Social Development Minister Paula Bennett is tracking down the Work and Income staffer who wrote to beneficiaries telling them to take out loans to cover their debts.So what was that advice? The NBR reports it as:
After being tackled on it in Parliament, Ms Bennett said last night she was "appalled" by the "totally unacceptable" advice ...
Of course spun well the advice becomes 'go to a loan shark and deprive your children of their toys' but the letter never said that, despite the headlines and the title of the Labour Party press release.
* Taking out loans to cover arrears;
* Pawning cellphone and children's PlayStation;
* Ringing debtors to reduce payments or refinance debt; and
* Seeking budgetary advice.
I think the advice is pretty reasonable.
As a family going through a rough financial patch, due to my recent job loss and the need for Matt to retrain this year, we have very quickly run into financial difficulties as our income has significantly dropped.
The first thing we did was take a good hard look at our budget and asked ourselves what we could live without - cell phone costs were an obvious first choice but there were a lot of other areas too. When too many things hit us in one week we pull out the credit card and then immediately make a plan to pay it off which includes an assessment of what we could sell on Trade Me and what additional things we could all go without until it was sorted.
We don't have any HP's or loans currently, but in the past when we have we have and they have gotten on top of us, we took out a debt consolidation loan and we exercised the other advice above by contacting those we owed money to and seeing what we could sort out.
None of this is of course easy or pleasant. Sherry is most peeved that we cannot buy her a new pair of jeans until we get a week without any extra costs (and even then it won't be the brand she wants) and the kids all complain that we now never take them out for hot chocolates or to places you have to pay an entry to get in anymore and that dinner is never takeaways. We are all sick of mince night after night too - though threatening them with lentils shuts them up. It is going to get worse the deeper into the year we go; we have survived it before when we spent Matt's PhD years living on a $20,000 p/a scholarship in Dunedin so we know what is coming - the lentil threat is not an idle one.
The case worker wrote the letter in question in the context of having granted the person financial assistance; it wasn't like the person was refused help. I mean, if you want a handout then I fail to see how you get to complain about getting a how-to-manage-your-money-better lecture.
Personally I wouldn't advise anyone to pawn their possessions because the money you get isn't great and the interest rates are steep but the general idea that you give up some of your less necessary items to get yourself out of the hole is not unreasonable. I am not saying sell the shirt off your back but then neither was the case worker.
Kids don't need PlayStations, adults don't need cellphones. I don't begrudge anyone on a low income having these items as we don't know the circumstances they got them in, they may have been gifts, bargains picked up on Trade Me or might have been purchased when the family was financial but you have to be able to recognise them for what they are - luxuries.
Sheridan knows that if she cannot pay for her horse this year, then she has to sell him as we cannot bail her out. Non-essentials can always be replaced no matter how attached to them we might be.
Before you put your hand in someone else's pocket would it really kill you to tighten your own belt first? People not on WINZ benefits do the sorts of things mentioned in the letter off their own bat to sort out their own messes so why shouldn't those on benefits.