Families earning €40,000 a year fall into poverty trap
Middle income families, many on two salaries, are reaching out for help in huge numbers, according to agencies dealing with poverty.
More than a third of new clients contacting the Money Advice and Budgets Service (MABS) are from households with incomes ranging between €30,000 and €40,000.
When the MABS service - financed by the Department of Social and Family Affairs - started 13 years ago, more than 90% of clients seeking help were on social welfare.
Michael Culloty, spokesman for MABS, said yesterday: “The breakdown now is that 34% of new clients come from middle income homes.”
“Young couples are going into heavy borrowings and if something goes wrong such as overtime being curtailed, they can face huge problems.”
The head of the Combat Poverty Agency said that household income is no longer a poverty indicator.
Helen Johnston said: “Statistics show that few people in employment are at risk of poverty. But this is misleading as it shows only one side of a coin and takes into account income and not outlay each week.”
She said the ‘new poor’ were under pressure financially because of increased transport and child care costs and high mortgage payments.
The big shift in MABS client profile has come about through a number of factors:
* when one person in a dual income household is forced out of work;
* medical costs due to illness;
* easy access to credit; and
* huge childcare costs - which average at €180 per week per child.
Last week, the Central Bank warned the continued growth in personal debt, particularly mortgages, was a cause for concern. It said borrowers needed to be more cautious before taking on extra debt, while lenders also needed to show restraint when dealing with loan applications.
The average monthly repayment on a 20-year mortgage on a €250,000 house is €1,400.
