One in three Aussies stressed by their finances: research

Research shows nearly nine million Australians are aware of their credit mismanagement.

A third of Aussies defeated by debt

One third (31 per cent) of Aussies confess poor financial management, such as using cash advances on credit cards, not knowing how to budget, not paying attention to debt, and racking up late fees on credit facilities are contributing to their personal debt situation.

Men are more likely than women to have not paid attention to their debt, with credit late fees contributing to their debt situation.

Research based on a survey of 1065 Australians conducted by Lonergan Research on behalf of Tribeca Financial found that 44 per cent of respondents have created debt with indiscriminate, everyday purchases such as ordering takeaway food, their Uber Eats home delivery habit and eating out.

More than half (54 per cent) of respondents identified holiday spending, education costs, updating homewares and furniture, and ‘big ticket’ purchases as culprits for spiralling debt. 

Tribeca Financial chief executive Ryan Watson said it was concerning that so many Australians admitted that they were drowning in debt.

“It is alarming for people to get into credit debt over insignificant purchases like takeaway food and Uber Eats,” Mr Watson said.

“The debt mounts up, leading to Aussies managing debt with high-interest rates. It is concerning, and it’s causing financial stress for two in five Australians.”

The research shows nearly nine million Australians are aware of their own credit mismanagement, and two thirds of this group (63 per cent or 5.4 million Aussies) have experienced issues repaying credit debt.  

Almost half (48 per cent) of Australians who are aware they have mismanaged their credit, have maxed out their credit card, gone over their spending limit, continued to make purchases with Buy Now Pay Later (BNPL) services, or have purposely made purchases late at night to rort the credit card approval system.

“I am consistently disappointed by lenders who act in their own best interests, often with no consideration of an individual’s ability to manage debt,” Mr Watson said. 

“Our research found almost nine in 10 Australians have been subject to additional charges relating to their credit card.”

Mr Watson is leading a campaign called The Great Aussie Credit Crush, which aims to encourage 100,000 Australians to destroy their credit card and pledge their commitment to paying off debt by 31 December 2019.

Does your financial situation cause you undue stress? Would you consider destroying your credit card?

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    COMMENTS

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    casey
    16th Jul 2019
    10:27am
    I like most of the people on this site were brought up in the post war era. We were taught if you don't have it don't spend it. I like to pay cash where possible. I still use a cheque to pay most of my bills. If I have to pay by card I use a savings debit card. In the early days of my marriage we refused to buy on HP which was the go then. We would go without until we had saved enough to pay cash.
    purplejan88
    16th Jul 2019
    12:32pm
    i was bought up by parents who never had a credit card nor did they do HP. Mum occasionally put clothes on layby otherwise they saved for the things they wanted including holidays. best way to be
    Eddy
    16th Jul 2019
    2:25pm
    My initial thoughts were more or less in line with casey. People under about 50 have rarely had to budget like we did when we were young marrieds and later young parents. One of the problems today is the ease at which credit is available and the seductive advertising on TV claiming why wait when you can have it now. We waited and, thankfully, did not have a $1000+ mobile phone on a $60 to $100 per month plan as required by today's peer group pressure.
    I got my first credit card, a Bankcard sent to me unsolicited by Bank of NSW, in 1974. I remember the year as the first purchase I ever made using it was for my wife who was ill in hospital at the time, a small portable AWA B&W TV set from Archie Martin (in WA) . The TV set still worked OK until the analogue stations closed a few years ago (testament to the quality of Australian manufacturing before the 'free trade' agreements). Today my credit card is my tool not my master, providence has been kind to me and ensured I an financially secure in my retirement. I still budget and pay my credit card in full every month, no need to cut it up.
    Rae
    16th Jul 2019
    3:16pm
    My bank is about to make using cheques unaffordable. I use pay over the phone which is a good option as you have to have funds in saving to pay bills this way.
    inextratime
    16th Jul 2019
    11:28am
    Lets not get too sanctimonious here. Easy to be smart in hindsight over many issues. Of course people have themselves to blame for getting in over their heads with credit debt but the incredibly high interest rates on credit card borrowings does not reflect the current interest rate market. The banks argue that it is the risk involved with credit card users and their ability to default. Maybe they should take that liability into account when they issue the credit card.
    JAID
    16th Jul 2019
    12:18pm
    With you inextratime. It is easy to get sanctimonious on this (not suggesting you were at all Casey.)

    It seems to me that the majority of people are optimistic rather than pessimistic. The margin may not be great. People send their kids to private schools because they want the best for them and think they will be able to afford it. They do the same with holidays. If the cupboard is bare they may reach go out. All under the belief that their current position will not change and their decisions will prove fine in the end.

    By no means an appropriate thing to do when you are running close to empty but I can understand the sentiment. I also understand the value of that optimism. It can make you perform better than you would otherwise do so. Decades ago with a home loan, a car loan, several equipment loans or leases, a fortunately small, office fit-out loan, insurances galore and more I now wonder how it was that I managed to fulfill their funding requirement. Somehow, sights adjusted to ensure survival. Failure was possible too but not a limit easy to accept.
    Rae
    16th Jul 2019
    3:18pm
    Interesting JAID. I wonder if pessimists are better savers and money managers?
    JAID
    17th Jul 2019
    1:00pm
    I suspect that may generally be the case Rae...especially if I am a fair example of the optimistic variety.
    inextratime
    16th Jul 2019
    11:28am
    Lets not get too sanctimonious here. Easy to be smart in hindsight over many issues. Of course people have themselves to blame for getting in over their heads with credit debt but the incredibly high interest rates on credit card borrowings does not reflect the current interest rate market. The banks argue that it is the risk involved with credit card users and their ability to default. Maybe they should take that liability into account when they issue the credit card.
    Aussie
    16th Jul 2019
    11:52am
    Easy solution for your debts ..... Bankrupt after all if you are over 65 or 70 Nobody will lend you a penny unless you have large collateral to support the loan so if you bankrupt and keep just one credit card for emergencies you are immediately free of debt and only have to stay in Bankrupt for 3 years and is all legal .... forget about your pride and continue suffering, live with stress and get sick ..... be free and start again after 3 years with a clean excellent credit score.

    I know is not the correct thing to do as per our society tell us but WTF ..... what is better ???? stress and get sick or be free of debt and enjoy living because you do not have to pay anybody anymore ...... Up to you either Stress & get sick or be free and happy .....

    Just remember that every time you make a late payment there are extra interest charges to your account .... so your debt will get bigger and bigger ....

    That is my suggestion if you having serious stress problems and drowning in debt ""Bankrupt"" ..... Check this out ... https://voluntarybankruptcy.com.au/our-guarantees/contact-us/bankruptcy-myths/
    LiveItUp
    16th Jul 2019
    12:19pm
    That is why credit card interest rates are so high.
    JAID
    17th Jul 2019
    1:12pm
    Great to be free and start again Aussie, maybe not so great for those with a house or mortgage on one. They will likely lose that and get to fret over high rental payments.
    Virginia
    17th Jul 2019
    9:29pm
    And how fair is that. Totally unrespectfull.
    Paddington
    16th Jul 2019
    12:02pm
    Cheques are old fashioned. Credit cards are fine so long as you pay the whole amount at the end of the month. People did pay on the never never so some here must have forgotten that.
    Banks have been very irresponsible in their lending and credit card allocation. They gave one to our son just out of high school which was ridiculous. They also overcharge and make things harder than they need be.
    People who are desperate will do desperate things. Theft of cars is bad where we live. Maybe make sure everyone has access to jobs and welfare when needed. It is easy for the wealthy and banks etc to judge people. Newstart is pitiful, not changed in 25 years.

    16th Jul 2019
    12:07pm
    Another misleading article. What questions were asked and is 1065 people who participated in the poll a significant number? This extract "44 per cent of respondents have created debt with indiscriminate, everyday purchases such as ordering takeaway food, their Uber Eats home delivery habit and eating out" doesn't prove that the purchases caused financial hardship, it just shows that people are using credit cards for purchases. It is the opinion of the writer that the purchases are not in line with sensible spending.

    The blame on the lenders is wrong, the lenders aren't making the purchases or not paying the debt within the agreed non-interest period. I believe that most lenders investigate whether a person who applies for a credit card has the ability to service the debt. There are people in our society who will never be able to handle money and will always be in financial hardship but they are a small minority and this article suggests that all Australians are in a financial bind and it's not their fault.

    I agree with casey about how those of us born in the first half of the last century are quite adept at handling money because we dealt with cash, not credit cards, and when our pockets were empty we stopped buying until payday. Our generation understands how a budget works and whether we should buy something we need, not something we want. We have created debt with indiscriminate, everyday purchases such as ordering takeaway food and eating out because it's more convenient to use a credit card but our generation does it because we know how to repay the debt.
    LiveItUp
    16th Jul 2019
    12:23pm
    Credit cards are a great slave but a poor master.

    I recently participated in a similar survey and as I use a credit card for everything then I would be making many purchases that they would not consider sensible spending. They also considered more than $5000 in debt on a credit card bad but many months my credit card debt exceeds $5000. So was I classified as the 44%?
    Rae
    16th Jul 2019
    3:22pm
    Same here LiveItUp but the monthly debt is paid out automatically. We would skew the results.
    purplejan88
    16th Jul 2019
    12:31pm
    like a lot of modern day technology we are encouraged to embrace there is one thing that younger generations lack an understanding in and i believe it is caused by this paywave culture. if all you need to do is wave your card to pay for a coffee or a newspaper or lunch etc you soon lose track of how much you have spent. i prefer to use my debit card to pay for groceries and draw out a cash amount which then pays for incidentals for the remainder of the fortnight. when that cash runs out - bad luck til grocery time .
    casey
    16th Jul 2019
    12:42pm
    With you there purplejan88, exactly what we do.
    JAID
    17th Jul 2019
    1:24pm
    About 30 years ago I managed to get a credit car with a zero limit. Works just like a debit card but always did work where I understand debit cards sometimes did not.

    Naturally you don't get that interest free period and if you happen to forget its contents and run over a dollar or two it either bounces or pays (I think that is used to but now it seems to run on automatic without leeway) but either way it gives you a charge. Seems strange when money is usually just sitting there earning interest for the bank but a little whack of $5 or $10 every couple years to keep you on your game seems OK to me.

    Mostly I just use it for any internet purchases having put only small amounts into it but no matter what it is used for it is appealing that its owner cannot go silly with it. Yes, one of little trust but it happens.
    KSS
    16th Jul 2019
    1:40pm
    “I am consistently disappointed by lenders who act in their own best interests, often with no consideration of an individual’s ability to manage debt,” Mr Watson said."

    For goodness sake, it is not the credit card provider ordering Uber eats, shopping on line at night or withdrawing cash on the card now is it? You can bet that the furniture is not coming from Vinnies either. I am more than a little tired of this total lack of personal responsibility and willingness to blame everyone except the individual racking up the debt.
    LiveItUp
    16th Jul 2019
    1:46pm
    I agree.
    Digby
    16th Jul 2019
    3:22pm
    Similarly, I agree totally
    roy
    16th Jul 2019
    5:23pm
    Hear hear.
    gerry
    16th Jul 2019
    1:50pm
    on current affair last night ,a couple said that they were having cold showers and went to bed at 6pm and although they lived in a housing commission they would soon have to live in their car until that was no longer going ...Then the interviewer said "I like those post cards on the wall " Yes she said weve been to all those places,100s of them all over the world YUK YUK
    Theyd spent enough to buy a house and a fat super

    Big spenders are all around me ,I live in Cairns and plane loads of families flew down to Brisbane for the Origin on inflated fares ,hotel one night ,taxis,popcorn coke etc etc and they tell us that they are behind with the house payments,other couples buy a cellphone every year and queue up to buy the latest Apple iPhone ,and one couple told me they would only be able to go abroad once this year BLAME THE GOVERNMENT
    older&wiser
    16th Jul 2019
    4:45pm
    Gerry - that was on ABC 7.30 report. I too watched that show, and was appalled and angry at the couple who have a huge credit card deb - how? - by travelling all around the world! Now they are crying poor, and have had half the debt written off!
    What a stupid fool I have been....always saved, bought things when I could afford it, my credit card always with money on it BEFORE I made purchase. it does make me angry when I see people crying poor - yet allot of the time it is their own fault. Yes, there are genuine reasons for not managing financially, but racking up credit card debts of $50,000? Seems to be that if you jut spend, get a high debt, then you are more likely to have the debt waived. Stupid! Totally unfair. Only today whilst shopping, I am sure I was the only person who actually bought items with CASH. Everyone else is credit card, touch card, etc.
    roy
    16th Jul 2019
    5:55pm
    And I bet they vote labor for shifty shorten et al, yuk yuk yuk yuk.
    Sundays
    16th Jul 2019
    7:08pm
    Two couples, the travel all over the world on credit ones, and the other who were seen buying Lotto tickets with the few dollars left over each week yet can’t afford electricity. It seems it’s too late to teach these people budgeting due to age and illness, so the financial counsellors are looking to have the debt waived. Something very wrong. I think the Program was meant to draw sympathy. Had the opposite effect on me.
    LiveItUp
    17th Jul 2019
    10:21am
    I had a tenant once who told me that she had done her Christmas shopping and now could start paying back her outstanding rent. She didn't get to renew her lease.
    gerry
    16th Jul 2019
    1:50pm
    on current affair last night ,a couple said that they were having cold showers and went to bed at 6pm and although they lived in a housing commission they would soon have to live in their car until that was no longer going ...Then the interviewer said "I like those post cards on the wall " Yes she said weve been to all those places,100s of them all over the world YUK YUK
    Theyd spent enough to buy a house and a fat super

    Big spenders are all around me ,I live in Cairns and plane loads of families flew down to Brisbane for the Origin on inflated fares ,hotel one night ,taxis,popcorn coke etc etc and they tell us that they are behind with the house payments,other couples buy a cellphone every year and queue up to buy the latest Apple iPhone ,and one couple told me they would only be able to go abroad once this year BLAME THE GOVERNMENT
    Taragosun
    16th Jul 2019
    2:17pm
    Financial literacy needs to be part of the school curriculum at around year 5 (NSW) and continue through high school to year 10. One lesson a week would suffice. By then the students will leave school with at least a basic understanding of savings, loans, credit cards, phone and internet bills, living costs, etc.
    Anonymous
    16th Jul 2019
    2:36pm
    Whilst your idea sounds OK, Taragosun, the practicality is that there are not enough hours in the school day. If a child drowns, the call is for teachers to teach them how to swim; if a student gets killed driving a car, there is a call for teachers to teach driving safety; if a child is rude, there is a call for teachers to teach manners and on it goes. These are things that are the responsibility of parents, not teachers who get enough flak for producing students who have difficulty with reading, writing and numbers. Look closer to home for the solution.
    LiveItUp
    16th Jul 2019
    3:03pm
    Too much other unimportant rubbish is taught in schools today. Biggest problem however is school teachers themselves have little if any financial literacy either.
    Rae
    16th Jul 2019
    3:23pm
    They could employ people who were financially literate to tach though. It would fit into maths, social sciences and economics.
    Rae
    16th Jul 2019
    3:14pm
    Once it was very hard to access debt and bank managers helped to prevent this. If the debtor has nothing to lose they can take steps to write down the debt but with years of poor credit history afterwards. It would serve banks right if more did so.
    older&wiser
    16th Jul 2019
    4:39pm
    I am single, on the Aged Pension, and since my early 20's, have had a credit card - but have ALWAYS had it in debit, never credit owed. That means, if I want to buy something by using my credit card, I ensure there is money on the card first. If I cannot afford it, I don't buy it. I have rarely had 'holidays', don't buy new cars or label clothing, rarely dine out, and have a modest small home.
    I have lived within my means, have budgeted, and done everything I can to NOT use credit cards.
    A good tip - at the end of each day, put all coins in a sealed money tin. You will be surprised at how quickly this grows. In less than 9 months, my tin held nearly $1800. This is money you have not missed, and comes in very handy.
    Paddington
    17th Jul 2019
    1:01am
    The previous generation did buy things on credit. They had a Myer account or similar. They also had someone call to collect money for things that they were paying off. Milk was delivered and paid once a fortnight. Lots of salesmen came to the door. I think people have rose coloured spectacles. They had a lot less money as well.
    JAID
    18th Jul 2019
    11:22am
    You are right Paddington. My grandfather was quite upright and stiff. I imagined he would never borrow or wrack up credit of any kind. We were in town one day and he stopped at a shop and said:

    "That is where old (so and so) ran a general store. When we were starting out we had nothing between the wool or wheat cheques, everything paid off debt. I went in there one day and said I would leave (this and that) just taking the basic bulk food requirements. Glancing around to see that no one was looking, the proprietor leant over and told me that my credit was always welcome, just pay when the cheques come in. I did that for several years until we were on our feet and will never forget that man made it comfortable, perhaps even possible."

    General stores in small towns carried a wide range of goods. Farming families often relied on them for most of their household and garden supplies. As their visits may have only been between monthly and tri-monthly large bills would have generally been the case.
    Virginia
    17th Jul 2019
    9:26pm
    COs they all want what they can't afford. There needs to be financial police so people only spend what they can afford not what they want.

    21st Jul 2019
    6:35pm
    It is funny people are still caught up in the web of credit card debt or loan debts when you can have it wiped out by a professional computer expert at y3llowl4bs.com