Stories Archives - Way Forward

The spending habits that are bad for your budget

November 14, 2023/in Stories, News/by Rachel Ryan

It’s one thing to set a budget, but quite another to stick to it. However, at Way Forward we know from experience that sticking to a budget is one of the most important keys to financial wellbeing. Our clients tell us what a relief it is to have a workable budget that helps them pay off their debts while also meeting their current needs.

We’ve noticed three key spending habits that can wreak havoc on personal budgets. Read on to learn how you can avoid falling into some of these traps.

Ignoring the real cost: Tap and go is a convenient payment method, but it distorts our sense of the true cost of goods and services. This disconnection from reality is magnified when we use our phones to make payments, and it becomes easy to forget that we are actually spending money every time we tap and go. If you find yourself trying to justify your spending, hiding receipts, or making a large number of purchases in one shopping trip, it’s worth thinking about whether ignoring the real cost of goods is pushing you towards financial difficulty.

Using tomorrow’s money: With the rise of buy now, pay later (BNPL) and wage advance products, as well as easy access to credit, it has become very tempting to use tomorrow’s money before you even have it. However, this spending habit can quickly lead to becoming trapped in the debt cycle; if you’re regularly using BNPL or wage advance products to pay for essentials like food, medicine, housing or electricity, it’s important to reach out for help before things get worse. In June 2023, there were 200,000 more credit card accounts than there were 12 months prior, which suggests to us that this is a very common problem.

Buying for the sake of it: Impulse purchases provide a momentary high but often lead to regret, and are rarely for goods and services that we actually need. Try to determine the reasons behind your impulse buying – perhaps you’re bored, in need of some social connection, or you’re shopping for entertainment. Way Forward client Sue developed unhealthy online shopping habits during COVID lockdowns: “I knew that it was getting out of control when my repayments were more than I could afford. I talked to a counsellor and realised that my online shopping was an addiction. I didn’t necessarily need the stuff that I was buying”. If this sounds like you, know that help is available and you’re not alone.

Building better money habits

We’ve seen time and time again that these habits work. Our client Brian built better money habits and reached his goal of being debt free: “I’ve learned discipline: distinguishing wants from needs and using cash for essential purchases”. At Way Forward, nothing makes us happier than seeing a client move into the future without the burden of debt.

Instead of being stuck in habits that are bad for your budget, focus on developing new money habits that will lead you towards financial wellbeing. Here are five steps you can take towards more intentional spending and a healthier savings balance.

SAVE: Make sure you have the money before you make the purchase. Create categories in your budget so that you’re saving for expenses like gifts, entertainment, and clothing throughout the year. But don’t stop there – look at how much you’re spending on each gift and consider inexpensive and creative options that prioritise spending time together, creating memories or appreciating the simple things in life.
STYMIE: Create some friction in your financial routines and make spending money harder. That might mean removing payment options from your phone or web browser, or putting savings into a bank account that you can’t access when out and about. Some people even put stickers on their credit cards to remind them of their financial priorities at the point of purchase.
SLEEP ON IT: Let your purchases spend 24 hours in the shopping cart before you hit “confirm purchase”. You’ll be surprised how often the initial excitement wears off and you no longer want what yesterday had seemed like such an essential purchase.
SWITCH: Start using a debit card instead of a credit card so that you can only spend money you already have. This means you can’t accrue credit card debt (and frees you from the associated high interest rates) – you won’t miss the unpleasant surprise each month!
STOP: It’s one thing to set a budget, but quite another to stick to it. However, at Way Forward we know from experience that sticking to a budget is one of the most important keys to financial wellbeing. Our clients tell us what a relief it is to have a workable budget that helps them pay off their debts while also meeting their current needs.

Feeling overwhelmed?

If you are experiencing financial difficulties, you’re not alone. Every day, the Way Forward team talks to people just like you who have found themselves struggling to repay debt.

Our clients are people who have experienced unexpected challenges like illness or addiction, unemployment, relationship breakdown or are financially overcommitted. Many remark that they never expected to find themselves in this situation, but they all share the same determination to become debt free.

We are here to help you find a way forward, and our services are free to clients. Let today be the day where you make a positive change – call us now to begin your journey towards financial freedom.

Housing is first on the list of spending priorities, says new research by debt charity Way Forward

November 8, 2023/in Stories, News/by Rachel Ryan

Way Forward has released the findings from its latest research into how people in financial hardship experience a cost-of-living crisis.

Read the report here.

The research found:

People Way Forward support have less savings but are earning more, meaning they are spending more overall – in part due to cost-of-living pressures.
People prioritise housing and this means when it costs more, other expenses are sacrificed. When finances are low, it’s what people don’t invest in that counts – after ensuring a roof over their head and putting food on the table, other expenses like insurance and extras for kids are being sacrificed.
Budgeting and debt management strategies can help people out of financial difficulty, but people in financial difficulty find it hard to absorb that information due to the stress caused by being in hardship. It’s a vicious cycle.
People want to learn how to manage their money better, but they don’t know how, with 50 per cent of respondents telling us they want a greater understanding of how to set up a plan to manage their finances and get out of debt.

The latest research backs up Way Forward’s previous survey findings from 2021 and 2022.

The results from three annual client surveys have consistently found that having even a small amount of savings (i.e., $1,000) and, to a lesser degree, budgeting are the greatest safeguards when navigating financial hardship and poor mental health.

Having savings – even small amounts – can significantly improve a person’s financial situation.

“We know that for many people, getting informed about how to manage their money, especially budgeting and saving, can be difficult. This is because when times are good and money isn’t a problem, there’s little reason to seek out new skills, but when times are tough, the ability to learn is affected by the stresses of dealing with financial difficulty,” said CEO David Berry.

“86 per cent of people who say they worry about money all the time see this impact their mental health at least weekly. We also understand that those who are most worried about money, struggle to manage their situation.

“While asking for help with an acute financial problem is a great start, our observations are that the best longer-term results come from supporting people in refining their money habits by budgeting, saving, prioritising and reflecting.

“Younger people are particularly vulnerable to falling into problem debt, which can be partly attributed to a lack of these skills. In the current age of digital shopping, where products are constantly marketed to young people via social media and purchasing is instantaneous, there are endless opportunities to make impulsive spending decisions.”

BNPL and wage advance products squeezing people more

Year on year, we’re finding that Way Forward’s clients are relying more heavily on BNPL and wage advance products to try to meet their cost-of-living expenses.

“We think it’s overdue that the Federal Government regulate BNPL and wage advance products as credit products, as we’re seeing the ongoing harm that these products continue to have and the way they worsen financial hardship,” CEO David Berry said.

“It is deeply concerning that of the people we surveyed who are in financial difficulty and have used wage advance or BNPL products, 1 in 3 feel trapped in a cycle of using wage advance products while 1 in 4 feels trapped in a cycle of using BNPL products.

“1 in 10 have used BNPL or wage advance products to pay off other debts, with this proportion being even higher among those with lower incomes.

“Nearly 50 per cent of people earning under $50,000 a year have used BNPL or wage advance to pay for essentials. For us it’s clear, BNPL and wage advance masks a problem – that a person is either in financial hardship or is close to it.”

After taking out loans to pay off scammers, Katrina is now wary of talking to strangers online

September 18, 2023/in Other/by Rachel Ryan

Katrina and her son Dan were caught in a scam a few years ago. They took out personal loans to give to people they met online.

Eventually, they were stuck with substantial debts that they couldn’t pay off.

“There were two people living overseas who both asked for lots of money. I used my credit cards and talked my son Dan into helping as well. We were promised large amounts of money. It’s a stupid thing.

“I asked the banks for personal loans, but I didn’t give a reason why I needed these large amounts of money.

“I felt that I couldn’t speak to anybody about it because I felt so ashamed, at my age to be conned into giving lots of money to people and then expecting to get something out of it.

Katrina was referred to Way Forward by CommBank.

“I got involved with Way Forward because I was having trouble in making the repayments for the credit cards, as well as the Commonwealth Bank and the ANZ loans that I had taken out.

“It got too much so we stopped giving the scammers money, but I still had these loans and these credit cards to pay off.

“We never got anything back from the scam.”

It’s easy to fall prey to scams

Katrina says that the scam began with a person sending her a message on WhatsApp and said their name happened to be the same as Katrina’s.

“I thought we had become friends.

“The woman told my son Daniel to pay money to different people all over the world. She said this will help them to pay something off, and they promised to give it back.

“We became suspicious because they constantly asked for money and promised that we were going to get money back, always after one more payment. This went on and on so Daniel decided to stop paying money.

“In the beginning, I was wanting to be friends with everybody because that’s my nature. Then, my sons warned me that I cannot be friends with everybody. Now I’m extremely wary.

If somebody on Facebook or Instagram asked me to be friends with them, I now think that I don’t know this person, and I delete. I don’t want to be friends with anybody because of what I had put my son and myself through.

“It was all because I wanted to be friends with people.”

Completing a debt repayment plan

“Every week when I received my pay, I would leave aside the amount of money to contribute to my repayment plan with Way Forward, which was $81.07.

“I always made sure that the money was there and that it was never going to be touched because I didn’t want to miss a payment. I wanted to finish paying it off all together.

“I started in 2020 and finished last week.”

Katrina says that now she budget’s every week and it’s made easier by having paid off her debts.

“I get paid once a week from my job from Coles. From my wages, I work out how much to put money aside for bills or petrol or insurance, then use what I need for those expenses from a smart access account. Then, whatever money I do not use, I put that into a net saver and that money will build up every week.

“Since my husband died nine months ago, my son and I are living by ourselves, so we pay the house bills.”

“Then, when I need to utilise the money in that net saver account for things like car repairs or bills, then I shift it from one account to the other. When the money I’ve saved is gone, I start saving again and transfer money to the net saver.

Katrina says that her future is looking better.

“I promised myself that I would never get into that bad situation again. I’m going to make sure that everything will work out this time, a lot better than it has in the past.

“The Way Forward team are very kind. I could not have done this all without assistance from Way Forward. I can’t speak highly enough of them.

“If you’re in the same situation as me, you must get out of it, try asking for help and support somewhere.”

I was buying Visa gift cards with Afterpay to afford groceries, because the credit card payments were swallowing up everything I earned

September 12, 2023/in Stories/by Rachel Ryan

Marie has lived in Perth for 12 years after relocating from the UK for her work.

She’s always been employed but around COVID, she suffered a pay cut when she was moved into a lower paid position. Her husband’s work has been patchy, and being a tradesperson in a state that is particularly vulnerable to economic downturns, experienced long periods of unemployment.

Added to this, one of their children was diagnosed with a disability at age seven, which meant paying for extensive therapy.

They ended up using credit cards constantly.

“It got to a point a couple of months ago where I realised we’re just drowning in debt. Every time I got paid, I could only pay minimum payments at hefty amounts on a number of credit cards.

“One of my credit card companies wouldn’t allow me to stay on a repayment arrangement, so recommended I look at financial counselling.

“I explained my situation to the counsellor. It’s quite tough putting all that out on the table because you feel like you’ve failed.

“Thankfully, they put me in touch with you guys because, given you’re a charity, I wasn’t charged setup fees.”

“Whilst I’m on a fairly good salary and had good credit rating, lenders were offering cards with very high limits and not explaining the implications.

There’s a lot of jargon in the agreements that are difficult for even a reasonably well-educated person to understand, so you just accept the terms.

“I know what a credit card is, what it does and know how to use it, but you don’t think about the implications of the interest, even though it is there on the statements.

“The only lender that allowed me to start on a payment arrangement for an extended period of time was Citibank, which is where my biggest debt was, but I ended up having to use the card again.

“Some companies were not helpful, in particular, the big banks. There was a lack of flexibility, particularly from ANZ and Westpac.

Way Forward offered a plan

Marie has always tracked her expenses using a spreadsheet.

“I’ve knew what was coming out when and pay utilities bills, but the amount of credit card debt we had meant that after paying the minimum repayments, what was left over got smaller and smaller.

“This meant there was never enough to pay for everything.”

Marie has been working with Debra from Way Forward, who was in contact with Marie constantly to help her through the process.

“Debra was phenomenal right from the word go.

“We would schedule a call and talk through the budget planner, why it was important to think about all my expenses so that we could get into a point that hopefully lenders will accept an arrangement.

“Without that preparation, through those discussions with her, I would have shortchanged myself a lot.

“She was clear that I should be mindful of all expenses, not just monthly, but those annual expenses too so that I don’t get caught out again.

“The meant that I wasn’t just thinking about here and now but that this is a five-year commitment, and whether, after I’ve paid off my debts, that I might get into debt again because I didn’t budget for all my expenses.

“We don’t need to eat out all the time or go to the cinema but that we should budget to do those things infrequently to make sure that we’re allowing ourselves enough for those reasonable expenses.

“I’ve been really impressed with Way Forward, getting me through, also emotionally. Making sure that I’d really considered every angle was fantastic.

“I’m just so thankful and grateful that organsations such as yours exist.”

BNPL made debt problems much worse

“I was going into Big W buying a Visa gift card with Afterpay to buy groceries, because the credit card payments were swallowing up all their disposable income. And also paying the gift card handling fees.

“It’s gut wrenching because I had to get a gift card to pay for the shopping. The kids knew so they didn’t want to ask for anything because they didn’t feel there’s enough money.

Marie’s advice is simple: “Put aside enough each month for those small and unexpected things and use a separate account, just to make sure that doesn’t get touched.

“Think carefully about using credit facilities, and the accumulation on your life. Looking back, I would have made different decisions about what we spent our money on.

“Just making sure that, regardless of your situation, you have some sort of mechanism save and make more budget friendly choices.”

Life on the farm as a working parent and main breadwinner meant Laura needed to deal with their debts or be overtaken by them

July 31, 2023/in Stories, Reduced income, Illness or disability/by Rachel Ryan

Laura and Darren’s money problems started when Darren fell ill a couple of years ago and could only work on and off.

The family was carrying a significant amount of credit card debt and that meant when their income was reduced, at times, to one, their ability to even get close to staying on top of their debts was gone.

“My husband has probably only worked about two and a half months in total this year just because of illness. He has no sick leave left and has dipped into long service leave to take the time off.”

Added to this, Laura and Darren are primary producers. But with four bad droughts over the last few years, most of their income has gone to feeding their livestock.

“We had to utilise credit cards to feed our family and pay our bills, because all our other income was going on trying to keep the bank from repossessing our farm and keeping our animals alive.

“We can’t let our animals suffer so we suffer financially as a result.

“We thought we were starting to get back on track and that our cattle were worth money again, but another drought hit and the whole cycle just continues.

“Luckily, at that stage we weren’t in mortgage debt but still had these credit cards that kept growing. We couldn’t keep up with the interest repayments.

“We were spending $2,600 a week just on grain and $1,000 a month on silage for our cattle and when my husband’s only earning $3,200 a month, it doesn’t get you very far.

“You feel like you’re the worst person in the world because you can’t meet your requirements to pay back your credit card debt, but you needed those funds available at the time.

“You can see yourself spiralling further into a dark hole that you’re not going to be able to get out of.”

Now that Laura and Darren are on a Way Forward debt repayment plan, they can make repayments on one income – Laura’s.

“Those five credit card companies ringing and harassing you; having that pressure off and knowing everything’s taken care of and that all the accounts are closed.

“Knowing that chapter is almost closed is a nice feeling.”

Life on the farm

Laura explains that it is common in the farming community for people to be running at a major loss all the time.

“You could sell everything up. But we like being able to deliver a good quality product for Australians to eat. We’re proud of our product.

“I’ve always worked, and my husband has always worked both on the farm and full time as a plumber.

“However, there’s no way we can both be full time on the farm because the income is not there.

“My husband is a fifth generation cattle farmer, so he doesn’t want to let that go.

“My in-laws live next door, and they are in a very similar situation. At one stage, their overdraft was up to $750,000, they were living was off this.”

Overcoming barriers to asking for help

Laura says that she and Darren needed to put aside their feelings of pride to ask for help.

“You don’t want to admit defeat. But emotionally and for your family’s wellbeing, it gets you down and affects your relationships.

“The biggest thing I would say to people is, don’t feel ashamed about the situation you’ve got yourself in.

“Particularly people from rural communities, we’re quite resilient and we don’t ask for help. We’re stoic, keep our heads down, and keep going.

“We don’t like to admit defeat or put our hand up to ask for help.

“But don’t be afraid to just get information and see what you think, because your situation might be improved.”

Adapting to new circumstances

“At the moment, I’m studying and working so hopefully I can earn a higher income and provide more money for our family. That way, if Darren needs to stop working altogether because of illness, he can.

“Now, I can at least sleep at night, rather than being awake until 3am wondering how I’m going to pay this bill or where I’m going to get that money from or how I can juggle things around.

“With my husband’s health the way it is, I was worried I’d be left with three children trying to raise them and provide for a farm and to do it on one income.

“Now we’ve got this plan in place, I know that we can manage all of that, regardless of if it’s just me working.

“I’m quite confident moving forward, that everything is going to be okay, whether he’s working or not. If we do hit tough times, we would be able to make it work.”

Tips for tax time: Practical ideas to make the most of your extra funds

June 21, 2023/in Stories, News/by Rachel Ryan

Tips for tax time: Practical ideas to make the most of your extra funds

The end of the financial year is nearly upon us, and although some people may have a tax bill to pay, others will receive a refund.

If you’re receiving a refund, it’s worth planning ahead to make sure your money goes further and can be used in a way that makes sense for you. Considering that everyone has different needs, it’s worth assessing your priorities and taking a look at your long-term goals.

What should I do with my tax return?

Everyone’s circumstances are unique and there is no one-size-fits-all answer. The one rule that applies to anyone, however, is that planning ahead offers the best opportunity to ensure your money goes further on the things that are most important to you.

So, do you save, spend, pay off debt or get ahead on bills? This is the part that you need to work out! Below is a guide on how to assess what is the right choice for you.

Step 1. Prioritise spending based on your unique needs

Everyone’s financial situation is different, so prioritise your needs accordingly.

If you are struggling to make ends meet or put food on the table, it’s important to allocate funds towards essential expenses like groceries and utility bills. Then you can focus on managing debts, saving and preparing for future expenses.

Step 2. Put aside something for yourself

While using extra cash to help with expenses like bills and debt repayments is important, it’s worth putting aside some money for a little celebration to mark getting through another year.

This doesn’t need to be much – it could be a $50 outlay for a takeaway dinner or catching a movie.

Step 3. Allocate funds intentionally

If you do receive a tax return this year, there are various options for how to spend the money. It’s essential to be deliberate and make informed choices. After setting aside a small amount for a well-deserved celebration, consider the following possibilities:

Save your money: Deposit a portion of your tax return into a savings account. To avoid impulsive spending, consider putting restrictions on your account, or opening a special account that requires joint signatories, has a short-term block that restricts withdrawals or is completely separate to your regular banking activities.
Repay your debts: If you have outstanding debts, consider allocating a portion of the tax return towards paying them off. This can help reduce interest charges and improve your financial wellbeing.
Pay bills or save for future bills: Consider using your tax return to settle overdue bills, such as electricity, gas or phone accounts. This will ensure you stay up-to-date with essential expenses and avoid potential penalties. Or, for those annual bills like car registration, putting aside money to anticipate this expense can save worrying about it when it arrives.
Emergency buffer: Put aside a portion of the return as an emergency fund to manage unexpected expenses that may arise throughout the year. This can provide peace of mind and alleviate financial stress
Plan for upcoming expenses: Consider setting aside funds for anticipated expenses in the near future, like school holidays and the extra costs these can incur or even early preparation for the Christmas season. By planning ahead, you can avoid last-minute financial strain.

Ideally, it’d be great to allocate funds to each of these categories, but if your tax return is small that may not be realistic. If that’s your situation, then you’ll need to make some careful decisions. You can reconsider the additional possibilities down the track when you have additional funds.

Be proactive

If you find yourself playing catch up during tax time, it’s essential to take proactive steps to get ahead. It’s never too late to change your situation. Assess your outstanding debts and prioritise based on interest rates or urgency. Create a budget to manage your income and expenses effectively. Consider seeking professional advice to explore debt management or repayment options. If your finding it hard to meet all your debt obligations, get in touch to see if we can help you.

Look to the longer term

Tax time can serve as a reminder to review your overall financial wellbeing. Take this opportunity to evaluate your spending habits, savings goals and investment plans. If you’re struggling, it’s important to reach out and talk to someone you trust.

By allocating funds wisely, managing debts effectively and preparing for upcoming expenses, you can maximise the stretch of your tax return and minimise stress. Remember to:

prioritise based on your needs
put aside a little for you
make deliberate choices
be proactive
develop a long-term financial plan

With careful planning and proactive steps, tax time can become an opportunity to get a better handle on your finances.

I had to go through quite a bit in my life to get to 38 years old and feel like the most ‘important purchase’ is a contingency plan

June 20, 2023/in Addiction, Separation/Divorce/by Rachel Ryan

Joseph’s problems started with gambling and impulse buying.

“When I was young, I started gambling on pokies. I had what they call the ‘phenomenal first win’—bells and whistles go off, and you win dream money for a night. You think that’s going to happen all the time.”

“I was also undiagnosed with ADHD and it played a big part in impulse control.

“When you start trying to gain control over impulse gambling and shopping, it’s almost harder than quitting smoking. It’s not just that you lose control of yourself, but your brain is almost a separate entity. It becomes an enemy.”

Joseph worked for months to put in place ‘accountability’ measures to ensure he stopped gambling.

“I gave my housemate my EFTPOS card and said that the only time I need it is to pay a bill online, and to do that, I’ll need the three digits on the back of my card.

Joseph knew that the only way out of his gambling and impulse buying problems was to make a conscious effort to not have easy access to money.

“I’m more honest now than I’ve ever been in my life. I told everybody because I needed to put a system in place that would guarantee accountability.

“I told my friends and family not to give me cash. And if they do, I provide a receipt.”

When Joseph eventually approached Way Forward for help with his debts, he knew he needed bank statements that showed a track record of no cash withdrawals. He waited several months before asking for assistance.

“You can’t just go to Way Forward and expect to be rescued. It must come from within you.

I didn’t want someone like Deborah [Way Forward hardship advocate] to put an excellent plan in place and then repeatedly fail on my end.”

Buy Now, Pay Later made problem gambling worse

Joseph started using BNPL to purchase everyday items to cover up gambling losses.

“I bought gift cards with Afterpay and Zip, and that accelerated my gambling. Some modern gamblers will be doing things like this.

For example, if you’ve lost $400 gambling, you’ll do a $400 shop, but instead of using savings, you use Zip. The deception is that the shopping is done using debt, and the money that’s been lost gambling is covered up.”

Create a personalised budget

Having a budget planner that Joseph designed himself was also an effective strategy to proactively understand his finances better.

“I have a budget planner, and knowing that I have ADHD, I’ll literally check it eight or nine times a day.”

Focusing on daily progress and thoughtful, intentional spending is helping Joseph get where he hopes to go.

“If I want to get to where I want to be, I’m not going to win money gambling. It has never happened in all these years.

“I had to get out of the mess slowly—dollar by dollar. Everything I’ve done up until this point was chasing a quick win.”

Budgeting has also been critical for Joseph’s financial recovery.

“I’m a data analyst, so I made a spreadsheet for my budgeting. The budget is set up weekly, but then I’ll also be able to look weeks ahead and start prepaying or preplanning for certain bills.

“It’s something that works for me.

“As time goes on, I can change it as I please. It started off with over 35 categories, and over time, you start to narrow it down and know which categories you can merge.

“If I had to stand on stage and talk to a bunch of people who were like me, I’d say that instead of taking someone else’s template, take all of them, copy and paste those random pearls of wisdom that you find that apply to you and make your own cheat sheet.

“A lot of them are unreasonable and don’t address what’s behind the spending.

“I had to go through quite a bit in my life to reach 38 years old and feel like the most ‘important purchase’ is a contingency plan.”

Finding a way out

For a long time, Joseph says he couldn’t see a way out.

“Now, I am very happy, and that is largely thanks to Way Forward. There was a late-night moment of desperation, and I stumbled across your website, and I thought this is my last chance.

“By the next day, I’d already lost that spark of motivation because I thought there’s no way anyone can help. I’m better off just hiding until the world blows over.

“But Deborah kept calling. A few times when I did want to answer but I was stuck in meetings. But she didn’t give up for a solid week. And then she did catch me. She believed she could help.

“She empathised, and there was no judgment, so I felt a bit of positivity after that.

“I told her everything. I might have even spoken too much, but she didn’t seem to be saying that there was nothing they can do.

“I had been turned away from other counselling places before, so I felt sorry for myself and thought, now she’s just going to come back and say that she can’t help.

“But no, she worked magic. There was literally a way forward.

“I was going in circles before. 90 percent of my pay was going to a debt with massive interest, and even in that, I’d be skipping a payment just so that I could have food.”

Lenders kept offering money

“I remember when the bank sent me a letter for the first time saying that I qualify for a credit card with a $10,000 limit. I thought, if the bank thinks I’m good for it, then surely, I am. You’re very frugal with it at first and feel pretty good about yourself, and then you have a big night out and run out of your own money.

“I was surprised that I was approved for some of the loans that eventually put me into hardship. Out of desperation, you look for signs, so when you might receive a text message offering ‘$2,000 today,’ you accept more loans.”

Humility is the Way Forward

“You must humble yourself. The biggest challenge is, how do I tell the people that care about me and only want to see me succeed that I have repeatedly failed to control myself whenever it mattered?

“You start by pushing your ego to the side and go to those people who you not only love but those you are sure love you back and say to them: I don’t want your judgment, but this is what’s going on, so help keep me accountable.

“I have some totems, which are a few purchases that are utterly useless. Like a 3D maze that was $60. It’s a bowl inside the little ball that goes around, and I’ll never solve it. I keep it there as a reminder to not buy things I don’t need.”

Joseph says that the bank he uses, Up, includes features in their products that are incidentally ADHD-friendly.

“There’s a side savings account where you can just put money in. But if I want to take money out, there’s a three-hour delay.

“If you’re out shopping, and you know your weaknesses, you can’t impulsively take that money out. If there is an emergency, you can text a friend who can release it, which is my housemate. He’s my accountability coach.

“If you’re struggling with impulses, and some of us might enjoy having those impulses because it’s rewarding to fulfil them, the challenge is how are you going to put an external measure in place?

“For some people, feeling like a failure or the fear of rejection is a hurdle to seeking help. What if you tell people about your problem, and they can’t help you? Or what if they call you a loser and want nothing to do with you?

“It’s hard to be vulnerable, but that’s a risk you have to take.”

Way Forward supports Federal Government plan to regulate BNPL as a credit

May 22, 2023/in Stories/by Rachel Ryan

Way Forward – Free Debt Solutions is pleased to see the Federal Government proposing to regulate Buy Now Pay Later (BNPL) as a credit product. This will raise awareness of the pitfalls from of these products, especially experienced by people in financial hardship.

“Putting BNPL regulation on the national agenda is a positive step in the right direction and we look forward to seeing more information about the specifics of these laws as they are drafted,” Way Forward CEO David Berry said.

“The next step is ensuring that the details and then implementation of these new laws genuinely help people who are in trouble, or at risk of falling into hardship.

“We would like to know more about the ‘scalable’ proposal, as we know from experience supporting people in financial hardship, that a high number of small transactions is where some people end up in dire trouble.

“There’s been an exponential growth in the use of BNPL products, especially for people in hardship who are using it to try to ‘catch up’ on their debts, which we know never happens, it can only make a bad problem, worse.

“We welcome further steps taken by the Federal Government to protect people who are at risk of harm or experiencing harm already. This issue needs to be on the national agenda.”

In 2022, Way Forward undertook comprehensive research into the use of BNPL by our clients, all who are in hardship, with 80 percent of survey respondents indicated that they have used BNPL services.

The findings of this report confirmed a correlation between poor mental health and complex debt, insufficient savings, and financial vulnerability.

In some cases, BNPL is used to buy essentials so that cash can be directed to paying off existing loans. Further, the ease of access to BNPL facilities can mean that financially vulnerable users quickly end up in overwhelming financial difficulty.

From this research, Way Forward found the sources of harm our clients experience from using BNPL can be categorised into the following:

Excessive ease of access
Lack of support for vulnerable individuals
The inability of BNPL users to understand and manage all the transactions
What goods and services BNPL is being used for
Poor mental health outcomes as a direct result of unmanageable debt
BNPL companies have failed to self-regulate and industry needs to be regulated by government

In its response to calls for submissions into regulation of the BNPL sector under the Credit Act, Way Forward asked that these new laws include:

Restrictions on the use of BNPL for essential items for people in financial difficulty
Mandatory credit checks
No unsolicited limit increases
Further verification/substantiation where more than two BNPL facilities are in use
Governance by External Dispute Resolution (EDR)
Mandatory hardship reporting
Greater clarity on purchases and the related instalments

“My friends and my family joke that money burns a hole in my pocket”

May 8, 2023/in Addiction, Separation/Divorce, Reduced income/by Rachel Ryan

Like many people, Sue developed unhealthy online shopping habits during COVID lockdowns.

“I racked up about $15,000 in debt using my Westpac credit card, Afterpay and then I discovered Zip Pay. They were my three main debtors.

“I knew that it was getting out of control when my repayments were more than I could afford.

“I talked to a counsellor and realised that my online shopping was an addiction. I didn’t necessarily need the stuff that I was buying.

“I decided to do something about it, so I spoke to a couple of free services and then found Way Forward.

At first, I didn’t understand what was going on but once I spoke with Bianca from Way Forward, she made it simple.

“We started documenting my debts and repayments. Then, things changed 18 months ago because I separated from my son’s father, which meant I became solely responsible for new expenses like rent and bills.

“In the past, I had never worked out my incomings and my outgoings, but I’ve done this now.”

New opportunities

Sue was given a lump sum of money once she had separated from her former partner. She’s using the lump sum of money firstly to repay her debts, which are currently managed by Way Forward.

Sue has goals she wants to achieve including buying a home to live in. She’s currently looking for a mortgage broker since she’s received a lump sum payment from the separation with her former partner.

She is optimistic about the future.

“The next time a mortgage broker investigates my finances, they’ll see only good things whereas only 18 months ago, it would have been quite dire.

“I’m working out how I can keep that money safe. Habits that I’ve had for my whole life aren’t going to go away just because I’ve got a large sum of money in my bank.”

Changing habits

Recently, Sue saw a free financial counselling service to help with budgeting.

“Not to say that I’m completely healed but I’m now keeping track of my spending.

“Way Forward and counselling has taught me that my finances are my responsibility. I’ve never had that before and I’m 47 years old.

“It’s about time to really knuckle down.”

Being open to changing her habits and behaviours is something Sue takes pride in.

“I’m not scared to reach out to whoever can help me. There are many services out there for someone in my situation and, as an example, I’ve been able to get free counselling.”

Sue has words of wisdom for people in a similar situation.

“Check out all the terms and conditions if you are engaging someone to help you.

“I almost used a particular company but when I started asking questions and reading more into it, I realised that it could be worse for me in the future.

The only trouble is that Way Forward is a well-kept secret. And I wish that that wasn’t the case.

“I’m good at researching, which is how I found Way Forward. But other people might not necessarily have that tenacity to find answers to questions, they think this is just too hard.

“I would love for everybody to know about Way Forward. I’m sure that given the amount of people I’ve spoken to, I’m not the only person that during COVID when we couldn’t get out and travel, got themselves into an online shopping habit.”

“Whatever circumstances or your social economic background, asking for help is not a bad thing”

February 28, 2023/in Stories/by Rachel Ryan

Dinesh was in a well-paid job as a high functioning insurance professional who never thought he would be facing threats of repossession from payday lenders.

But that is exactly what happened when he ended up in financial hardship.

The problems started when his wife became unwell and couldn’t work anymore, meaning he was the sole breadwinner. Expenses to fund her recovery from a chronic condition, stretched their family budget beyond what they could afford.

“My wife had to travel overseas a few times, she was hospitalized a couple of times, plus, psychiatric treatments are quite expensive.

“I was able to manage the day-to-day expenses but the extra expenses plus living on a single income for two or three years, meant that even though I’m on a decent income and I’ve got a stable job, all of it was going into the debt payments.

I’m pretty good with numbers and had a detailed Excel sheet but it was just mathematically impossible to make the repayments I owed with the income I earned, even though I had a decent income.

“For example, on one credit card I was paying $300 per month but $150 was charged on interest. The balance wasn’t really moving anywhere.

“I applied for financial hardship with my creditors, but it was only a temporary arrangement. There wasn’t like a set plan like Way forward does where you’re making a lump sum payment.

“After exhausting all my options, I became very stressed. My credit score was affected. I had reached that point where I had run out of all my options.

“I was not sleeping and only thinking about debt and finances. That went on for about six months. Out of desperation one night, at like 2am, I was looking online and came across Way Forward.

“I was aware of debt agreements and bankruptcies, but my situation wasn’t that bad. I didn’t want to go down that path anyway.

“Most hardship arrangements gave me repayment relief for a three-month period and the maximum was six months, but you are charged interest and a late fee. This extended the term of the loan, so my overall situation remains the same.

“For the 3 months I was on hardship, I used any income I had to pay another debt. After that hardship arrangement finished, I was back to doing the same thing with another creditor, and then paying another. Once you’ve exhausted all your options, you’re back in the same situation.

Payday Lenders were ruthless

Most of Dinesh’s debts are with payday lenders, who he describes as “ruthless”.

“The difference between a larger institution who are professionally trained and accountable to the regulators means that the banks show more empathy and listen to your situation, whereas with the secondary lenders, it’s a difficult conversation.

“Rather than listening to what repayments I could afford during a period of financial hardship, the payday lenders were ruthless. They told me that default will be listed and that they can start repossession.

“I was getting so many phone calls and it was creating a lot of anxiety. If you miss a payment by one day the calls from payday lenders start coming in one after the other.

It had a huge impact on my mental health anxiety. I’ve never had a drinking problem, but I started drinking more just to just to numb out that pain and just forget about my worries for the night.

“They are threatening compared to large institutions.”

Mental health impacts of debt

Dinesh explains that impact that had on his wellbeing: “I was living a double life where in one part I’m high functioning individual going to work every day in a senior to mid-level position, but the other is that I’ve got nothing left in my bank account and people are chasing me.

That has an emotional impact on you. You start questioning your life choices: where did you get wrong?

I can handle pressures but this time it just broke me. I was just not sleeping. It got to a point where I stopped picking my phone up.

Dinesh felt he was alone in managing his financial issues.

“My wife has gone through serious mental health problems, so I wasn’t able to share my wife.

“I shared with my father, but there’s not much he could do.

“My family had already helped me out a couple of times, but then in the end it’s even worse talking to them because they understandably think that they can’t fix it for you, so I kept it to myself.

Way Forward offered hope

Dinesh has been working with Kelly from Way Forward who spent several months co-creating a budget and repayment plan.

“Kelly explained that we work through a solution together.

“Having someone listen to you carefully to understand your situation gives you hope. I remember sending an email back to Kelly to say, thank you, I’ll sleep well tonight.

“Kelly has been patient and regularly keeping me up to date about the process.

“We went through a detailed budget that she had shared with me, which made sense. And then we worked on it together to ensure it was realistic. The whole process took 4 to 6 weeks.

Going through that process with someone who’s obviously done that many times with others was very beneficial.

“With my budget, I had all the expenses like utility bills, and internet, car registration, or most of that stuff was covered, but what I forgot was my own personal needs.

It’s important to save something for yourself, even if it’s having an occasional breakfast at a cafe to lift your mood or being able to afford a cup of coffee without thinking twice about it. Those little things can make a huge difference to your mental health.

Financial hardship can impact anyone

“If someone can learn something from my story, please know that a program like Way Forward’s is for anyone in trouble, even if you have a high-level, well-paid job. It’s not beneath you to ask for help.

“Don’t be deterred that you wouldn’t qualify, just because there are people in a much worse situation to you.

“I was driven by ego. I thought I could sort it out myself. But whatever circumstances or your social economic background, asking for help is not a bad thing.

“People like me, especially anyone who has a job and might see themselves as high functioning individual might find it hard to ask for help.

“My message to people like this: Way Forward’s program is not just for people who are in a lower socio-economic situation. It’s for everyone.

“Asking for help is a good thing.”

Get out of debt – 6 tips on how to do it

February 20, 2023/in Stories/by Rachel Ryan

We’ve put together some practical tips to help face the growing economic challenges of 2023 with a healthy mindset.

Having a plan for your money means you’ve got the best chance of looking after yourself and your family by spending (and saving) wisely.

1. Ensure that you’re not spending more than you earn

It may seem obvious but ensure that your income can cover all your expenses and debt repayments. Many people who approach Way Forward for assistance have landed in financial trouble for this simple reason: they’ve spent more money than they earn, sometimes without realising.

We suggest creating a budget and reviewing it annually. Make it simple: list all your expenses over the year. If you need help with this process, check out our budget tool. This might include rent, food, petrol, utility bills, local government charges, car registration, insurance and entertainment.

Considering the rise in the cost of living over the past 12 months, it’s important to be honest with yourself about how much you’re truly spending rather than what you hope you spend.

If you’re supporting a family and your kids are still younger, there is a chance you’ll have school fees, stationery and uniform costs along with expenses associated with extracurricular activities. Whether your children attend public or private school, including this in your budget it important.

Think about how you managed those unexpected items. What funds did you draw upon? Some people like setting up a separate account as a buffer to fund those unplanned expenses.

You can check out our handy budget tool on the Way Forward website or the Moneysmart website.

If your income isn’t covering your expenses, you need to re-evaluate where you can cut back. If you are struggling to pay off your debts, it may also be worth getting in touch with your bank to talk about a hardship arrangement.

2. Spend time reflecting

As you’re putting together a budget it can help to write down reflections on your approach to spending over the past 12 months.

Some questions to ask yourself could include:

When did you find it difficult to stick to a budget? What was sitting behind that difficulty?
What were my unexpected expenses last year?
What was something I did well? Can I back it up this year?
What were the hard decisions I needed to make? When should I have made them?
What might you be willing to change?
Can I reevaluate my needs versus wants?

3. Use savings rather than relying on BNPL or credit cards

Starting the year with a debt hangover can be crippling. Adopt a thrifty approach to spending to help reach your spending goals.

Avoid using Buy Now Pay Later (BNPL) to make purchases. Using BNPL is still ‘borrowing’ money that eventually needs to be paid off. If you’re then using income to pay down on credit cards, this means less money to see you through the year. Even worse, if you then need to take on more credit to pay off credit, you could end up in financial hardship.

Aside from BNPL, most short-term credit options have surprisingly big interest rates, which means you could end up spending the next few years paying off interest and repayments.

Spending according to your budget (and what you have saved up) means that you’ll feel better about the whole experience and start the new year with a clear head and fewer debts.

4. If you’re in financial trouble, seek help early. There is no shame in asking for help right now.

As cost-of-living pressures increase, people who are already struggling might find themselves quickly falling into serious trouble. If this happens, it is important to seek assistance as soon as possible. One sign of difficulty is if your BNPL and debt repayments become too large to cover with your current income.

If this is happening to you, start a conversation with us, your bank, or a financial counsellor as soon as possible. There is no shame in asking for help.

Way Forward has assisted a wide range of people. Even people with a decent income can get into trouble with their debts. It’s better to address it before it’s too late.

5. Come up with a plan to get out of debt and take charge of your finances

Having a plan and then putting it into action are two different things. It’s critical to be proactive with your spending decisions. Making conscious choices about what you want to do with your money is important.

Don’t fall for the upsell, they can be tempting but you might need to be prepared to go with good enough, not top of the line. Having a disciplined approach to spending means being aware of the increased cost of everything – it’s important to factor this in when making decisions.

Knowing that the best time to be accountable for a purchasing decision is at the time that you’ve made it rather than putting it off and hoping that it’ll work itself out later. Feeling good about your decisions minimises buyer regret – flipping to a positive mindset and making intentional purchases can be a valuable way to stay on top of your finances.

6. Sleep well at night

Having someone listen to you carefully to understand your situation can make it easier to sleep. Knowing that there’s someone on your side can take the pressure off.

User

February 14, 2023/by Rachel Ryan

a:8:{s:8:”location”;a:4:{i:0;a:1:{i:0;a:3:{s:5:”param”;s:17:”current_user_role”;s:8:”operator”;s:2:”==”;s:5:”value”;s:13:”administrator”;}}i:1;a:1:{i:0;a:3:{s:5:”param”;s:17:”current_user_role”;s:8:”operator”;s:2:”==”;s:5:”value”;s:6:”editor”;}}i:2;a:1:{i:0;a:3:{s:5:”param”;s:17:”current_user_role”;s:8:”operator”;s:2:”==”;s:5:”value”;s:6:”author”;}}i:3;a:1:{i:0;a:3:{s:5:”param”;s:17:”current_user_role”;s:8:”operator”;s:2:”==”;s:5:”value”;s:11:”contributor”;}}}s:8:”position”;s:6:”normal”;s:5:”style”;s:7:”default”;s:15:”label_placement”;s:3:”top”;s:21:”instruction_placement”;s:5:”label”;s:14:”hide_on_screen”;s:0:””;s:11:”description”;s:0:””;s:12:”show_in_rest”;i:0;}