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Is the Coronavirus Pandemic Going to See You Sink Further into Debt?

Posted by Debt Rescue on Apr 9, 2020 3:31:27 PM

The Coronavirus crisis is having a huge impact across the country as job uncertainty increases and many Australians are now worried about how their finances will hold out during this challenging time.

Statistics from the National Financial Capability Strategy show that one in five Australians were not able to access $2,000 in an emergency prior to the Coronavirus pandemic. In addition, 1.9 Million Australians were struggling with credit card debt prior to Covid-19.  According to MeBank’s 2020 Household Financial Comfort Report, comfort with cash savings fell by 9 per cent in and the ability to deal with financial emergencies fell by 7 per cent in the second half of 2019.

Now, two million Australians could be without a job as companies stand down employees due to trading restrictions aimed at stopping the spread of the virus. Centrelink has seen record queues and the MyGov website has collapsed due to the number of Australians registering for unemployment benefits. The unemployment rate could possibly reach, or be even worse than that of 1932, the highest unemployment rate Australia has ever recorded. The economic fallout of the Coronavirus could severely cripple many of us financially.

Kantar’s Australians and COVID-19 report found that as at March 23, 60% of Australians are looking for support to be more proactive about financial planning and security, whereas 64% of Australians are increasingly worried that Coronavirus will be worse than an economic recession with the risk of job loss.

The Australian Government has announced multiple economic stimulus packages to help support individuals and households through the pandemic. However, many Australians don’t have the emergency savings required for a time like this which may cause a number of people to use credit cards just to get by.

In a time when we are all so uncertain of the future, it’s important to remember that you are not alone.  We are all in this together. There is Government help available to financially assist you and if that is not enough, there are a number of debt relief solutions available to reduce unnecessary debt stress and see you through the Coronavirus pandemic.

The Australian Government’s Stimulus Package for Individuals and Households

JobKeeper Payment

The Australian Government has introduced a new JobKeeper payment to cover employee wages during the COVID-19 crisis. Businesses impacted by COVID-19 will be able to access a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for up to 6 months. This payment is aimed to help prevent financial hardship in Australians who may lose their job due to the increasing instability of the economy.

Income Support for Australians

Over the next six months, eligible individuals will receive a new Coronavirus supplement of $550 a fortnight. Those already receiving Government benefits and new recipients of the following payments will receive the extra income support:

  • JobSeeker Payment
  • Youth Allowance
  • Parenting Payment
  • Austudy
  • ABSTUDY
  • Farm Household Allowance
  • Special Benefit

Once-Off Payments for Australian Households

The Australian Government is providing two $750 payments to eligible Australians on Government benefits, including veterans, income support recipients and concession card holders. The first payment will be made from 31 March 2020 and the second payment, which will not be made to those eligible for the Coronavirus supplement, will be made from 13 July 2020. The aim of these household payments is to provide assistance to lower income Australians.

Early Access to Superannuation

 All individuals who have been affected by the Coronavirus will be able to access their superannuation early. You can access up to $10,000 in 2019-20 and a further $10,000 in 2020-21. If you do need to access your super early, it won’t be taxed and it won’t affect any payment you’re currently receiving from the Government.

Eligibility

To be eligible to access your super early, you need to:

  • Be unemployed, or
  • Be eligible for a job seeker payment, youth allowance, parenting payment, special benefit or farm household allowance, or
  • On or after 1 January 2020:
    • You were made redundant, or
    • Your working hours were reduced by 20 per cent or more, or
    • If you are a sole trader – your business was impacted by the Government’s restrictions and was suspended, or there was a reduction in your annual turnover of 20 per cent or more.

Support for Mental Health During the Coronavirus Crisis

Coronavirus has drastically changed the way we live, work and communicate. The Government’s tight measures, such as the limiting of public gatherings to only 2 people, will have a significant impact on Australian’s mental health and wellbeing.

With many Australians now facing the possibility of financial hardship due to Coronavirus, the mental health impacts are likely to be far more widespread. Being in debt can adversely affect your mental health and wellbeing, causing financial stress, anxiety and depression.

It’s important you recognise the impact Coronavirus can have on your mental health and speak to someone if you’re experiencing any signs of stress, anxiety or depression. Olivia Fisher, a mental health researcher at Queensland University of Technology told ABC News that “if you’re really overwhelmed or feeling anxious more days than not, that’s when you need to be seeking some support.

“It’s important to remember we’re human, and most of us haven’t dealt with something like this before.”

Beyond Blue has put together some helpful tips to looking after your mental health during the Coronavirus outbreak.

  • Remember that medical, scientific and public health experts are working every day to contain the virus and develop a vaccine
  • Limit your exposure to the news and social media if you find it distressing
  • Stay connected with friends, loved ones and colleagues through email, social media and the phone
  • Maintain physical activity, eat healthy foods and keep a regular sleeping pattern
  • For those working from home, try to maintain a healthy work/life balance by taking regular breaks

Accessing Support

Debt Rescue is Here to Help

If you were already struggling financially before Covid-19 and the impact of joblessness or reduced income will send you further into financial hardship there are both formal and non formal solutions that can reduce your debt. At Debt Rescue, we will assess your situation and give you realistic, easy-to-manage options to resolve overwhelming debt. There are a range of choices depending on your individual financial situation. They includes:

 Has Coronavirus Impacted Your Finances?

Get in touch with our team today on 1800 560 572 so we can assess your situation and recommend the best solution to get you out of debt once and for all.

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