Posts Tagged ‘debt’

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Families Commissioner on how to beat debt

July 27, 2009

Frugal reader Jack reminded me about this story, which was front page news on today’s DomPost:

Families Commissioner Gregory Fortuin said the research, to be issued in full in September, indicated that household debt could be reduced by a fifth if three characteristics in the New Zealand psyche could be dealt with.

The main behaviours driving debt were the belief that life and financial management was out of your control; having aspirations based on comparisons with other people; and a tendency for impulsive buying.

The commission is now looking at what can be achieved by attending to those factors, which it identified last year.

The study also identified that a quarter of households were not keeping up with mortgage repayments and bills. More than one in five were selling possessions and turning to family for financial help, and a third were getting some form of community financial support.

DEBT BUSTERS

– Regain control of your spending

– Don’t spend to keep up with others

– Don’t make impulse buys

On the one hand, the advice seems like common sense to me, but on the other, clearly it can’t be that common. And as we all know, these things are easy to say, but full of challenges if you want to practise them consistently.

Regaining control of your spending means that you have to start recording what you spend diligently, and using the results to construct a budget.

Not spending to keep up with others means developing a thick hide, learning to make the cheap look good, and resisting the pressures of your peers and a lot of clever marketing.

Avoiding impulse buys seems the simplest to me, but even then, there are days when it’s going to be difficult to get along without your wallet.

I think we might rustle up a post or several on these points in coming days.

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Usury

December 20, 2008

This blog is not given to pronouncing on policy or public affairs. But yesterday I saw something that made my blood pressure rise.

This makes me very angry

I’m afraid you can’t really see it in this picture (cameraphone across the street), but the advertised interest rate is 8% per week.

If you borrow one dollar at 8% per week, and don’t pay it all year, you will owe $59 by the end of the year. Which is to say this is about 6000% pa.

This is loan sharking, plain and simple, calculated to wipe out the very little resources of our most vulnerable citizens.

Whether this operation’s clientele is genuinely desperate or simply acutely ignorant about money hardly matters—if there are enough customers around to sustain this business, our society has failed.

As an aside, I’m pretty sure it’s illegal to advertise an interest rate in anything other than annual terms. Next time I’m in the area I’m going to gather enough details to complain to the appropriate authorities.

Update: Jack points out in comments that this is a pawn operation, which in many respects makes it rather better. See below.