by Scott Pape -
Jane Smith is typical of most of those yummy mummies you see congregating in coffee shops mid-morning: expensive strollers, salon styled hair, bubbacinos.
In her late 20s, with two pre-school-aged children, she lives in a leafy suburb, in a practical home filled with practical furniture. She’s a full-time mum; hubby John is in corporate IT.
When politicians talk about working families, they’re talking about the Smiths. The windbags in Canberra base most of their policy (and propaganda) around helping out middle Australia. And, as we’ve been repeatedly told, things are tough, and getting tougher.
Jane’s story
Their wedding was the happiest day of their lives. Sure, they fight more than they used to, but raising a family these days is hard work; meeting the monthly mortgage, feeding the kids and balancing work with home life all put extra stresses and strains on a relationship.
About six months ago John came home with bad news. He’d been laid off.
Things were tense in the household for the next few weeks. Against Jane’s advice, John refused to apply for Centrelink benefits (which have a waiting period before they can be claimed).
He wasn’t a bludger. After he’d cooled off from ranting and raving, he’d assure her that things would turn around and he’d soon pick up another job.
Turn for the worse
A month later, and many sleepless nights, John still hadn’t found a job.
The fighting was now a daily occurrence. Jane began to withdraw from seeing her friends. She isolated herself, and silently suffered through stress, anxiety and depression.
Now three months behind in the mortgage repayments, and suffering a huge knock to his self-confidence, John was getting frustrated and the fights turned physical. Over a period of a month, Jane was beaten on a regular basis.
The next month she took her two children and fled.
Sadly, she didn’t have the support of her family. Her father had died years ago, and her mother lived on the other side of the country in a nursing home. So, for the next few months, they couch surfed with various friends. Yet with two young children there was always a risk of overstaying their welcome.
With little to no employment history, a frightening lack of funds (the bank had since foreclosed on the property), and two scared children to care for, Jane found herself on the steps of a women’s shelter – truly another world away from the comfortable confines she enjoyed less than six months ago.
Homelessness in Australia
According to Homelessness Australia, some 46,000 women are currently in Jane’s situation.
The group states that domestic violence is the biggest driver behind homelessness, and women and children are the ones mostly affected.
This is the other housing crisis we don’t hear enough about.
Jane, and many women and families like her, are the hidden homeless. As a wealthy white guy, I used to associate homeless people with the beggars in the city asking for change. Yet in 2010, with record household debt, homeless people are everywhere. Yep, even in the trophy suburbs. Even in your suburb.
The talk-back bigots will say that these people have no one to blame but themselves. After all, they stretched themselves to breaking point with plasma televisions, massive mortgages, and flashy cars they couldn’t afford. I agree.
Lack of financial skills
However, years of counselling people about their financial affairs have shown me the other side of the coin. These people are not financially skilled (they’ve been educated to spend, not save). They borrowed a heap of dough from the friendly bank manager, who assured them they could afford it (why else would the bank have lent it?). They borrowed more from the furniture store, and they began living the dream.
Just like all the other mothers at the caf.
The fact that they missed the warning signals of a flailing economy, a tighter labour market and a credit crisis is to be expected – the family home and the financial welfare of our kids cut to the heart of our emotions and rarely resonate with a different, more dangerous reality (just ask the wizards on Wall Street).
Storm brewing
I would never have heard about Jane had it not been for a remarkable woman named Linda Wesley, who coordinates crisis accommodation for the homeless with the Wesley Mission in Melbourne.
With her help, in early 2007 BC (Before Crisis) I wrote a column that explained the tragic link between financial stress, domestic violence and homelessness.
Today, I see a dangerous storm brewing.
First homebuyers who bought in the last few years with the help of the $21,000 (plus) grant from the Government, and interest rates at record lows, could be in trouble. “Every second home loan customer of peak working age is suffering mortgage stress” – according to a study of Australia’s mortgage belt.
Yet as my mate, property expert Neil Jenman, says, committing yourself to the maximum when rates are at their minimum is a recipe for maximum pain in the future.
The storm will erupt in a few years time when many of these young homebuyers lose their jobs as a result of the prolonged economic downturn. Little savings, rising repayments, are ingredients for disaster (especially with an extra mouth or two to feed).
Linda tells me that the women like Jane she meets in such tragic circumstances all tell her the same thing. They never, ever thought this would “happen to me”.
Tread your own path!
Names have been changed.
Photo: www.flickr.com/photos/maistora/3237164755/
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5 comments
This is very sad, to avoid this happening to myslef, husband and 2 young children, we sold our home and are renting. Rent $450 p/w Vs Home Loan Repayments $650 p/w We now have a huge deposit for when the Property Market Crashes. Don’t get caught when everyone else is trying to sell, Its only a house?
Bronwyn, I’m disappointed to hear that you sold assets. How hard was it to get your first home? And you let that go for a bit more cashflow. Times do get tough and if you have such a huge deposit then you had some good equity in your home. So either you borrowed too much or didn’t have a cash buffer in place. And it should be IF the property market crashes! Put your cash to good use asap. What happens to the value of cash over time? Inflation…
The storm is definitely brewing but it may not be the economy that causes it to break.
I know so many young people who have mortgaged up to the hilt and need both incomes to service the mortgage. The trouble comes because they all want kids but never factored that into the the housing budget.
There is a generation who will very shortly need to make the choice, stay in current house and have no kids or downgrade and have a family.
The new paid maternity leave will help while mum is at home immediately after the birth but then what? Halve the families income so mum (or dad) can stay home with the kids or pay expensive childcare fees, neither of which can be budgeted for if you need dual incomes to survive before the kids come.
I got made redundant but thanks to my six months of mojo money, it was plain sailing.
Spending about 60% of my income on home loans, and about to have my first kid. Too bad my wife can’t stay at home if she wants, like my mum was able to…..those were the days, eh?