GOLDEN RULES

Auckland City Harbour News - - YOUR PAPER, YOUR PLACE -

Pay down debt fast Live fru­gally to do it Vote

their fault.

Each one lived the best way it knew how.

They bought houses, mostly to live in, which is an ac­tion as Kiwi as eat­ing fish and chips, watch­ing the All Blacks, or hav­ing com­pli­cated feel­ings on Wai­tangi Day.

Own­ing a house is the ab­so­lute heart of our cul­ture.

So when house prices went up, and up, and up, peo­ple who could bor­rowed ex­tra­or­di­nary amounts of money to get one.

Just as it sees high debts as risky for a coun­try, so too would the IMF look with a frown on the risk a cou­ple who bor­rowed 6.5 times their be­fore-tax in­come to buy a house have been forced to take on leav­ing them ex­tremely vul­ner­a­ble to shocks like job losses or a spike in in­ter­est rates.

Let’s be clear. I, and many of my age never had to do any­thing so risky.

But what could peo­ple do? When you are born into ex­tra­or­di­nary times, you have to do ex­tra­or­di­nary things.

An ex­tra­or­di­nary debt (which to me is any­thing over four times house­hold in­come) re­quires an ex­tra­or­di­nary debt clear­ance strat­egy to get it down to a level where a cou­ple can cope with it on one in­come.

That means go­ing for op­tions like tak­ing sec­ond jobs be­fore chil­dren come along, adopt­ing ex­treme fru­gal­ity, let­ting out rooms, liv­ing with sec­ond­hand fur­ni­ture, run­ning one car (at most), and pur­su­ing pay rises, and pro­mo­tions, with sin­gu­lar fo­cus.

It also means cri­sis-plan­ning with fam­ily.

Would fam­ily help with re­pay­ments in a cri­sis, or let the kids move back in, so the deb­ten­cum­bered house could be rented out?

I hear peo­ple tell young folk who can’t af­ford to buy in the city of their birth to get the hell out of Dodge and live some­where else.

It’s a level of ca­sual eco­nomic cru­elty and ne­glect that marks the last decade.

Telling young New Zealan­ders they shouldn’t ex­pect to live an or­di­nary life in their home cities is ex­tra­or­di­nary.

That’s why Labour polling shows af­ford­able hous­ing is the num­ber one is­sue for par­ents and grand­par­ents in the com­ing elec­tion, and prob­a­bly why Na­tional has now de­cided to em­u­late Labour with prom­ises to build af­ford­able homes in Auck­land.

123RF

A child’s con­cep­tion of a home. On cur­rent prices, many won’t grow up to own one.

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