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Blindsided by unexpected debt
By Tammy Barton

Blindfolded business womanSometimes money troubles happen when you least expect them. Everything seems to be going along just fine then the car breaks down, a relationship falls apart or someone loses their job. MyBudget clients, Rowena and Kelly, are good examples of the propensity of life to catch you by surprise. The couple found themselves in debt they didn't see coming, yet, in a little under two-and-a-half years they were able to turn their financial fortune around. They now own one investment property and are starting to shop for another.

Rowena, an administrator, and Kelly, an accountant, are country born and bred—they’re down-to-earth people who understand the value of a dollar. So when they suddenly found themselves in financial trouble, they felt entirely blindsided.

Rowena’s problem stemmed from a previous relationship. She had moved out of the house that she and her ex-partner had rented together. Her ex-partner promised to transfer the bills out of Rowena’s name, but that never happened. “As far as I knew, everything was fine. I wasn’t aware that she hadn’t paid the bills. Nothing had been forwarded to me until one day I was served with a court summons,” says Rowena. “It was the most humiliating, gut-wrenching feeling. I felt physically sick. I was in shock because I was unemployed at the time and I didn’t even know that I was in debt. It was like being smacked over the head with a two-by-four.”

Meanwhile, Kelly was unknowingly developing her own money problems. While travelling with her mum on a backpacking tour of Europe for three months, she stayed in regular contact with Rowena via her mobile phone. Most of the phone calls were made by Rowena from her prepaid mobile in Australia and Kelly gladly answered, neither of them understanding that Kelly was also being charged for the international portion of the calls (one of the commonly misunderstood pitfalls of international roaming). Thousands of dollars in phone charges were racked up without Kelly’s knowledge and, when Europe turned out to be more expensive than expected, Kelly’s credit card also got a workout.

The couple found themselves with a total debt of about $8,000. “It doesn’t matter what size a debt is,” Rowena tells me. “It’s about the feelings it generates. I think it was even more humiliating for Kelly because she’s an accountant.”

On the same day Rowena went to court, she also joined MyBudget. “I felt so embarrassed at first,” says Rowena, “but Joanne [a MyBudget staff member] was sensational. I felt so comfortable with her. Nothing was ever too much trouble. It turned out to be one of the best things I’ve ever done.”

When Kelly and Rowena joined MyBudget they committed to a tight weekly living allowance of $250 which needed to cover their combined food, cigarettes, clothes and petrol. I asked Rowena how difficult it was. “At the beginning I had never felt poorer—handing my money over to someone else to manage and living on so little, but our bills were paid quicker than we could keep up with. I kept being surprised by how quickly we were getting ahead and we actually lived well. We’ve probably never eaten better. We planned our meals, went to the butcher, only bought what we needed for the week and never let the car get empty [of petrol].”

Rowena and Kelly “graduated” from MyBudget in a little less than two-and-a-half years. As well as paying off all of their debts, they had also saved for a house deposit. The couple have since bought and renovated a property.

Today, Rowena and Kelly apply the skills and discipline they learned at MyBudget to create and manage their own budget. “Our habits and sensibleness is still there. We’re still cautious, but more relaxed these days. We’re still in the habit of meeting all of our commitments on pay day. On pay day we pay our bills, do the grocery shopping, fill up the car with petrol and put money into savings.” Rowena and Kelly are starting to look for their next house and have dreams of slowly getting into property investment. “We feel great about our financial future,” Rowena tells me. “Our dreams are definitely within reach.”

I’d like to thank Rowena and Kelly for sharing their story. Their situation highlights that debts can appear out of nowhere and accumulate quickly. It also highlights that tackling a money problem as fast as it arises is one of the keys to quickly reducing financial stress and the fastest way to get back on track. We congratulate Rowena and Kelly on their turnaround and wish them the very best for a bright financial future.

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