Often, it starts with something small: an illness, losing a shift at work, or a bill that’s more expensive than usual.
As time goes on and things don’t improve, it builds momentum. Relationships break down, homes are lost, and the situation quickly seems inescapable.
At the National Debt Helpline, a free service for people struggling to make ends meet, financial counsellors speak to people every day who are forced to decide between buying food and paying the rent.
While financial hardship is often the result of an unforeseen event, it’s hard not to blame yourself. The guilt, shame and stress can be catastrophic for people’s physical and mental health, says Sarah Brown-Shaw, a senior financial counsellor who works at the helpline.
“People are very private about money. It’s not something [most of us] have open discussions with friends and family about,” she says.
“We have people phoning us feeling seriously suicidal several times a week.”
Naomi Halpern and John Najjar have both been through financial hell. Their stories show that, however desperate the situation, you can make it out the other side.
‘I was absolutely traumatised and terrified’
Naomi Halpern realised something was wrong when her phone kept ringing.
It was 2007, in the early days of the global financial crisis. She was away on a conference tour, and banks and debt collectors were after her money.
Years earlier, on the advice of her financial adviser, she had borrowed money to get into the share market, as well as managed schemes that invested in timber and agricultural plantations.
She had told the adviser she only wanted to invest in low-risk, conservative products. Despite her request, everything collapsed.
“He would present documents for me to sign, fill in my details, and say, ‘Sign here’,” she says.
“I’d been with him for so many years — I trusted him.”
It wasn’t until she talked to another accountant that she realised everything was unravelling and she was facing a $640,000 debt.
She was told: “Essentially, ‘You are stuffed — you are in a chasm you will not be able to get out of’.”
“I had no idea,” she says. “I was absolutely traumatised and terrified.”
Naomi has not been able to recover a cent.
About a decade later, she is still picking up the pieces. She was lucky not to lose her house, which was re-mortgaged to consolidate her debts.
In 2011, after three tough years spent trying to get her life back on track, Naomi’s father died unexpectedly. Six months later, her dog died.
“That was really rock bottom,” she says.
What helped and what didn’t
In the early days of her crisis, Naomi says she went into survival mode, working frantically to keep her house. As time went on, she dealt with feelings of humiliation and anger.
Naomi channelled her anger into activism, becoming a spokeswoman for the scores of victims of her financial adviser, and advocating for justice and awareness of financial misconduct.
She has now appeared before four Senate inquiries, lobbied politicians and appeared in countless newspaper articles and television reports.
Through the ups and down, Naomi says it was important to reach out for support — and, at times, to take some time out.
Other things that helped were her work, which was energising and important, and talking to the people in her life who listened.
“Just find other people who will be there for you. Don’t waste time and energy on people who are going to try to blame you.”
One thing that has changed throughout the ordeal is Naomi’s confidence and sense of self.
“Dealing with the self-doubt, the anxiety and all of the shame — working through that, I think I probably am stronger and clearer and more focused,” she says.
“I’m not going to take shit from anyone.
“It’s also about having to find a way to come to terms with the fact that my financial future is never going to be how I thought it was going to be, and how it should have been if I had been given appropriate advice.
“In terms of retirement, I really don’t think that’s an option for me anymore. I’ll be working until I drop.”
- Be sceptical of financial advisers. Some are ethical; others are in it for themselves
- Ask someone you trust to review any documents you’re asked to sign
- Find the people who’ll be there for you
- Channel your anger
- Don’t blame yourself
‘Four years went by and I hadn’t paid anything’
A few years ago, John Najjar got a phone call from his ex-wife. They still had a joint bank account, and she noticed he was in trouble.
“She said, ‘You know, you’ve got about $20,000 left before the bank takes back the house’,” he says.
After the separation, John bought a block of land in country Victoria, using a line of credit secured by his house.
He had been dealing with depression, and although he’d been working, he hadn’t been making repayments.
“When you’re depressed, you can lose track of time. I think about four years went by, and I hadn’t paid anything,” he says.
In the end, John — who is a carpenter and furniture maker by trade — rushed to fix up his house and put it on the market. Luckily, the sale was enough to cover the debt. But now, aged in his mid-50s, John is renting and has little savings or superannuation to fall back on.
The missed repayments and interest on the line of credit ended up costing him $400,000 — more than what he paid for the property.
What helped and what didn’t
During the darkest moments of his depression, John shut himself off. Over time, by focusing on things that brought him happiness — like his work and his hobbies — things started to gradually improve.
One of the things that helped was talking to people with similar experiences. But it was never easy.
“Finding someone on that level, who you can have a conversation with without them being judgemental or aggressive, is difficult,” he says.
John plays that role himself now for some of his teammates at a local football club. When he sees someone struggling, he offers to help. He has found that helping others helps him, too.
“When I see people who are depressed, I can talk to them because I can see it,” he says.
“It helps them. There’s a lot of guys at football in the same situation, struggling with money.”
Despite the situation he finds himself in, John remains positive about the future, and doesn’t have any regrets.
But money — or the lack of it — plays a more central part in his life.
“I always thought that health was the most important thing. But that’s changed now. You know what’s number one? Money,” he says.
“A few years ago, I wouldn’t have said that. I would have said health or love. But it’s money. I hate to say it, but it’s a fact.”
- Focus on the things that make you happy
- Talk to people who’ll listen
- Join a team or a club
- Think about using your experience to help others