"Only about 10 % Of Seniors Who Face Increased Housing Prices Are Taking Advantage of State Aid"Published: Feb 9, 2023 Reading time: 7 minutes
Prozeny.cz magazine published an interview with PIN's financial crisis expert Daniel Hůle. His debt team can you advise on a variety of topics, ranging from things like how best to avoid a foreclosure and in what areas you can save most to why you might actually want to consider a loan and what help you can expect from the state regarding outstanding debt. You can read translated excerpts from original Czech interview below.
First off, can you explain what exactly your job entails and what kind of help you can offer people?
Primarily, at People in Need, I lead a team of people who deal with debt, debt relief and the issue of debt counselling in general. And once a week, I am available on our help line who targets people who can arrange most things themselves but maybe just need a little advice or guidance. Then, we also offer “free admission” to people where they can come by, and we can have a 45-minute chat with them where we do a rapid analysis of their situation and check if they have any approaching deadlines. If they don’t have any encroaching deadlines, but do need long-term assistance, we put their names on a waiting list and we come back to them when it’s their turn.
You probably always have enough work, and I expect now that prices are increasing you have even more.
Well actually, it’s more that the topics are just changing. It really started during COVID when a lot of self-employed people began contacting us at much higher rate than they had been previously. Around the same time, nearly half of our clients become self-employed because they simply lost their contracts with their companies and/or started having to take out loans for things they could no longer repay.
And now, after COVID?
After COVID, self-employed people have begun to be replaced by seniors who have never had any debts before, but suddenly do because of the rising energy prices.
So, if I understand you correctly, it seems that people who hadn’t had any major debt or financial issues previously are suddenly now turning to you for help?
Yes, the energy crisis has kind of worked as a catalyst in terms of propelling the topic of debt out into the open. Suddenly, mainstream media is also interested. People are beginning to realize that they too can get into trouble, and it’s not only irresponsible or disorganized people who have to watch out. Since even people who maybe a year ago could not even imagine dealing with something like a foreclosure now know that it could affect them and put them in a difficult situation.
So even "orderly" people can find themselves affected by this kind of crisis?
Yes, but not usually on such a huge scale. When you're educated, you have a job, you may live an orderly life, without debts, but if you suddenly you lose your legs in an accident, everything can change all at once. You could lose your job, the cost of your treatment and aid might increase and you may find yourself in real financial trouble. This does happen from time to time. It's seen as being such a rare occurrence that most people don't accept that it could easily happen to them tomorrow. However, it reinforces this mistaken idea that it’s only the irresponsible who go into debt, and the responsible are safe. A big crisis can happen to anyone.
"... just at the end of the year these fixed rates that ČEZ had ended for a nearly half a million households and electricity prices increased for them by 200-300%, which is a really brutal increase! And this is just for people who thought they were being cautious."
So nowadays do you think society has wised up and realized that no one is ever completely safe?
For sure, yes. Back in August or September, there was this view that wise people had fixed their energy prices, and if someone was stupid and doesn't have it fixed, they were now paying for it. But guess what? Those fixed rates usually only last for between 1-3 years, so just at the end of the year these fixed rates that ČEZ had ended for a nearly half a million households and electricity prices increased for them by 200-300%, which is a really brutal increase! And this is just for people who thought they were being cautious.
Nevertheless, there are groups of people who are really on the verge of poverty and are in even greater danger.
Definitely, and now those groups are probably largely made up of seniors. These people live in properties which are not always very well designed, typically older family houses that too big for them because they raised their children there, but now the children have left. These houses also tend to be uninsulated and lose a lot of energy, so these people simply cannot handle the current increase in energy prices.
So the rise in energy prices is the most painful?
I would say so. Because the increase in food price is more solvable. You can always buy on sale or just buy bare necessities. It's uncomfortable, sure, but you can always just buy a roll with a little something on top. But you can’t always do so much about your housing, especially if you're a senior or have already lived somewhere for over 50 years, raised your children there, spent time with your spouse there...
But even energy is something that can be saved, like many politicians suggest, can’t it?
To be honest, for the majority of older people, it is unrealistic to expect them to take such drastic measures, such as to install better housing insulation It’s also really hard to change suppliers, so they really only can stop the heating entirely or significantly reduce it. But then mold grows at home, and at the same time, it is physically much more difficult for old people to adapt to any temperature change.
So what should we do about it?
I'm going to play the devil's advocate, but I'll go back to lowering the temperature of heat if you have to. It seems that most seniors are used to frugally and modestly and the last few pension valorizations have seemed to help out with food price increases but not energy price increases. I mean, I wouldn’t do it all at once, but gradually reducing the temperature in your home is worth considering. For example, if the temperature is currently 23 °C, it makes sense to gradually reduce it. Just one degree less than save 8% of the energy used, and if you reduce the temperature by 3°C, you can save about 25% as a result. And another thing is to really use the help offered by the state.
But don't people already do that?
Again, I’ll stick with what I know about seniors. The state offers them assistance which is, on average, a little over CZK 4,000 (around €170) a month, which is really a lot. But only about 10% of them take advantage of this. Either they don't know about it, or they're embarrassed to ask for it, or they simply don’t know how to get it. Another thing is that the state is taking major steps to modernize in the field of online applications, but seniors are more dependent on the offline world and sometimes things online just aren't as clear. If they have to go to all these places, try to understand these complex forms, take the time to them properly, it’s exhausting. This is one of the things we now focus much more on in our program and exactly what we help seniors with…
You can read the rest of the original interview between Lucie Müllerová and Daniel Hůle at prozeny.cz