Tuesday, June 26, 2007

Some poor people can help themselves

The Herald's Simon Collins - one of this country's best journalists - has written several good pieces on low income earners on mounting debt.
Kanikita Mohulamu gets more in family assistance than the after tax income. They have seven kids under 15.

If you can't afford to bring up kids, don’t have seven kids in 11 years.

Sue Lafaele and Loto Kaio get $845.00 a week after tax and have one child. Both work full time. He earns $14 an hour during the day, she works 45 hours a week, getting $11.30 in her main night job. He sleeps at night - she sleeps in the evening before going to work. Their son sees both parents together max 2 hours per day.

More than two thirds of their combined income goes on rent and debt: Two cars, two personal loans taken out for two of their parents' funerals and when their power was disconnected.

Yet it appears they were not even claiming Working for Families. They foolishly turned down WFF because IRD said they were only entitled to 7.00 a week. Had they accepted it they would automatically got the 1 April increase and they would have been able to use that to buy a phone before April 1. Alternatively they could have saved that money to avoid power disconnection and the loan for reconnection.

This is tragic. She should quit her job. Her family would most likely be better off. She will have more time to spend with her son and her partner. She will be able to shop for specials, thus making her dollar go further - you can get good clothes at the Sallies or at sales and reduce your shopping bill - and taking the petrol credits - by up to 25 percent by shopping the specials. The family would be earning roughly $560.00 a week instead of $845.00 But their WFF entitlements would more than double - to around $145.00, offsetting half her income, given that she wasn’t even claiming WFF.

They would have been eligible for two funeral grants, accommodation assistance, a special benefit to cover both car loans and other essential debts, assistance for school uniforms, and any accommodation overflow, and an interest free power advance - all from Work and Income. The weekly payments would have gone some way to offset the other half of her income, but if you take the interest paid on loans taken out, a reduction in petrol costs due to her not travelling to work, fewer takeaway foods, - as well as proper budgeting advice, it all adds up. If they got a WINZ food grant every so often they could afford to reduce debt.

It's not easy living on a low income - but it is impossible when you have mounting debt and make ill-advised choices. The debt - and refusal or ignorance about state assistance - is more of the problem than the low income or the church tithing.

1 comment:

Anonymous said...

Thanks for this, I'll think about this a bit before replying.
If the first $12k were tax free how would that help?