Amid rising costs of groceries, rent, utilities and petrol, affording everyday living expenses has become all the more challenging for Mandurah locals.
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The Mail recently reported on the increasing cost of groceries coupled with ongoing food shortages and the detrimental impact this was having on families.
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Emma Jayne, a local mother of one, was struggling to afford her weekly groceries, and even had to cancel her health insurance just to ensure there was enough food on the table for her family.
"I have skipped dinner for myself three times last week because I'm scared about running out," Ms Jayne said.
As if the cost of living wasn't already enough to contend with, many locals have now turned to buy now, pay later (BNPL) facilities to pay for everyday living expenses. For those unfamiliar, BNPL allows individuals to buy items and services and pay off the total through regular installments. Afterpay, Zip Money, Zip Pay and Wallet Wizard are all examples of buy now, pay later methods.
Money Mentors financial counsellor Lani Reynolds explained that this method of payment was being used by low-income earning families to pay for everyday expenses like car maintenance, household utilities and costs related to children returning to school.
"At this time of the year, they are sometimes using them to pay for things like school uniforms, school fees or even schoolbooks.
"Other ongoing expenses include things like gas bottles for the purpose of hot water or cooking around the home. Or it could be furniture and household items, particularly if they have left a violent situation," Mrs Reynolds said.
The trend of using BNPL services had changed over the last 13 months, Mrs Reynolds said, as the cost of living had risen exponentially.
People are not using them to pay for things that they want, they are using them to pay for things that they need to survive.
"People are not using them to pay for things that they want, they are using them to pay for things that they need to survive.
"Until income inequality more broadly is addressed, this is likely to continue," Mrs Reynolds revealed, adding that government payments vulnerable families received often failed to cover basic living requirements.
The most troublesome aspect of BNPL services is the fact that they do not take into consideration the borrowing power of the client or their capacity to repay.
"BNPL facilities charge fees when their clients' default on repayments and that is how they make money," Mrs Reynolds said.
While BNPL was commonly used by those struggling to afford basic living expenses, it was also increasingly used by individuals experiencing financial abuse.
"They often don't have access to the household income as they have had to leave the situation. They are often still responsible for the expenses related to raising children but are not allowed to work or earn an income," Mrs Reynolds said.
For anyone struggling with BNPL debt or struggling to afford basic living expenses, know that you are not alone and there is help available.
"Financial counselors are able to advocate with creditors on their behalf and work towards a solution. The financial counselor can also review if the lending should have been provided in the first place.
"Financial counselling is a free service, and support is offered for as long as is needed. Financial counselors are often able to help families discover available resources or practices that can reduce the reliance on BNPL services," Mrs Reynolds said.
As a method of affording expenses when money is tight, BNPL offered a quick fix. However, many families as a result were left dealing with the long-term impacts of accumulating debt and increasing reliance on these services. If in doubt, financial counseling is the way forward, Mrs Reynolds said.
"In an ideal world, people would be able to avoid dealing with such services. If someone finds themselves in difficulty with them, they have the option to access financial counselling. They will then have the support of someone qualified to provide options and work towards a good outcome," Mrs Reynolds said.
Money Mentors Mandurah offers free financial counseling to community members. Visit http://www.moneymentors.org.au/ or call (08) 9581 1281 for more information.
