Shame and blame experienced by ‘Generation Debt’

The results don’t surprise Tracy Hemingway, who became a financial adviser after navigating her way out of more than $90,000 of personal debt.

She says we live in an age saturated with consumer debt. As soon as people head to university, debt gets pushed their way by the government.

“When I signed up for a student account, I got an automatic $2000 credit card and a $2000 overdraft. It just comes with your package. There was no application,” she says.

“I'm going to uni. I want the fees free tertiary account, and they're like, ‘Cool, here's $4000 of credit.’ I didn’t even have a job,” she says.

It took her three years to haul her way back into the black. She worked like a devil and turned over every cent she could to clearing her debts, a path that would later take her into her first home, and then to add a rental property.

“I learned how to be good at money,” she says.

Those surveyed by researcher Mymavins reported that Gen Yers didn’t feel they lacked financial knowledge, but felt that their incomes fell short of the cost of living.

Of special trouble was buy now, pay later debt, the report said, a form of debt that allows people to buy things like clothing and electronics without having to save for them first.

Six out of 10 Millennials had used buy now, pay later loans to buy things in the past year, Mymavins found.

For a large proportion of them, the decision brought a repayment headache with 18% reporting having found making repayments a struggle, and a further 22% saying they had not made repayments on time.

Since launching as a financial advice provider in April last year, Hemingway has earned her living working with people to help them clear their debts and get the mortgages they need to get into homes of their own.

She says buy now, pay later comes up time and again when people come to see her.

“I deal with clients every day, and it's quite distressing to see how many of them are in this short-term debt,” she says.

The Generation Debt report says 80% of Millennials admitted to feeling they were under financial “stress”, with more than half of them saying their debts were to blame.

They tried to balance their books and had resorted to a number of strategies.

These included not going travelling, not joining KiwiSaver, and cutting back on social spending and seeing friends, leading to a greater sense of social isolation.

Many reported they were missing out on important youth experiences that were more easily available to earlier generations that did not have to cope with the mix of student debt and high property prices.

A sizeable minority were worried they might even fail to accumulate enough wealth to arrive at retirement owning a debt-free home, a concern that the Retirement Commission Te Ara Ahunga Ora has highlighted.

The commission reported in 2022 that it expected to see an increase in the proportion of people reaching 65 who have debt.

The report says half of people who did not already own a home had low confidence they would ever get onto the property ladder, with the exorbitant cost the main barrier, and New Zealand’s failure to find a way to build affordable homes.

House prices are so high, many expected some help from family.

Those experiencing financial struggles said it was making their mental health worse, with 19% saying the effect was significant, 29% saying it was moderate, and 37% saying it was mild.

Anxiety, fatigue, feelings of hopelessness, trouble sleeping, social withdrawal and depression were the most commonly reported impacts reported.

Feeling isolated in their financial distress was common, with only 15% of people saying they were comfortable talking about their money lives with their family, friends or colleagues.

Shame and fear of being judged were big factors in them keeping their money troubles to themselves, Mymavins researchers found.

Hemingway says she was always able to talk to her mother about her financial situation.

“I was severely overwhelmed and stressed, but I also had a positive outlook, I guess,” she says.

“Only my mum knew about my debt-free journey. I literally hadn't told anybody about my debt-free journey. No one knew.”

She worked in sales while she was clearing her debts, and her parsimonious ways caused interest.

“The ladies at work just thought I was a psycho because I was earning all this money. They could see all my commissions and stuff, but I was also the cheapest person on the planet,” she says.

“I'm very lucky. My mum's a hugely supportive person. I also appreciate that some of my clients don't have that support.“

That is one of the reasons they seek her out for support.

Millennials had mixed feelings about how their generation was portrayed in the media, with 42% feeling their were stereotyped as a spendthrift generation.

Some of the tags attached to their generation like “buy now, stress later”, or the “YOLO” generation did not ring true for them. Neither did the “insta-gratification” tag.

However, a similar proportion said the media portrayed their troubles as being caused by the high cost of living.

Hemingway understands the challenge high house prices, and high cost of living pose.

But, she says: “It's an education piece I feel that's missing as well.”

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