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Time to tackle key obstacles threatening your financial future

Nga Tangata Microfinance supports this year’s Money Week focus: encouraging NZers to positively visualise their financial future, create a plan, and then making a start to live it out.

For some people, their financial future involves owning a mortgage-free home, a long overseas holiday or a comfortable retirement. But the daily reality for many low income families means the goal is to always have enough food on the table, a secure roof over their heads, a house that’s warm and dry and enough money after the bills are paid to treat the kids once in a while.

Whatever our circumstances, obstacles can hinder or even stop us getting to the financial future we aspire to. One obstacle that can easily grow into a monster is high interest debt. New Zealand is unusual in having no limit on the cost of consumer credit, and interest rates and excessive charges can legally exceed 500% annually.

The Government chose not to introduce a cost of credit cap as part of the 2014 amendments to the Credit Contracts and Consumer Finance Act 2003.

While appearing helpful and even necessary at the outset, debts owed to fringe lenders, pay day lenders and mobile trucks can capture families in a poverty cycle that limits food for the children and family essentials. Life becomes a daily struggle and it’s impossible to think about the future, let alone plan for it.

Budgeting Services provide a tremendous support to their clients who are under the burden of such debts: providing a budget plan, negotiating with creditors where possible and advising ways that limited income can be stretched.

Robert Choy, Executive Officer of Nga Tangata Microfinance (NTM), says "Budgeting Advisers and their clients have welcomed our no-interest loans as a pathway to building a positive financial future." With loan capital provided by Kiwibank, NTM provides no fees, no interest loans to qualifying low income families. These loans are safe and fair, in stark contrast to loans from high interest lenders.

Choy describes how a family were able to meet the timeframe to qualify for a housing loan and move into their first house earlier this year, as part of the Turanga Pacific Financial Wellness initiative. The programme’s accountant said "Without the Nga Tangata loan of $2470 to tackle their finance company debt, they would not have met the deadline and they wouldn’t be proud home owners".

"Creating and sticking to a budget plan to overcome our financial obstacles is so important. We may need outside help, and it will take time and determination, but a brighter future is possible" says Choy. Starting to tackle one of the major obstacles to our desired financial future, unmanageable high interest debt, makes good sense in Money Week.

Background information on Nga Tangata Microfinance

  • Established in 2010 with a vision of building a more just and equitable society for people on low incomes
  • Offers two loan products which are offered at no interest or fees. The first, NILS, is to assist with family asset building and well-being or essential items or services. The second loan product, DRLS, is for relief from high interest debt, and debt consolidation.
  • Qualifying conditions for all loan applicants include a Community Services card or a low income and the willingness and capacity to repay the loan within 2 years.
  • Nga Tangata values the relationship that clients have with a budgeting adviser. Financial education occurring alongside our loans is encouraged.
  • The three establishing organisations of NTM are Child Poverty Action Group, New Zealand Council of Christian Social Services, and New Zealand Federation of Family Budgeting Services.
  • The loan capital is provided by Kiwibank. J R McKenzie Trust provides funding for operational costs. Good Shepherd Microfinance, operating in Australia since 1982, has provided advice, support and information.
  • In 2013, Nga Tangata Microfinance Trust and Kiwibank were supreme winners of the NZI Sustainable Business Awards.