Cost of living hits hard as 1 in 5 young people are being chased by debt collectors

Almost two million Australians have fallen behind on their everyday payments and are now being chased by debt collectors.

Almost one in 10 Australians admit they have an unpaid bill that is being chased by a debt collector.

The research by comparison site Finder shows younger Australians are feeling the pinch, with one in five Gen Zers having unpaid debt with a debt collector compared with just 5 per cent of Gen X.

The survey of 1049 Australians found a further 4 per cent had an unpaid bill referred to a debt collector in the past 12 months that was now up to date.

Another 7 per cent had faced this situation more than 12 months ago.

Finder head of consumer research Graham Cooke said households were having to make difficult choices when it came to their bills.

Aussies are taking on a second job as the cost-of-living crisis bites. Picture: NewsWire / Max Mason-Hubers

“Costs such as phone bills and utilities are going unpaid in some cases, as households prioritise food and shelter,” he said.

The number of households struggling to pay bills comes as Reserve Bank governor Michele Bullock warns prices for goods and services will “not be returning to their pre-pandemic level”.

Ms Bullock said the central bank was not going for “deflation”, which is the worst-case scenario for an economy, as it slows consumer spending with people waiting for a cheaper price.

“We can bring inflation back down, but to get prices back down to where they were pre-Covid would imply deflation,” Ms Bullock said on Thursday at the ASIC annual forum.

Working our way through the cost-of-living crisis

With the number of people falling behind on their bills, a study released by jobs company Indeed showed 57 per cent of people might take on additional work during the festive season.

A further 93 per cent of people who are looking at a second job say it is due to cost-of-living pressures.

Aussies are looking for additional jobs in the hospitality and retail sector to pay the Christmas bills. Picture: NewsWire / Gaye Gerard

For about five million of the seven million workers who will work over Christmas, this is the first time they’ve considered taking on extra work.

This year’s findings through Indeed’s jobseeker searches for festive season roles are “significantly” higher than previous years and are tracking well above last year as of October 31.

Indeed career expert Sally McKibbin said there were “higher levels” of festive season job postings and job searches than in previous years, with Aussies looking for more work in customer service, retail, hospitality and delivery services over the Christmas period.

“People want to boost their income over the festive season, and employers are being extra proactive in filling vacancies ahead of the Black Friday and Christmas rush,” Ms McKibbin said.

The peak could be over

Despite Aussies feeling the pinch, research from two of the big four banks shows the peak of cost-of-living pressure could be behind us.

The consumer price index (CPI) rose 0.2 per cent in the September 2024 quarter and 2.8 per cent annually, according to the latest Australian Bureau of Statistics data.

This puts the CPI into the RBA’s target range of 2 to 3 per cent, although underlying inflation, which removes volatile assets, is how the central bank measures inflation, which was at 3.4 per cent.

The peak of the cost-of-living crisis could be over. Picture: NewsWire / Max Mason-Hubers

Consumer confidence data released by Westpac shows Aussies are seeing light at the end of the tunnel.

Overall, the consumer mood has continued to build on last month’s promising gain, with the index up 14.4 per cent from its mid-year lows and only 5.4 points below the “neutral” level of 100.

Consumers are seeing further easing in the pressure on family finances, are no longer concerned about the risk of further interest rate rises and are becoming more confident about the economic outlook. However, some big shifts over the course of the survey week suggest the lift in confidence is shakier than it looks.

Meanwhile, NAB said for the first time in 18 months, Aussies were feeling more optimistic about spending as cost-of-living pressures begin to ease.

Even in a higher cost-of-living environment, Australians are proving time is money as they trim back spending to keep home services like cleaners and gardeners.

NAB retail customer executive Larna Manson said busy Australians were sparing cleaners and gardeners from cost-of-living cuts.

“Despite all the chat about cutting back and skipping takeaway coffees, coming home to a clean house at the end of the day still holds a high priority right now,” Ms Manson said.

“The phrase ‘time is money’ can be overdone, but it’s clear we’re a nation serious about outsourcing home and garden care so we can use our weekends and evenings to relax and socialise.”

Originally published as Cost of living hits hard as 1 in 5 young people are being chased by debt collectors