Tipping point for debt
5:00AM Sunday April 22, 2007
By Stephen Cook
For Murray and Ola Waititi, these were supposed to be the carefree years.
Twenty years of gainful employment behind them, a house in the suburbs, two kids and a solid marriage - the ingredients you'd expect for a financially healthy lifestyle.
Instead the Waititis are up to their eyeballs in debt - with mortgage repayments, credit card debt and childcare costs accounting for much of the $200,000 they earn each year.
Theirs is a common scenario. Despite a buoyant economy, solid employment and income growth, as well as relatively low interest rates, New Zealanders have amassed a mountain of debt over the past 20 years.
And the share of average disposable income needed to service that ballooning debt has climbed steeply from 5 to 6 per cent though the 1990s to 13 per cent now.
Figures provided to the Herald on Sunday by financial planners Spicers show that since 1990 the average debt level of your typical New Zealand household has risen from $18,800 to $99,000 - a figure set to exceed $100,000 in the March quarter, for the first time. Factor in that nearly 50 per cent of families are mortgage-free and the amount owed by your average indebted household is probably double that figure.
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