personal finance

Case study: how anyone can fall into debt despite working

Paula Walton reached her lowest ebb when she needed to use her local food bank in Northampton.

The 46-year-old works as an administrator at Nationwide building society, earning a salary above the minimum wage, yet still struggled to make ends meet after her relationship ended. She sank into debt to keep putting food on the table for her children, which forced her to visit the food bank two years ago.

Walton is one of many who has been caught at the rough end of the problems identified by the Commission on economic justice report – low pay, rising living costs and increasing debt – and views herself as an example of how anyone can fall on hard times.

According to the report, most of the families living in poverty across modern Britain are also in work. Walton has three children and a stepdaughter from her new relationship. Weak wage growth, cuts to benefits and rising living costs have increased the chances of experiencing hardship in modern Britain. Food bank visits are rising, with more than 1.3 million three-day emergency parcels given to people in crisis last year.

Walton says her job is better than many could have in Britain today, especially those on zero-hours contracts, which do not guarantee a set number of hours of work. But she said her pay had still not increased enough to match the rising cost of living.

“The price of things has risen tenfold,” she says. “When I was a kid gas and electricity wasn’t too much but now it’s the main bill. Everything is going up apart from wages.”

Despite a good job, her problems with debt began spiralling out of control when she was diagnosed with breast cancer two years ago, which forced her to take sick leave from work. With lower levels of income, she took out payday loans to keep going, while the visits to the food bank began just as she was undergoing chemotherapy.

“I was under the blind impression that if I just kept going, it would all work out. I was robbing Peter to pay Paul. But that’s not what happens. Something always happens. The fridge breaks, or the car breaks,” she said.

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Having paid taxes for more than two decades, she thought benefits might provide a safety net during her treatment for cancer and time off work. Yet her overall income was effectively halved, making her money problems much worse.

She turned to the charity Christians Against Poverty for help with her debt problems and to get her life back on track. Having returned to work late last year, the charity and local church then helped her to marry her new partner, Calum, a month ago, while she continues to repay her debts with their support.


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