Andrew Dickens: What can we do to ease debt and the cost of living?

Household budgets remain under pressure from rising costs, a credit expert says. 

Centrix’s latest credit indicator shows consumer arrears fell by 7,000 in June to 478,000, representing 12.36% of the credit-active population. 

But Centrix managing director Keith McLaughlin said there has been an increase in pressure on household budgets: “The slight year-on-year improvement in arrears we’ve observed so far this year has plateaued … and that just seems to be sticky." 

“Consumers have cut back on discretionary spending … and were managing their non-discretionary [spending] quite nicely." 

But he says there's a flow through of the increase in things like insurance and rates. 79% of mortgages due to be repriced over the next 12 months, many borrowers may benefit from lower rates. 

Increases in rates, insurance, and power does make it very hard to get the benefit out of those reductions in interest rates. 

Looking for the positive, the number of accounts reported in financial hardship in June was 14,450, down 550 from the prior month, Centrix said. 

But year on year, financial hardships increased 7.1%. 

We've plateaued in an uncomfortable place, so the question is what could we do to make things better? 

Insurance is off the table and councils have had the hard word to decrease rates, but what else is there? 

My family rarely buys takeaway coffees these days, but I fear all I'm doing is hurting small businesses. We've had an audit of streaming and subscription services, but that means we have less news sources in the house and less entertainment. 

I bought an EV 18 months ago and that has radically lessened my petrol bill, even with the road user charges. There's any number of household hacks to stretch the household budget, but what can we do as a country? 

Australia has just written off $16 billion in student loans. Albanese says getting an education shouldn't mean a lifetime of debt. Paying off student loans does curtail the young, which is why they're buying houses and starting families later and later. 

Is that something we could do here? If not a full amnesty, then perhaps some partial easement that makes things easier. 

My 29 year old son is just two pay packets away from wiping off his student debt from two degrees in environmental management, which is what he does for a job. He's counting down to liberation day and to finally have money to invest in his future rather than his past. 

Now we're poor compared to Australia, and governments are dependent on the repaying of that debt to fund the country, and the liability is viewed as a positive on our balance sheet.  But it's mythical money – could this help the young trying to start the sort of lives that previous generations who had no debt enjoyed? 

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Episode Transcript

Speaker 1 (00:06):
You're listening to the Kerry Wood of Morning's podcast from
News Talks, he'd.

Speaker 2 (00:10):
Be household budgets are still under pressure from rising costs.
This was after the Centrix released their latest credit indicator.
It shows that consumer arears fell by seven thousand in June.
That's good news, but the number is still big, four
hundred and seventy eight thousand people. That is twelve point

(00:32):
four percent of the entire credit active population in areas
right now. The managing director, Keith mcgloughlin has said that
there's been an increase in pressure on household budgets. However,
there is a slight year on year improvement in areas,
so that's good, but it's plateaued, it's not going down,

(00:54):
and it all seems a bit sticky. And he says
that it's obvious that consumers have cut back on discretionary
spending and we're also managing our non discretion spending nicely.
That's things like rates and insurance. I mean, you can't
get away from those, can you. So you have to
figure out how to get through them. He says that

(01:16):
there is going to be some benefit from the repricing
of mortgages. He says it's seventy nine percent of mortgages
due to be repriced over the next twelve months. And
of course we know the interest rates are lower, so bomb, hey,
you got some more money in your pocket. Don't tell
me I'm only negative. There's some positive news for you
right there. However, there will still be increases in rates, insurance,

(01:40):
and power, and it makes it very hard to get
the benefit out of those reductions and interest rates. But
don't let that spoil the story, Dickins. Keep looking for
the positive. The number of accounts reported in financial hardship
in June fourteen four hundred and fifty. That is down
five hundred and fifty from the prior month, So we
had less people in hardship in June than we had
in May. That's good news. However, look at June last year.

(02:02):
Look at the year on year financial hardships increased. Why
seven point one? So how are you feeling about it?
From this, I see that we've plateaued in what is
still an uncomfortable place. So if you're a household, you're thinking,
how can I make things better? How can I get by?

(02:24):
How can I afford all? This insurance is off the table?
We can't touch that. Counsels have had the hard word
to decrease rates, but you know, will they can they?
My question is what else is there? There's us a
little rats of my stuff. My family obviously rarely buys
takeaway coffees these days, but every time I do that,
I think, well, I'm hurting a small business. Aren't I

(02:45):
helping my budget and hurting somebody else's budget? Is that fair?
My household has started an audit of streaming and subscription services,
like to news sites and of course to entertainment sites.
But that means we're going to have less news in
the house, and that's not good because I make my
money by talking about the news. So there's a bit

(03:05):
of an argument there, and obviously there'll be less entertainment.
It's nothing worse than going along to the water cooler
and everybody's talking about a great show on a service
that you don't have. Hands up. Those who've never had
Apple Plus Hello, that's me. People start talking to you
about Severn, so you go, huh anyway, but you do
it because you know that times are tight. I bought

(03:27):
an ev eighteen months ago, not because I'm a green warrior,
because I was worrying about my petrol bill. I can
tell you it worked radically less than my petrol bill.
Even when you put the road user changes on what's
going to happen to the battery and how long this
car is going to last? I don't know, but right now,
in a hard time, I am saving hundreds and hundreds

(03:47):
of dollars. Now, there's any number of household hacks to
stretch the household budget, and I love to hear yours,
particularly if it's one we haven't heard before. I don't
think we need another caller floating up saying it. I
grow all my own vengies. Good on you, and you
should always in good times end bad. But if you've

(04:08):
got a new one, then you've just found love to
hear from you. The number is eight hundred and eighty
ten eighty. You can text. But why. There's also a
question about what we can do as a country. So
we're looking around, going where can we save some costs
and where can we make you know, the cost of
living crisis easier. And whenever governments start doing that, they start,

(04:31):
you know, hunting around for all sorts of coins down
the back of the couch. And sometimes they find these
these coins and then they don't realize the unintended consequences.
So this might be one. But at the same time
we can discuss it. Australia has just written off sixteen
billion dollars worth of student loans. Albanezy says giddy an

(04:52):
education shouldn't mean a lifetime of debt, and you have
to say that paying off these student loans does curtail
the young, which is why they're buying houses and starting
families later. But I have to ask if it's good

(05:14):
enough for Australia. Is it good enough here? Could we
do a full amnesty? I don't think so, I mean,
can we afford it? Could we do some sort of
partial easement that makes things easier in my house? Here
we go, once again bringing it down to the immediate.
I've got a twenty nine year old son. He's got
two degrees environmental management and that's what he does for

(05:35):
a job. He is now just two pay packets away
from wiping off his student debt. How good is that
at the age of twenty nine. And he knows that
then all that money that goes out of his pay
packet each fortnite goes to it that's going to come
to him and he's going to have the money to
be able to afford a better life, whether it's getting
into a better flat, whether it's about buying a better

(05:56):
buying a house his first house, whether it's buying a
better car, whether it's all sorts of things. He's going
to feel a little bit richer in a moment of
hard times. So sixteen billion dollars worth of student loans,
I should do some research soon and find out how

(06:17):
big our book is on student loans in New Zealand.
It's quite big. And I do realize we are poor
compared to Australia, and governments are dependent on the repaying
of that student debt to help fund the country. And
of course the student debt is viewed by the government
as a positive on their balance sheet. It's money they're

(06:37):
expecting to get in the hand later on. But at
the same time it's kind of mythical money because it
hasn't been paid back yet. And as I said at
the beginning, and as Albanasi has said as well, this
could help the young trying to start the sort of
lives that previous generations who had no debt after their
study enjoyed. That's you and I

Speaker 1 (06:58):
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