Financial ruin – a slippery slope

Even so often I receive a phone call, read an article, or hear a story that leaves me bewildered and, in some ways, helpless because I don’t have a simple foolproof answer.
In the past week I have heard of three separate stories that, because of past decisions, have had a profoundly negative outcome for each of the folk involved.
As readers of this blog, you will know I like to talk about personal financial wellbeing and the need for each of us, irrespective of our age or circumstances, to live a financially responsible life.
Let me relate one of the stories in the hope there are lessons we can take from it – if not for ourselves, perhaps for our family or friends. But first, a caveat. I don’t profess to have all the answers!
The story relates to a couple in their early 20s. These folk are renting, have two leased cars, a heap of credit card debt, no savings, and have a baby on the way. Their financial situation is such that they are behind with their repayments and are facing a very tough time financially.
The man in the relationship has a job that pays a salary of around $70,000 per annum. His pregnant partner is not working and she is unable to get Centrelink income support benefits, because of his income!
One question I asked was whether they could get by with just one car? The answer I was given was ‘no, because she is pregnant’. Apart from that, her car is worth less than the amount required to pay out the lease!
Now, I know very little about this family or their lifestyle but by all accounts, things appear to be quite dire. I was asked if this couple could access their superannuation in order to get themselves back on track financially.
In certain circumstances superannuation can be accessed in cases of severe financial hardship, and on compassionate grounds, however the rules around access are very prescriptive. Sadly, in this case, their personal circumstances would not allow early access to super.

Apart from this couple getting really serious about tackling their debt, financial ruin and even personal bankruptcy, could be a very real outcome.

Feeling somewhat helpless, I suggested they probably need to start be re-examining their lifestyle, objectively reviewing all their expenses and commitments, and then prepare, and stick to a realistic budget that will ensure they live within their current means, and progressively repay their debts.
In this case, I also suggested that a phone call to the National Debt Helpline might be worth considering. Details can be found at ndh.org.au. This is a free service. Sometimes we just need to swallow our pride and ask for help.
So often we hear of stories like this and it would be wonderful if we could just wave a magic wand and all the problems would simply go away. But sadly, life is not that easy.
There is a crying need for more financial education for all ages, not just the young.

But there is a bigger issue we need to tackle.
As Australians, we tend to have turned ‘living beyond our means’ into an art form. The pursuit of immediate gratification has become, sadly, extremely common.
Perhaps we need to take lessons from our grandparent’s generation. They appeared to be quite comfortable living within their means.
How do you meet your financial struggles? We would love to hear your experiences and suggestions. Do you have a tip or two for the couple in this article? Feel free to post a comment.

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