Sunthar

The numbers behind the stories

This is one of a new series of real stories highlighting how different cost-of-living pressures are playing out in the budgets of people coming to us for help.

About Sunthar

Sunthar is in his 40s and lives in the North West with his wife and 2 young children. Sunthar came to us for help with council tax and credit card debts in 2021. After making a budget plan with us, he and his wife paid back significant chunks of these debts over the following year.

Unfortunately, last year Sunthar suffered a knee injury which means he’s now unable to work. As a result their household income has fallen, and they now rely on Universal Credit and his wife’s income from working part-time. This drop in income, along with increased costs as inflation pushes prices up, has left Sunthar and his wife in a very difficult financial situation.

Inflationary pressures on a reduced budget

In June 2021, Sunthar and his wife were covering all their essential costs with a surplus of just under £350 at the end of each month, which they used to repay their existing debts.

Certain factors made this possible for Sunthar which others in a similar position might not be lucky enough to have. For example, Sunthar and his family live in a housing association property, which means their rent is below market averages for the area. If they had to rent a similar sized property in the private market, they would likely be paying around £500 extra each month in rent. This would be impossible within their budget.

Since Sunthar’s injury, the family’s income has fallen by around £400 per month. When we saw Sunthar again in November last year, he and his wife only had about £60 left each month after essential costs had been covered. And in the last few months, things have gotten worse. Like everyone else, Sunthar’s energy bill has risen in the last year. But over the winter months the amount they’ve had to spend on energy just to keep their home warm enough, has shot up by £22 per week.

Spotlight on prepayment meters

A few years ago Sunthar and his wife were transferred onto a prepayment meter when they fell behind with their energy bills, partly due to a faulty meter in their home.

Sunthar and his wife now have to pay for their energy via a more expensive prepayment meter — and their energy supplier also deducts credit from their account every time they top up to repay what they owe on their previous debt. In recent months these repayment deductions have risen from £2 per week to £10 per week.

“It’s really difficult as I’m currently unable to work so the only money coming in is from my wife’s part-time job and Universal Credit.

A couple of years ago we fell into debt with our energy supplier, partly because of affordability but also because there was some problem with the meter. The supplier put in a prepayment meter and we’re still struggling to repay the debt and top up so we can cook and heat our home. Energy is so expensive, it takes nearly half of my wife’s wages.

Once we pay the bills and buy food there’s nothing left. We’re not sure what we are going to do as the prices are just going up for everything and we don’t have any extra money coming in.”

Sunthar, January 2023

Tipping over into a negative budget

Sunthar and his wife are now in a negative budget as a result of essential costs rising and having no way to increase their income. This means that they have more going out in basic costs than money coming in to meet them. Unless they skip meals, go without heating and hot water, or cut back on other essential expenditure, they have no money left at the end of the month to make repayments for their existing debts — and are gaining new debt each month just by surviving.

This makes Sunthar and his wife especially vulnerable to any unexpected costs. By November last year, their yearly projected surplus income — what they would have leftover after paying for essentials — was only around £700, out of which they still needed to make repayments to their existing debts. This left them very little in the way of a cushion if any unexpected costs arose — like if their washing machine broke and they needed to replace it.

This year, their energy bills have increased further, wiping out this financial cushion and leaving them in a situation where they can’t even cover essential costs with the money they have coming in.

Undermining progress on debt repayments

Sunthar’s story highlights the knock-on effect that rising costs are having on the ability of those with existing debts to make repayments.

Despite being on a fixed income, Sunthar and his wife managed to pay off over £1,600 of credit card debt and council tax arrears after coming to see us for debt advice in 2021. However, by November 2022 their progress with these repayments had stalled — and they had a new debt to their energy company to pay off as well.

If Sunthar and his wife keep topping up their energy meter enough to pay off their energy debts and heat their home, then they’ll have to make reduced payments towards other bills to compensate, like rent. This would lead to money being owed to their housing association, and to keep up with repayments for this debt, they’d need to cut back elsewhere — effectively trapping them in a spiral of worsening debt.

Families facing impossible decisions

Sunthar’s family isn’t alone. Households with children typically spend more money across all types of essential expenditure. This is especially true for utility costs — as a household with children, it is much more difficult to go without heating and hot water (particularly when children are young like Sunthar’s).

Other outgoings are harder to cut down on with children and dependents. Parents like Sunthar and his wife are facing incredibly difficult choices about how to use their limited income, what to prioritise and what to sacrifice.

Faced with the same pressures as Sunthar, what would you do?