Go Easy on the Plastic and Hire Purchase and Avoid the Poverty Trap in 2009
The Salvation Army is urging families to lay off the plastic during the post-Christmas sale period as it prepares for growing demand on its budgeting services and food banks next year.
Salvation Army social policy spokesman Major Campbell Roberts says with the expectations of further job losses and a likely rise in the cost of rental housing next year, he hopes families will take a conservative line on debt this summer.
“Unmanageable debt levels are the key precursor to poverty for many of the families coming to The Salvation Army for food, emergency housing or budgeting advice and is also often a factor in domestic violence,” he says.
Households have begun to cut back on their borrowing, but the situation is far from reassuring, Major Roberts says.
In September, households owed $13 billion in consumer loans – some of it secured against their homes – and almost $5 billion on their credit cards. This month, credit agency Veda Advantage reported a 20 per cent jump in the past year in people filing for personal bankruptcy or the recently introduced alternative “no asset procedures”.
“We’re asking families to be prudent in the face of economic uncertainty and to avoid credit card debt, personal loans and especially loan sharks when making retail purchases, Major Roberts said.
“Adults who make unwise spending choices can result in more children living below the bread line, and we already have 200,000 kids living in poverty in New Zealand.”