Sorted Wiki Moni 2021 – Just wondering what you’re wondering
Talking about money matters can be a little difficult for many people, for many reasons. In New Zealand, parents commonly teach their children that it is impolite to talk about money, and if you don’t have as much as your school mates, money talk could be embarrassing.
Once we have the freedom to earn and spend money, our response to financial independence can be anything from exciting to daunting, depending on our money personality. We are bombarded with advertising about interest-free shopping deals, loans that are as easy to get as buying takeaways and offers for credit cards with ever increasing credit limits.
If we are taught not to ask money questions – how are we going to work out whether all these debt deals are good or bad for our personal situation?
Ask the Debtfix Crew
Sorted Money Week is from 9 to 15 August 2021 but year round Debtfix is here to answer your debt questions. The Crew loves it when people ask what they think might be a silly question.
As the saying goes: the only dumb question is the one you don’t ask.
In the lead up to Sorted Wiki Moni 2021 – Just wondering what you’re wondering the Crew has thought of common questions people ask and provided answers and money tips for these.
If businesses I owe money to are hounding me but I can’t afford to eat because of my debts. What can I do?
It’s really tempting to ignore all those emails and phone calls but the sooner you respond to businesses you owe money to – the sooner you can work out a plan to repay problem debts the better. The people hounding you for money would rather know what your situation is and it is often possible to make a hardship application to change the payment schedule. You’ll need a budget – so get your financial information sorted first.
How can I find out if I’m on the cheapest power plan?
Give your power provider a call to find out if you are on the cheapest plan currently available for your type of power use. They often have new price plans that may be better than the one you are on. Some power companies have cheaper rates at off-peak times, like throughout the night, and it might be possible for you to do things like run the washing machine then. Be careful though if you use a lot of power during the day as the peak daytime rate will be high. PowerSwitch is a good website where you can compare your power supplier with others.
Can I sell my car if I still owe money on it?
If the car is the security for the loan, you need speak to the lender before you sell it. If the car is not the security for the loan then you can sell it and continue paying off the loan without informing the lender. However, we advise people to look at all their debts and pay off those that have the highest interest rates first because they cost you the most money. Typically, car loans have higher interest rates, ranging from about eight to 30 per cent and it may be a good idea to clear the debt when you sell the car. You must do this if the car is security on a loan.
Should I make use of Afterpay?
There are many buy now pay later products available and these have replaced the old lay by that we used to love. Remember, you paid a bit to the shop each week and then when you had paid enough the shop gave you the goods? Well now that is reversed – you get the goods straight away. I would say ‘yes’ it could be a good option but limit yourself to only one maybe two at a time. We have seen clients with more than half a dozen which then are likely to become unmanageable and there are penalties for late payments. This could also affect your other debt repayments.
Can I use KiwiSaver to pay off debts?
KiwiSaver is to help buy your first home or for retirement, and if you dip into it to pay for debts it can have a negative effect on your long-term financial stability. There may be other debt solutions that don’t set you up for a tough time when you reach retirement age. However, hardship applications can be made to withdraw KiwiSaver funds and it may be an option for some people. The process is not easy and you’ll need to have good evidence that you can’t meet your minimum living expenses, which may not include a Sky subscription or more than about $50 per month for clothing. You need to be prepared for your Kiwisaver provider to say no or release a smaller amount than you had hoped for.
How can I save money on groceries?
You can save money by planning your meals for the week and writing a list before you go to the supermarket. You could also save by looking for bulk shopping bargains and maybe share the items with close family or friends. Make sure you do your maths though because it’s not always cheaper to buy bigger sized products.
Should I avoid having credit card?
If used correctly, credit cards are useful. Right from the start set a credit limit based on your monthly spend and then pay it off in full, every month. The interest rates and late payment penalties are high for credit cards. You will also find some businesses have a surcharge when you shop with your credit card and it’s common to pay about two per cent on top of the advertised price.
How can I improve my saving habits?
Start small and start now. Put $10 away each week into an account that you can’t touch and you could have about an extra $200 by Christmas.
It is a good idea to open a Christmas club account with your supermarket and other reputable participating retailers and put something in that each time you do the grocery shop.
How do I pay for my car registration in one annual payment?
If you pay your vehicle registration as one annual payment you will get a discount. When you have a budget you may have all money that goes in and out listed for each week, and this should include savings put aside for all vehicle expenses, including the warrant of fitness, registration, road user charges, maintenance, vehicle insurance, etc. Put this money in a separate account ready for when the rego is due.
How do I know if I am eligible for an accommodation supplement?
New Zealanders may be eligible for accommodation supplements if you:
Are aged 16+ years
Are a New Zealand citizen or permanent resident
Have accommodation costs – mortgage, rent or board
Are on a low income
Are not paying rent for social housing
Applicants are screened to assess their household income and the value of any assets owned.
Check the Ministry of Social Development website for more information about what assistance may be available to help you. Please don’t struggle financially when there could be support available.
Will getting a job be beneficial to me and my family?
Sometimes it may seem that benefits are worth more than people can earn however, if you are working and have dependent children you may get additional financial support via the Working for Families tax credit scheme. The amount families receive depends on their household income. It is also possible to request it in a lump sum, which could be a great way to save for Christmas.
Keep your questions coming, because the Debtfix Crew loves to find new ways to improve the financial understanding of New Zealanders.
