The post-Christmas, credit card hangover notwithstanding, the start of a new year offers an obvious time for people to reassess their levels of debt.
Andrew MacKenzie, a Wanaka-based authorised financial adviser for NZFunds Private Wealth, offers a catchphrase: ''tomorrow's good, but today's better'', meaning it's important for people to think about their monetary situation and take action as soon as possible.
''Debt is one of the most significant factors that the average Kiwi needs to deal with.
''People should plan first, then make decisions about spending or investing. If you don't have a plan, you're not in a position to make informed decisions about your lifestyle.''
Money (or lack of it) can sometimes be a stressful subject; therefore MacKenzie is sometimes involved in a form of counselling.
''Often, partners might disagree. They come to the table with different views. I call it financial counselling. There is an element of coaching involved,'' says MacKenzie, who abides by an overriding mantra: ''The more you spend today, the less you have later''.
''At this time of year credit card or store debt is an issue for a lot of people. This is the highest-cost debt. And putting it on the mortgage is not ideal because that extends the debt period. So it is important to get that consumer debt out of the way.''
Yet much of MacKenzie's time is taken up with the bigger picture, the long-range financial forecast, if you will. Mortgages and retirement savings are top of his list.
''If I was to sit down with you, I'd look at your mortgage, your KiwiSaver situation, your age and your earnings up until when you expect you might retire.
''If it transpired that your level of debt wouldn't be paid off until after you retired, well, then we'd have to do something. That might include increasing debt repayments or taking a completely different decision - say, selling your house.
''We talk about people having a 'mortgage pledge towards savings'. For instance, if a person paid a mortgage off in five years as opposed to, say, 25, and they then saved the same amount as they were paying on their mortgage, what would that mean for them?''
Say you had a house worth $600,000 and a 20-year mortgage of $400,000, giving you an equity of $200,000; if you were able to pay off the mortgage in 15 years, then you'd have five years of pledged savings,'' MacKenzie says.
''Let's look at when you might retire. Take the notional age of 65, the age at which entitlement to KiwiSaver and New Zealand Superannuation begins. However, for the purpose of planning, let's exclude superannuation because who knows what future governments might do.
''Now, work out what percentage of your current level of income you'd like to live on in your retirement: say, you are on $100,000 per year and thought you could live on $75,000 per year in your retirement; at 65, you would need to have saved around $1.5 million.''
