Garth George: It's much too easy to become a slave to debt

Someone once said that "debt is the worst form of bondage". I don't know who said it or when, and have been unable to find out, either the easy way (Google) or the old-fashioned way (the Oxford Dictionary of Quotations).

But he (or she) was on to something for I have, at times in my life, been deeply in debt and recall painfully the constant anxiety and sense of unease it brought.

I have always been grateful that back in those wild, irresponsible and drunken days there were no such things as credit cards for, had there been, I'd have soon been in jail for misuse thereof.

And that back in those days individual customers pretty much had to get down on their knees and weep and beg to get a bank manager to give them an overdraft, let alone a loan.

Even 15 years ago, when my wife and I decided to save to put a deposit on our first home, the ANZ Bank, of which I had been a customer from the age of 18, would lend me only 60 per cent of the price of the house on mortgage.

(So we took a punt and went to Countrywide, which lent us 90 per cent even though its staff had never seen us before. We moved all our accounts there, remained with the National Bank when it bought Countrywide and will stay only as long as new owner ANZ leaves it alone.) Nowadays, bank managers almost tout on the street in their enthusiasm to lend you money. The other day the bank let me know that, unless it heard otherwise, it would increase my credit card limit by $3500. It heard otherwise.

The banks make borrowing so simple it's no wonder some people get themselves in money trouble. (Not long ago I needed $30,000 as a deposit on a new home and raised it on the existing mortgage. On Monday I sent an email to my personal banker; on Tuesday she phoned to ask me in to sign the papers, which I did; and when I got back to my office 15 minutes later the money had been credited to my account.)

Every week "personal" letters arrive in the mailbox from companies offering me thousands of dollars credit. They go the same way as all the other junk mail. Even so, we can't blame the lenders for the deplorable state of the nation's debt finances as reported in the Weekend Herald. People who get themselves irretrievably in debt are either stupid (like the bloke with the family income of $250,000) or ignorant (like some of the sad folk budgetary services try to help).

What does get up my nose is the callous avarice of those moneylenders and purveyors of goods (mainly used cars) who prey blatantly on the ignorant.

Open the classified section of any suburban newspaper and you will find columns of ads by usurers offering "instant" money specifically to people with debt problems or poor financial records. And one particular used-car advertising brochure, which regularly arrives in my mailbox, is plastered with similar ads from car dealers tempting the already deeply indebted to buy a vehicle on credit.

This is a matter of grave concern to Auckland City Missioner Diane Robertson, whose organisation is left to deal with people who have taken up these offers and who are so deeply in debt that their families go hungry, ill-clad and ill-housed.

In an interview published in the Christian newspaper Challenge Weekly, of which I am editor, she said there were a number of things that could be done to push these firms (loan sharks and used-car dealers in particular) to be more ethical, especially those which gave credit to those who cannot afford to have credit.

"It's about highlighting the problem, it's about educating people, as well as saying 'this is the silliest thing you could possibly do'," she said. Of concern to her and her staff was the number of children caught in the poverty trap, often brought about by unmanageable debt. Working closely with schools in South Auckland, the mission had discovered some startling facts.

For instance, about 40 per cent of children had no shoes to wear to school, many were going without lunch, some had never been on a motorway and many had never celebrated a birthday. It seems strange to me, in a nation which seems literally to be awash with money, that there is so much abject poverty and that some of those who have control of that surplus money are busily using it to increase the burdens of the impoverished.

Surely the Government should take a look at this situation, particularly the scurrilous advertising, and see if some form of ethical regulation might be imposed.

As for the rest of us - the frugal, the prudent, the prodigal and the plain stupid - considering the miserably low wages paid in this country, the usurious rates of interest charged by financial institutions and the blatant thievery of the Government, it's no wonder some of us succumb to the temptation to borrow ourselves into bondage.