Kiwis Turning Their Backs On Debt

Kiwis are turning their backs on non-mortgage debt and understand the benefits of paying it off as quickly as possible, the results of a new survey have found.

The Financial Behaviour Index released by the Commission for Financial Literacy and Retirement Income tracks changes in New Zealanders’ financial behaviours.

The latest Index found more Kiwis are paying off their retail purchase agreements in full during the interest-free period, and paying more off their personal loan than required, compared with 12 months ago. Kiwis are also increasingly spending less that they earn.

The findings were:
· 92% of Kiwis paid off their purchase agreements within interest-free period (up from 85% in November 2011)
· 39% of Kiwis paid more off their personal loan than required (up from 30% in November 2011)
· 54% of Kiwis say they earned more than they spent over the last three months (up from 50% in November 2011)

Retirement Commissioner Diana Crossan says the results of the survey are pleasing and is hopeful it is the start of what will become a permanent attitude towards paying down debt.

“Whether times are good or bad, paying off debt should be a priority – especially when it is dumb debt - that is, high interest debt that could have been avoided.

“It’s great that people see the benefit of paying off debt within interest-free periods because paying interest really is a waste of hard-earned money. If you can avoid paying interest you’re so much better off. And it’s a good rule of thumb to always pay more off your debts than required so you can pay your debts off faster.

“The fact that more Kiwis are spending less than they earn is fantastic. It’s fundamental to getting ahead financially. If you’re spending more than you earn you’re always going to be moving backwards rather than forward. I’d urge everyone to live in the black and spend less than they earn.”

Ms Crossan says the tough economic times of the past few years have had a silver lining.

“There seems to be a much healthier attitude among Kiwis towards dumb debt. More people understand that it’s not a good idea to buy things that decrease in value. It’s important that as our economy recovers we maintain the good habits we’re starting to adopt,” she says.

Colmar Brunton interviewed 1,001 New Zealanders aged 18 years or over online from 31 October to 19 November 2012.

View the full Financial Behaviour Index here:
http://www.cflri.org.nz/sites/default/files/docs/FL-Financial-Behaviour-Index-Nov-2012.pdf
ENDS

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