Financial Counselling Australia CEO Fiona Guthrie answers your questions
Expert Fiona Guthrie reveals the first financial steps to take if you lose your job and why you should think twice about accessing your super.
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Thousands of Australians facing financial distress because of COVID-19 have never had to call on support before.
Financial Counselling Australia wants them to know they are not alone and qualified professionals are available to offer free advice.
CEO Fiona Guthrie was online for an hour-long question-and-answer session today and urged anyone who needed help to reach out.
Q. My wife is trying to hide her head in the sand about the difficulty we’re in. She won’t even talk to family about it, but we need to get some help. How do I make her see this is nothing to be ashamed of. We’ve always paid our way and it’s not our fault we need help now.
A. It would be hard for you and for your wife at the moment, because everyone deals with stress differently. Sometimes people deal with things by pushing them away, which is what your wife is doing. You are taking a different approach.
What I’d like to say to your partner, is that there will be options and a way through. The feedback that financial counsellors get is often, “You were a life saver,” or, “We were at our lowest and now we can get back on track”.
Financial hardship can affect any of us — we are certainly seeing that at the moment in spades.
Q. If someone loses their job in the next week or so what are the first steps they should take to manage the financial situation — and how do you do that if some companies just aren’t geared up to respond to the volume of people needing help.
A. First step – get an idea of your priority expenditure: this will usually be rent/mortgage, electricity, food. Loan payments (unless it is your home) are usually not priorities.
Second step – do you have enough income to cover these payments?
(Hint: there is a great budgeting tool on the ASIC MoneySmart website if you want to do a full budget – probably a good idea too when you have time.)
Third step – negotiate affordable payments on loans and if necessary, for your rent/mortgage and electricity/gas.
Every person’s situation can be different, so you can always ask for help from a free financial counsellor on the National Debt Helpline on 1800 007 007. There is also some great information on the NDH website.
You also asked about problems with so many people trying to get through to banks and utility companies. They are definitely being smashed. Try and use their online services if you’re able to. They will get back to you. (By emailing the bank you have evidence that you asked for assistance.)
And in our experience in financial counselling they are all trying to help. Oh, and ask for late fees to be waived.
Q. I’ve looked at the options to access super and also seen warnings to only do so as a last resort. Am I better deferring as many payments as I can and trying not to touch my super?
A. I’m so glad you asked this question. Financial counsellors are really worried at the moment about lots and lots of people accessing their super now, when they have better options.
Super is about the best form of saving you can do, and using it to pay debt, or to fix a short term problem with living expenses, will mean much less money later (for example $20,000 accessed at 35 years old could mean that the total balance in retirement may be reduced by up to $80,000). Importantly, it may not fix the problem anyway, if it is just a short term reprieve.
Other options, rather than accessing super, are negotiating lower repayments on loans or even deferring payments (which banks are allowing on mortgages). But it is always better to pay as much as you can.
Having said all this, the above is general advice for anyone in the community.
A financial counsellor can ask about your personal circumstances and talk through all of your options.
And finally, I hope lots more people do what you’re doing, before jumping in and taking out their super. Really sensible to think things through.
Q. Could the Government mandate some changes so that people aren’t worried about bills – a period without late fees and an extension of the due date that applied to energy, water, rates, telcos etc? Just while we are in this crisis.
A. Yes the Government could take action on those issues. Currently, the Government is relying on business to be compassionate.
Some of our regulators have also sent very clear, strong and helpful messages to companies about what they expect – for example, the Australian Energy Regulator has told electricity companies that they expect that they will not disconnect people or small businesses who are in financial stress.
It has been good however to see that many businesses are not charging late fees and providing extensions of time on request.
Call them and explain your situation, tell them what you can afford and ask for late fees and penalties not to be charged.
Q. My daughter works in childcare. She was employed full-time until last week when her hours were cut to 15 hours per week. Is she entitled to the JobKeeper allowance?
The owner is to make a decision soon whether to close the centre and stand down all employees. What entitlements would my daughter qualify for in those circumstances?
A. Your daughter may be eligible for the JobKeeper payment. To be eligible, your daughter’s employer will need to be eligible for JobKeeper Allowance. The legislation for JobKeeper is hopefully passing parliament today.
At this stage, the best first step is for your daughter to check with her employer about whether her employer intends to apply for JobKeeper. Your daughter also should check whether she is now eligible for JobSeeker payments from Centrelink due to her decreased income.
For information about entitlements, it would be best to contact the Fair Work Ombudsman.
Q. How do I prioritise one bill over another now we’ve lost my husband’s income. I tried to contact the electricity company over one bill but they said to ring back in two weeks because they couldn’t cope with calls — and that’s after the bill’s due.
A. Prioritising payments is essential when you are in financial difficulty. You did the best thing possible by contacting your electricity provider to discuss your situation. Do pay what you can.
When you finally get in contact, ask that any late fees or penalties are not charged given the pandemic. Energy companies should be receptive to doing that.
You can also contact the National Debt Helpline and they can talk you through how to work out priority payments.
And if you have problems with the energy company, they can explain how to lodge a dispute with the energy and water ombudsman in your State. These are free services too and really helpful.
Q. Two of us rent from the real estate agents / landlords, paying $3024 per month ($1512 each). We are both in the hospitality industry and both have not worked since early March. We are going to email the agents today to see if they can reduce our rent to $2000 per month. What do we do if they say, ‘No, you have to still pay the whole rent’. We have a lot of other bills to pay as well, not just the rent. We have been in this property since 1999, 21 years now.
A. Negotiating with your landlord on rent is a great first step. The landlord and everyone else are all affected by the pandemic. It is really important that you negotiate rent you can afford. Paying what you can is always good advice. And you’ve taken the sensible first step of working out what you can afford.
If the landlord will not negotiate, it is worth getting advice from your local free tenancy advice service (eg the Tenants Union NSW) about your rights.
The State Governments have said that they will be acting to stop people being evicted, but just checking on the Tenants’ Union website, there haven’t been changes to the law yet.
The intent though is that we all work together in a co-operative way through these difficulty times and do the right thing by each other. It sounds like you’ve been a wonderful tenant, so I’d hope that your landlord would want to help (regardless of any changes to the law).
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