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Simple Savings

nz 20 dollar
nz 20 dollar

 Read more Oily Rag articles by Frank and Muriel Newman

In recent weeks more details about the savings habits of we kiwis have been released. And the findings aren’t all bad. A Nielsen survey, commissioned by Sorted (the Retirement Commission’s website), found 56 per cent of respondents said they were less inclined to take on debt as a result of the recession. One in seven said they were prepared to cut up their credit cards, and one in 16 said they would pay their high-interest debts first. That’s great news, and one hopes such habits will remain even after the recession has passed.

As David Kneebone from Sorted reportedly said, people are getting the message to repay “dumb debt” first. Dumb debt is high interest rate personal loans. The cost is staggering. We recently came across an example where a couple were paying 24.5 percent for a car loan (24.5 percent!). What this means is while the value of the car is going down by at least 10 percent a year, the value of the debt is going up by 24.5 percent! Surprisingly their car loan was not from a back-street loan shark either – it was from a “reputable” big brand money lender.

There were some other interesting findings about the way we manage our money.

  • New Zealanders are spending 99c for every dollar they earn after tax. Before the recession they were spending $1.10 for every dollar earned (ie increasing debt).
  • Sixty-two percent of those surveyed said they planned to spend less.
  • New Zealanders have $5.25 billion in credit card debt. Only one third is paid on the due date. The other two thirds ($3.5 billion!) is (very) dumb debt costing an average interest rate of 18 percent – about $640 million a year!
  • Total consumer debt in New Zealand stands at $11.96 billion, made up of hire purchase, store cards, personal term loans, credit cards and overdrafts.

What amazes us is how people get bogged down with dumb debt in the first place. It can be avoided by living off the smell of an oily rag and shopping smart. Here’s a case in point.

This letter was sent to us by T.G. from Hamilton. "I thought you might be interested in my small survey conducted in Hamilton over the last few weeks on milk prices.

Standard blue top 2 litre bottles from Countdown:

Anchor Brand$4.80per litre $2.40
Signature Range
$4.08per litre $2.04
Home Brand
$3.60per litre $1.80

The cheapest milk seems to be at dairies where you can get 2 x 2 litres for $6.20 which is $1.55 per litre.

Powdered milk in 1kg bags (whole milk powder) is a different story (NB they all make 8 litres except Home Brand which makes 7 litres):

Anchor BrandCountdown
New World
per litre $1.88
per litre $1.81
Home BrandCountdown$9.70per litre $1.38
PamsNew World
Pak n Save
per litre $1.18
per litre $1.12

Powdered milk also has advantages – there are no heavy bottles to carry, no space taken up in the freezer for emergency supplies, no waiting to defrost the bottles from the freezer, and no worries about ‘best by’ dates. I haven't had any problems with powdered milk in my baking – and the cats like it! “ 

We always recommend that people should be saving 10 percent of their income and we often get asked what they need to do to save that. Our answer is always the same: Only spend 90 percent of your income!
If you have a favourite tip share it with others by visiting the oily rag website or write to Living off the Smell of an Oily Rag, PO Box 984, Whangarei. The book Living off the Smell of an Oily Rag by Frank & Muriel Newman is available from all good bookstores or online at

* Frank and Muriel Newman are the authors of Living Off the Smell of an Oily Rag in NZ. Readers can submit their oily rag tips on-line at The book is available from bookstores and online at