For richer or poorer

Published in Nine to Five, October 2010

We're all struggling to keep up appearances, but behind the fashionable facades we're drowning in debt, Matt Young discovers.

Have we learnt nothing from the GFC? Two years ago, we were tightening our belts and bracing ourselves for one of the worst financial crises this generation. Redundancies were common, jobs were scarce and, for a while, life was put on hold.

Now the GFC is over, it seems like we’re all trying to live up to the expectation of a lifestyle that is just unattainable, unless we’re millionaires. Keeping up appearances has become a metaphorical jail sentence.

And from what this reporter has learned, it seems we’re all suffering.

Having the beautiful home in the right suburb, keeping up with the latest trends in fashion, maintaining the right hairstyle, spray tan, facials, eating out, weekend socialising, drinking alcohol, being seen at the right parties and parking fines. It’s costing us a motza.

Then there’s the real living costs. Electricity, gas, water and phone bills. Rent. Mortgages. Car insurance. Credit card debt. The list goes on. What happened to the days when we weren’t financially stressed? Did it ever exist?

According to ninemsn, a survey conducted by consultancy The Nous Group found that almost 1 in 5 said they were financially stressed. And that figure was from a survey conducted before the GFC really started to bite.

The Australian Bureau of Statistics says that in 2006, of the 623,000 adults in lone parent households with dependent children, 38 per cent reported that they could not raise $2,000 in an emergency.

A survey conducted by found that 81 per cent of respondents said they find it increasingly difficult to achieve the great Australian dream of homeownership. 33 per cent find it extremely difficult to pay rent while trying to save a deposit for a home, as they are having to fork out more than they have been saving or paying in rent, while 46 per cent agreed it was difficult.

But the buck doesn’t stop there. Families and singles alike are feeling the financial pinch.

Erin Lees, 24, believes the overwhelming amount of bills she’s received in recent months has led her to feel “more broke than usual”.

“My car registration and insurance are both due; as are a few key bills. Last electricity bill set me back $150. My monthly phone bill hit an all time high of $150 last month – something I’ve been told shouldn’t be possible under the $49 cap I am on with Vodaphone.

“On top of this I have moved into a new rental property. Paying the bond upfront - over $2000 - and then working out my monthly rental payments have left me with absolutely no cash.”

Cash flow became so bad for Lees, even finding enough for food became a struggle.

“For the past two weeks I’ve eaten tinned spaghetti for lunch because I didn’t have any money. Dinners are a combination of frozen food my mum has given me, eggs - there’s so many ways to cook them - and two-minute noodles.”

Then there are the families.

“What savings accounts?” stay-at-home mum Kara-Lee Dewhirst said.

“My hubby works so hard getting up at 3am to go to work for us - three kids, three cats and not a cent to spare. Electricity bills are getting ridiculously high and with school excursions, fees and the rest of the bills, I’m still wondering how we are going to get Christmas this year.”

And the business owners.

“My own business is client dependant,” said Melinda Dawson, 26. “In the past year, I hear client after client say how much they are struggling. Four months ago, I felt the pinch and now I’m the one counting my pennies.

“Bill after bill, coming in higher and higher each time means more nights in front of the TV – it’s daunting.”

Relationship Psychologist for Life Resolutions Frank Breuer says that people who spend too much are, in fact, often longing for better, more meaningful and nurturing relationships.

“We have become more and more focused on outer appearances - what we own, wear or do - that pressure often is the inevitable consequence. We chase after little happinesses that we almost completely lose sight of the greater happiness, i.e. we lose connection to our real needs as human beings. Some call it “retail therapy” when shopping for a self-esteem boost. Often it does not even matter what is bought.

“This can quickly become a self-sustaining cycle. If spending money also serves the purpose of distracting us from other problems, we are at risk of developing an addiction, always in search of the next ‘stronger’ kick.”

Breuer believes the solution all begins from within.

“Ask yourself, do I really need all these things? Or am I seduced by a clever marketing industry, that never tires of promising ‘happiness’, but never lives up to the promise? Am I actually harming myself and my family by getting into debt or building up stress?”

Whether a look at our inner selves is the solution to our insurmountable debts, or not is unclear, but it’s a positive stepping stone in the right direction in realising that books aren’t supposed to be judged by their covers. If you start reading, you might find something with enough depth to keep the chapters flowing.

As for those living costs, well, we might just have to put that one to the Federal Government. But not all is a loss. Lees remains positive…kind of.

“Hopefully this is just a temporary situation and I will be back on track soon.

”I think I can kind of see the light at the end of the tunnel…kind of.”

Electricity: the worst is yet to come.

If you thought your last electricity bill was high, think again. The impact of the Federal Government’s proposal to cut emissions is expected to worsen by 2013, with electricity prices expected to rise by up to 62 per cent, including inflation, over the next three years, as stated by the state’s pricing regulator, the Independent Pricing and Regulatory Tribunal (IPART).

It’s expected that EnergyAustralia’s prices will rise by 10 per cent in 2010-11, 16 per cent in 2011-12 and 25 per cent in 2012-13, equalling a 58 per cent rise in the next three years. According to IPART, the average EnergyAustralia customer is expected to pay $727 more by 2013.

Budget babe

How to save your precious pennies, according to Dale Gillham, co-founder and chief analyst of Wealth Within and Sky News regular.

  1. Leave your credit card at home and simply pay for things with cash. You will be surprised how this changes your spending habits.
  2. With our dollar at a 30-year high, you can save by buying goods online from the USA. Many websites have savings of 30 - 50 per cent on what you pay in Australia.
  3. Before spending, ask yourself is this a want or a need? Do I need a new pair of jeans or do I want them because they are on sale? This will be hard, but it will keep you within budget.

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