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Research sheds more light on Singaporeans in chronic debt

Jun 2015    

The research study also revealed that, contrary to popular belief, these families in chronic debt are primarily intact families with four or five family members in the household, making up 69 per cent of the programme participants.

 

A significant majority of Singaporeans in chronic debt have $100 or less in savings, a research study by Methodist Welfare Services (MWS) found out. The study aimed to understand the impact of the Family Development Programme (FDP) on its beneficiaries. FDP helps families in chronic debt reduce their debt by doing a dollar-fordollar matching for the amounts that the families pay to reduce their arrears.

 

As part of the research, 72 clients from MWS’ three family service centres (FSCs), namely Covenant, Daybreak and Tampines, were profiled.

 

Other than the low level of savings which covered 90 per cent of the participants, the profiling also revealed that a majority of these arrears – 94 per cent – were current consumption debts dated back for more than a year.

 

These are “worrying findings”, said Mrs Cindy Ng-Tay, Assistant Director of Covenant FSC, who was part of the core research team. “They won’t have that cushion against crises such as unexpected loss of income or unexpected debts.”

 

The research study also revealed that, contrary to popular belief, these families in chronic debt are primarily intact families with four or five family members in the household, making up 69 per cent of the programme participants.

 

They are also employed. The majority of the participants – 61 per cent – have either a full-time or part-time job. The programme was piloted for a year to help families in chronic debt increase their net worth by reducing their debts and building their assets.

 

The amount of money these families pay towards their arrears will be matched by MWS. On top of the matching, they are also taught financial skills such as budgeting.

 

After the year-long pilot programme, the total arrears of the families that were helped went down, and their average net worth increased by nearly $2,500. The 34 families which received debt co-payments reduced their total arrears by about $81,000, from $256,000 originally.

 

In contrast, the control group of the other 34 families that did not receive debt co-payments increased their arrears, while their average net worth increased by just over $500. Their total arrears increased by $18,000, from $276,000 originally.

 

The bulk of the arrears were for activities of daily living, such as utilities, service and conservancy, rent, telephone bills and furniture hire-purchase.

 

Despite the amount reduced, more research needs to be done to determine statistical significance.

 

Mrs Jenny Bong, MWS’ Group Executive Director, said: “We embarked on this journey to better understand the people we are helping, and to learn exactly what worked, and what did not. The insights we get will help MWS recalibrate and enhance our debt management programme to help people struggling with chronic debt.

 

“Currently, there is no concrete data available on the profile of poverty and debt. With a complex problem like chronic debt, it is important to understand the triggers and the efficacy of current strategies before we can begin to see significant results from our interventions,” she noted.

 

The Family Development Programme is one component of MWS’ integrated debt management programme to help clients tackle chronic debt.

 

As part of the Golden Jubilee of Singapore’s Independence (SG50), and the 130th anniversary of The Methodist Church in Singapore (MCS 130), MWS also launched the ‘Getting Out Of Debt’ (GOOD) Programme, which will help 850 low-income families clear an average of $2,000 of chronic debt each. The initiative aims to give these families a fresh start so that they can take concrete steps out of poverty.

 

DONATE – to help give a fresh start to families trapped in chronic debt – visit www.mws.org.sg/donate

SIGN UP – for MWS’ Wheels for GOOD event (refer P2 of this issue) to raise funds for the GOOD programme.

Chuang Bing Han is Web Editor (Communications and Fundraising) at Methodist Welfare Services.

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