Financial stress is defined as a condition that occurs whenever income is less than the expenses. Sometimes we wonder how this can happen? How can someone spend more than what they earn. The answer is credit cards.

When you use a credit card to pay for something there is no actual money changing hands and this somehow gives consumers the feeling that they can afford more than what they really can. This is apparent in a recent report finding that in Australia, spending is higher than earnings in more than one million households and 44 per cent of those are in financial stress. Financial stress left a number of Australians unable to pay bills on time and afford the basic necessity of daily living. Furthermore The Wesley Report: Facing Financial Stress describes a quarter of households in financial stress are middle income earners, who make $52,000-$104,000 a year.

The report also stated that households owed an average of about $7000 on credit card payments, $250,000 on mortgages, almost $100,000 on investment loans, $12,000 on personal loans and $18,000 on student loans. Even though the report tells us that Australians are getting loans for their basic needs like mortgage and education, the increase in the cost of utilities like electricity and phone bills give them a hard time coping. Adding to the fact that people want the best things life can offer, it is why they may feel the need to spend more. Credit card spending was clearly identified as a prime factor in increasing financial stress. A report by Reserve Bank of Australia found a near-record national debt on the credit card debts amounting to $51 Billion in February alone. This implies that Australian’s way of living is to live now and pay later.

Reducing Financial Stress

If you are one of the victims of financial stress you will find that the solution to the problem is to balance income and spending. This balancing act can take two forms: either increase the income or decrease the spending. You do have a choice, of course the latter is easier to do. You know you are in deep trouble when you are paying your debts with money you have not even earned yet, this means using your credit card to pay off debts. The only way out of this mess is to purge your spending and refinance your loans with a lower interest loan. How do you do it? Get help in debt management and debt relief from a reputable company.

Australian Debt Agreements can help. We understand that everything in the financial world is negotiable. We specialise in debt agreements and this can be the perfect solution to your debt problems.  A debt agreement is an arrangement made between yourself and your creditors to settle your debts affordably. Want to know more? Call us today.