Online chats, favoured by younger people, have hit record levels, climbing 40 per cent over the past year.
Tania Clarke, the Consumer Action Law Centre’s director of policy and campaigns, said housing costs were the single largest issue.
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She said people were struggling to pay their mortgage or rent, forcing many to seek help for the first time.
“A couple of years ago, the people we were hearing from had something go wrong, like they’d lost their job and there had been a death or something like that,” she said.
“Interest rates and the cost of living have just caught more and more people, and their incomes have just not kept up. More and more people are working two jobs, they’re cutting spending but can’t keep up.
“We’re now seeing low- and middle-income people, they’ve reached the end of the road and they need help.”
Previously, a person unable to pay their mortgage would sell their home and return to the rental market. But counsellors are finding the surge in rents has closed off this option.
Apart from housing costs, callers to the debt helpline report a growing number of problems paying council rates, utility bills and credit card or buy now, pay later debts. There has also been a lift in people, usually small business operators, struggling to pay tax office debts.
Over the past year, the number of people holding down more than one job has climbed by 30,000 to a record 974,000.
The biggest increases in average mortgages over the past year have been in Queensland, up by 12 per cent or $63,300, and Western Australia (up 15 per cent or $68,000). Calls to the debt helpline are growing fastest in these states.
Australians are cutting their discretionary spending and focusing only on essentials as cost of living bites.Credit: Trevor Collens
Australian Bureau of Statistics data shows households slashing expenditure, often on necessities, to deal with the cost pressures.
Spending by NSW households fell by 0.6 per cent in the year to the end of May, in Victoria and Western Australia it dropped by 0.3 per cent and in the ACT it slumped by 3 per cent.
NSW households have slashed their spending on discretionary goods and services by 3 per cent while Victorian households have cut it by 2.1 per cent.
A spokesperson for Treasurer Jim Chalmers said the stage 3 tax cuts, its $300 energy relief payment, reduced medicine prices and paid parental leave were aimed at easing stress on households.
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“We know people are doing it tough and being hammered by cost of living pressures, which is why we’re rolling out cost of living help from this month,” they told this masthead.
But shadow treasurer Angus Taylor said Australians were hurting because of the government’s economic failures.
“Families are in recession, we’re seeing record business insolvencies and a record number of people working multiple jobs to make ends meet,” he said.
The National Debt Helpline can be contacted on 1800 007007.
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