Manfred Kohl is one of 1.9 million Australians struggling with credit card debt.
- The Salvation Army’s financial advisory service reports more and more people aged 55 and over are asking for help
- ASIC says 1.9 million Australians have problematic credit card debt
- Australia has one of the highest levels of household debt in the world
The 59-year-old was forced into debt when his partner fell ill and had to stop working, cutting family income in half.
He started using a credit card and took out a personal loan, and now owes $ 48,000 which he cannot repay.
He is one of the growing number of older Australians who find themselves trapped in credit card debt.
Fighting back tears, Mr Kohl described the difficulty of making ends meet.
“I tried everything we could,” he said.
“We stopped eating normally, we cut off the electricity.”
Mr. Kohl earns about $ 800 per week as a maintenance installer.
He and his partner Helen Soo turn off the lights at 6:00 p.m. every night and go to bed to save electricity.
They have cold showers, don’t turn on the heat, and use five blankets on their beds to try and stay warm.
Ms. Soo, 76, suffers from diabetes and high blood pressure, and her health problems forced her to stop working two years ago.
Mr. Kohl cashed in his vacation pay and seniority leave. He even asked his family to help him pay the bills.
But that was not enough to cover their debts.
“I didn’t want to go into debt,” he said.
He said he had had sleepless nights, fearing he would end up homeless.
Australians struggling with debt
According to Moneycare, the Salvation Army’s financial advisory service, older Australians are increasingly asking for help managing their debts.
Ten years ago, 19% of its customers were aged 55 or over. In the 2017/18 financial year, 26% belonged to this age group.
The most common reason people seek financial help is credit card debt (49%), followed by personal loans (30%) and electricity debt (25%).
Gerard Brody of the Consumer Action Law Center said credit card debt was the number one reason people called the National Debt Helpline.
“Australia has one of the highest levels of household debt in the world,” he said at 7:30 am.
“1.9 million Australians have problematic credit card debt according to the Australian Securities and Investments Commission. That’s almost 15% of Australian adults.”
Older Australians fall into the debt trap
Mr. Kohl’s financial advisor is Isis Khalil. She works with Mission Australia and said many of her older clients had been sick, separated from marriage or lost their jobs, which meant their once manageable debts quickly got out of hand.
“When something happens, the first thing they start doing, rather than paying their credit cards every month like before, is paying the minimum amount,” she said at 7:30 am.
“It is getting worse very quickly and before they know it they have reached the maximum amount on their credit card.
“And that’s when they get close to that limit, that’s when they start calling and saying, ‘I need help.’
“If you don’t control him, he can control you”
Louie Tolentino admits he’s addicted to spending by credit card. After 30 years of paying on plastic, he found himself in debt of $ 50,000.
He said most of the money was spent on trips abroad with his wife Nida. The couple have traveled to over 30 countries.
“Like my smoking experiences, I should have quit,” he said.
“If you don’t control him, he can control you.”
Mr. and Mrs. Tolentino still work full time, but the credit card debt means that half of Mr. Tolentino’s income will go towards paying the minimum repayment.
“Until last month I was able to cover the minimum,” he said.
“But then I started to worry because I know it will increase where I can’t afford it anymore.”
Mr Tolentino cut his two credit cards and said his travel plans were now on hold while he focused on paying off his debt.
He works with a financial advisor from Wesley Mission, who managed to convince one of his banks to give up their credit card debt entirely.
This was due to Mr Tolentino’s chronic health issues, which means he needs an oxygen mask to breathe at night and uses an inhaler up to eight times a day.
His other bank put him on a manageable payment plan, but it will take another six years to pay off the remaining $ 24,000 credit card debt.
The particularly vulnerable elderly
Head of Mission Wesley Reverend Keith Garner said more and more seniors are falling into the trap of credit card debt.
“If you don’t have a good income, that’s one way to put things off,” he said at 7:30 am.
“This is why the elderly in particular are very vulnerable.”
He calls for more credit card reform, pointing out that the cash rate is at an all-time high of 1 percent, but it is still common for credit cards to charge interest rates above 20 percent. .
“We have all heard statements from the Governor of the Reserve Bank and others about interest payment levels, which have fallen to 1% now,” he said.
“I don’t see the same change happening in terms of credit cards. And I would say to the banks after the royal commission, what about coming to the party now and doing something about it? easier credit, but certainly helping people. “
Where to get help
The National Debt Helpline is a free and confidential national service, reachable on 1800 007 007.
He can help anyone under financial stress and direct clients to financial advisors in their area that they can work with for free to help them with their finances.
Reverend Garner urged people of all ages with financial need to seek help as soon as possible.
“Don’t be afraid of your situation,” he said.
“If you are in debt, ask for help.”