodation-related expenses.

Top reasons people have sought help

1. KiwiSaver hardship withdrawals.
2. Ways to deal with the rising cost of living (including rent) when income doesn’t keep up.
3. Homelessness, costs in emergency, transition and community-based accommodation. - Source Rotorua Budget Advisory Service