This is my story
How credit cards, BNPL and rising living costs landed Scott’s family in debt
Scott is the sole breadwinner in his family of two kids, one with a disability, and a wife who is studying. The pandemic and a move to the city landed them in financial trouble as Scott could no longer afford his family’s living expenses.
Troublesome rise in living costs
“We moved into the city about 18 months ago from a regional location so our daughter could attend University. There was an immediate increase in living costs, everyday costs alongside a large cost in moving our family,” Scott recalls.
“Even though I budgeted for increased living expenses and rent, and just a little bit extra, it mounted up so quickly that I didn’t have enough income to pay everyday expenses.”
“At the same time, our son reached the age where government support for him ended so we not only lost income that we used every week to pay groceries and rent, but on top of that, there was an increase in expenses.”
The situation deteriorated as Scott took on a range of credit cards and loans to make ends meet, “I started off with small personal loans and when that amount was exhausted, I got one credit card and then another credit card to pay off that credit card and so forth.”
“What accelerated the personal and psychological pressure was signing up for Buy Now Pay Later (BNPL) schemes. It seemed a very good idea at that time, we could pay for groceries or put everyday expenses on gift cards, and then pay them off in regular payments fortnightly or monthly over a short period of time.”
“But once there was a number BNPL payments running on top of all other expenses, there was no way I could keep up. It all snowballed quickly to a stage where I had no idea how I was going to make the payments just on the credit cards and still pay school fees and other family expenses.”
“The hardest part was having no idea what to do next or where to go to for assistance. I felt helpless, constantly catastrophising the situation, uncertain what was going to happen next and fearing our family would end up on the street.”
Scott’s way forward
Scott’s financial situation caused him depression resulting in him being admitted to hospital. At the time, he spoke with social workers who recommended several debt consolidation companies with large fees attached, which Scott could not afford so he searched for alternatives.
“I discovered Way Forward when I googled free services to help me get out of debt. When I found the organisation, I was hopeful there was a way out of my situation but I was still nervous that I’ve got in such trouble so quickly that nobody’s going to be able to help. But I thought it can’t hurt to make a phone call.”
Scott got in touch with Way Forward to find a solution to his +$40,000 of debts. Since then, the team renegotiated with his creditors to get him on a manageable repayment plan.
“From the start, my Hardship Advocate seemed very experienced and knew what she’s talking about. Her primary concern was my wellbeing and how was I doing throughout the whole process, right up until the repayment plan was put into place. With every contact, I felt her focus was to relieve the financial pressure I was under and build a way forward and plan out of debt. It was just amazing.”
When the repayment plan was accepted by Scott’s creditors, Scott and his family celebrated. He is now receiving medical care and excitedly awaits for this new chapter in his family’s life without money worries weighing heavy on their minds.
“Now that I’m repaying my debts in an affordable way, my outlook has dramatically changed. Although this plan will last for several years, it’s completely affordable so it doesn’t further impact my family.”
“As long as I stick to my budget and repayment plan, there’ll be money for school fees next year and I won’t have to sit and think where to get this money from. Now I don’t have a dread of the future financially, which is a welcome change.”
For others experiencing debt stress, Scott has this advice, “If you’re struggling with debt, don’t hesitate to contact Way Forward. I didn’t ask for help early enough as I was stubborn and felt there must be a way to fix it all on my own. But had I contacted Way Forward earlier, weeks before I did, I’m confident I would not have ended up in hospital.”
Get help to get out of credit card debt
Way Forward supports 800+ Australians experiencing financial hardship and currently manages debt tied to 2,600+ credit cards on behalf of our clients, amounting to $20M. The average debt for each individual credit card is $9,900*.
Our Hardship Advocates have recently seen a rise in Australians taking on credit cards and BNPL loans to afford everyday items like food, petrol and nappies – landing them in debt they cannot manage and with Way Forward.
If you or someone you know is struggling to make ends meet, ask for help early and avoid taking more credit as it can land you in further hardship.
*) Source: Way Forward, March & April 2022