Young, single and spending often comes back to haunt people when they want to buy a first home.

One of the biggest barriers to building up a deposit — even with a decent KiwiSaver balance — is never-ending interest payments.

That 12 per cent interest here or 20 per cent there on the car loan, hire purchase or consolidated loan may well be the start needed if saved rather than funnelled straight into lenders coffers. It's a good reason never to pay later for anything.


According to Reserve Bank of New Zealand figures we have more than $32.5 billion in consumer debt compared to $22.7bn a decade earlier. That's excluding mortgages.

Sometimes people have genuine reasons borrow to buy things. Perhaps its to buy their first car. Or to get an education. But some people stop there. Others end up on the treadmill in a cycle that can blight family and relationships.

Mortgage broker Kim Lyons of FirstRate Mortgages thinks Kiwis are borrowing even more since peer-to-peer lending came along. Lyons sees clients with $50,000 to $100,000 of consumer debt, and nothing to show for it. No tangible assets or increase in net worth in any way, he says.

Many Kiwis are also drowning under the spectre of afterpay, which allows them to buy now and pay in installments over a number of weeks. I raised an eyebrow when a Trade Me purchaser bought a frivolous item from me and chose the afterpay option to finance this $20 payment. Jeepers.

The way forward is finding your own path that doesn't conform to the borrow, borrow, borrow bombardment:

Don't be exploited

In a report for The Law Foundation, Dr Richard Tooth cited concerns from the Families Commission, Ministry of Consumer Affairs and others that lenders exploited the difficulties Kiwis have making good decisions about credit.

In my opinion the lenders do it by manipulating our minds and by offering a barrage of even more debit-simple phrases such as; buy now pay later, get funded fast, quick cash, fast little loans, whatever life throws at you, and instant this and that. This fluffy language makes it all seems normal and easy. Once you're in the system, the lenders thrust offers at you to encourage you to take out more credit.

Think before spending your hard-earned dollars

Investor and author Lisa Dudson, who has just published The New Zealand Money Guide, says her best out-of-the-box advice for clients caught in this cycle is to think about how hard it was to earn that money.

"If you can get into the habit of pausing before spending you will be better off." That's an excellent two-fingered salute to the lending machine, and those non-purchases will add to the savings fund.

Build up a savings net

Money Week this year was all about savings nets. Research by the Commission for Financial Capability found that just 34 per cent of Kiwis can access $3000 easily if they need it. Even in households earning $100,000-plus, only 50 per cent can access that amount easily. That is quite astounding.

Don't spend your future earnings

The commission's Tom Hartmann says one of the most effective ways to stop putting purchases on credit is to think of it as spending your future money now. Sure borrowing can smooth over your spending, says Hartmann. Nonetheless it's unsustainable and if you borrow again and again you'll be digging yourself out over and over.

Budget, budget, budget

Set up a plan for your spending that includes some leftover to build up a savings fund. It's the biggest single thing you can do for your finances.

Learn from people who have done it before you

Seek out others who save on small or similar incomes to you, don't borrow and keep clear of personal financial crises. Find out how they do it.