As I write this from my desk in Wellington to be honest I’m not sure if summer has been and gone, which quite often seems to be the question here in Wellington at this time of the year. Although, and perhaps it’s the eternal optimist in me, I’m sure we still have quite a few good weeks of summer ahead of us here in the capital (fingers crossed).
Also it’s at this time of year that I have conversations with customers, friends and family re their savings plans for 2011. If I can generalise, people tell me that they get back to work around about now and start to get serious about the year ahead.
In past years they’d focus on paying off any credit card expenses (Xmas presents and holidays) and then start to save in earnest for the rest of the year. Although it’s been widely reported for some time, including by us in our Financial Confidence Index results last October, in response to the economic downturn, Kiwis are repaying debt as a priority over spending and increasing their savings, so perhaps they won’t have as much credit card debt to repay and therefore will start saving sooner.
What I’m interested in understanding is when will Kiwis feel they’ve paid off enough debt, before they start to save and/or spend more?
I’d imagine at the very least Kiwis are focussing on paying off the most expensive debt first (credit cards, overdrafts and any personal loans), but what about their mortgages? Is there a threshold or tipping point at which they’ll feel happy to spend/save once again? What level of indebtedness will Kiwis be happy with going forward? Is there a level at which they think they’ve struck a balance?
As we go into the election year, I will be watching with great interest as to what is promised by the major parties to stimulate savings and investments. We saw some significant changes in resident withholding tax last year, so what will the government offer either in the May ’11 budget or as part of their election pitch?
I’d be really interested in your thoughts – what more can the government (current and/or future) do to stimulate savings? Plus, is there a tipping point at which you’ll feel that you have your level of debt at an acceptable and manageable level, what debt are you specifically focussing on?
There is usually also something else to look forward to in the first few months of the year – public holidays, a way of easing your way back into a full working week, although this year I think we are going to miss out as Waitangi Day will once again full on a weekend. That said, so long as the weather is great over the coming weekends I know I’ll be happy.