Avoid extended warranties Only buy necessary insurance Avoid debt, and debt insurance
insurance. Credit card debt is to be avoided. It makes banks richer, not you.
FUNERAL INSURANCE: I’m not a fan. I know funerals cost a lot, and many people do not want to leave a bill for family members. The best thing to do is to save a lump sum. If you have a decent emergency account to enable you to cope if you lost your job, you have enough for your own burial. Just make sure there’s a will so your family can get the money, if you drop dead.
PAYDAY LOANS: These are short term loans with extraordinarily high interest rates. In our unequal society some people struggle to get from payday to payday, but high interest loans only make things worse. Avoiding personal loans is always best.
Save for purchases, especially holidays.
BONUS BONDS: If you think of it as a replacement for buying lottery tickets, it’s not the end of the world. It gives you a chance of winning a million, without spending a fortune in weekly instalments. But as an investment, Bonus Bonds suck. The only sensible amount of Bonus Bonds to have is not many.
‘‘BASICS’’ HEALTH INSURANCE: These are super- cheap health insurance policies aimed at young people. They work like this. You give the insurer money, and it gives some of it back to help pay for minor medical treatments. This is silly. Insurance is there to pay for the things you can’t afford on your own, like having a back operation, or rebuilding your house after a fire.
STORE WARRANTIES: The Consumer Guarantees Act means shops that sell you appliances that break down within a reasonably short period of time have to fix or replace them. There’s no electrical appliance that should break within three years. Make them pay in such cases.
KIWISAVER DEFAULT FUNDS: Super low-risk
KiwiSaver funds for people who do not choose a fund for themselves. Everyone needs to make a KiwiSaver choice. If you haven’t, I predict you will regret it come age 65.
MOBILE PHONE INSURANCE: If you buy a mobile phone you need to insure because you could not afford to replace it, if you lost it, you have spent more than you can afford on a phone.
Opps. There go the savings on insurance premiums and interest.