SINGAPORE – Debt and financial woes have always weighed Mr Wandy, 48, down. 

His family used to owe about $1,500 in utility arrears, and his wife had to borrow “small sums” of money from family and friends to help them get by.

But by the end of October, he would have cleared his utility arrears, with the help of the Methodist Welfare Services (MWS), a social service agency.

Since April, he has been repaying $100 a month to settle his utility arrears, with the MWS matching it with $200 each time. 

“It’s a relief to get my debt cleared. I’m not so stressed now, and it’s helping my mental health,” said Mr Wandy, who is currently unemployed and declined to reveal his full name.

“Before this, I was in a mess. Now, I can start to think about my future.”

He suffers from a mental illness and a degenerative spine condition, which causes him a lot of pain. His wife earns less than $2,000 a month working in a coffee chain.

He does not want to ask their four children, aged between 18 and 25, for money as they have their own families to support, among other reasons, he said.

So the MWS Family Development Programme, which started in 2016, was a lifeline for him.

The programme “alleviates the strains of poverty” by helping families get out of debt and build up savings for a rainy day, said Ms Annie Goh, the programme’s manager.

Among other criteria, applicants must have a per capita gross income of $850 or less a month.

For every dollar of debt repaid by a beneficiary under this programme, the MWS matches it with $2 and this is capped at $200 per month.

The programme covers only debts on daily living necessities, such as public housing rental, utilities and telecommunications arrears. It does not clear debt from licensed moneylenders or loan sharks.

After clearing their debt, beneficiaries can start saving, and each dollar they save will be matched with $2 by the MWS. They graduate from the programme once they have saved $10,000.

More than 700 families, who had debts ranging from $500 to $5,000, have benefited from the programme, which has disbursed almost $3 million so far.

The MWS has since partnered other social service agencies (SSAs), such as Daughters of Tomorrow, to extend its debt clearance programme to other SSAs’ beneficiaries.

Ms Goh said: “Debt clearance not only helps the families financially, it may also help them in other areas of their lives and help them escape a cycle of poverty that extends to the next generation.”

Tackling inequality and boosting social mobility were a key focus of the Forward Singapore report that was unveiled on Friday.

A new approach to empower low-income families under the Community Link (ComLink) scheme to improve their lives was highlighted in the report.

Under ComLink, low-income families with children living in highly subsidised HDB rental flats are given comprehensive and coordinated help ranging from financial and job assistance to their children’s development.

The enhanced ComLink scheme, called ComLink+, ties measures such as financial incentives to progress these families make towards goals such as staying employed, saving up to buy their own home or ensuring their children attend pre-school regularly.

This comes after Deputy Prime Minister Lawrence Wong said while Singapore had made progress on reducing income inequality in the past decade, there are early signs that social stratification is becoming more entrenched.

Social workers say that debt is one factor that keeps families trapped in poverty, and the ill effects of debt-related woes may spill over to the next generation.

They point out that a Singapore study published in 2019 found that chronic debt creates severe anxiety and affects a person’s ability to think clearly and make good decisions.

Dr Ong Qiyan, one of the study’s researchers, told The Straits Times then: “Even if you have the same ability as others, you will face more difficulties in achieving your potential.

“Being poor may make you more likely to turn down a training opportunity, avoid acquiring new skills or trying new innovations – all because there is too much on your mind.”

Based on interviews with almost 200 low-income families in debt, the researchers found that it is more fruitful to extend aid at an earlier stage, so they do not fall into chronic debt.

Dr Ong, an adjunct senior research fellow at the National University of Singapore’s Social Service Research Centre, added: “If we spend the money earlier, their ability to make good decisions will still be relatively intact and the same amount of money might allow them to get out of trouble for good.”

Social workers say many low-income families borrow from family or friends. But some turn to licensed moneylenders or even loan sharks – and this keeps them mired in debt.

There is a myriad of reasons why low-income families end up in debt, said those in the social service sector.

Some do not earn enough to pay for necessities, said Mr Christian Chao, chief executive of Care Corner Singapore, a social service agency. This is because they may work part time or in gig economy jobs that do not give them a stable income.

He said: “It gets worse if they fall sick or another adverse event happens, this can be a very big blow to them.”

In 2015, Care Corner started its Jubilee Fund Programme, which gave eligible families a one-time sum of $2,000 to help them clear their debts, such as utilities arrears, hospital bills and housing loans. 

Beneficiaries must be willing to address other issues they face, such as working towards getting a more permanent job, Mr Chao said.

A total of 338 families were on the programme, which ended in 2019 when the $650,000 raised for it was fully disbursed.

Mr Wandy, who served an 11-year sentence for drug trafficking before he was released from jail in 2021, is determined to turn over a new leaf.

The MWS Family Service Centre – Tampines is now sponsoring his driving lessons, which cost about $3,000, so that he can find work as a driver.

He and his wife also hope to start saving $100 a month, to benefit from the MWS programme’s savings matching component.

Currently, the couple have only a few hundred dollars in savings, he said, and they are ill-prepared for retirement. 

Ms Goh said: “Many families have shared how the MWS Family Development Programme has helped them ease their anxiety over their financial situation, appreciate the merits of better managing their finances and see the possibility of a better future for their families.”