Twenty-one days until Christmas and about now the pressure of the festive season and how you're going to pay for it might be on your mind. After a challenging year that has seen the price of almost everything rise, will Christmas be business as usual for you this year, or will it be Christmas on a budget? 

The cost of living crisis has been with us for a while now, but its impact continues to grow. It was announced yesterday that money withdrawn early from KiwiSaver funds due to financial hardship has doubled compared to a year ago, with more people taking money out before retirement. 

The latest figures show the number of KiwiSaver members taking withdrawals increased from 1570 people in October 2022  to 2800 people in October 2023. So, the amount of money withdrawn from KiwiSaver due to financial hardship doubled from $10.3 million in October last year to $21.5 million in October this year.

Also, last week, it was announced the number of Kiwis behind on their mortgages spiked back up again in October. There are now 19,200 mortgage accounts passed due in October. That's up 25% year on year. That's an increase of 1.25% of mortgages in arrears in September to 1.29% in October. With the Reserve Bank’s forecast effectively keeping the possibility of one more rate hike in this cycle, and the thoughts that there will be no rate cuts until 2025, there is little relief in sight for those struggling with their mortgages. 

Now these increases might feel small. It might feel like a small percentage of those who have them are suffering. But what we are seeing is a trend in the increase of the numbers of people who are suffering from hardship, and that brings us to the cost of insurance.

One retiree living in Wellington spoke out over the weekend, saying the nearly 40% increase in his contents insurance policy would mean that he's probably just going to have to risk losing his possessions if his house burns down. The increase is just too much for a pensioner. So he would retain third-party insurance on his car in case he hit a Rolls Royce, but that had gone up 24% too.

Now, according to the insurance companies, since Covid-19 hit, it is now more expensive to replace or repair customers' assets. So there's inflationary pressures at play here, an increase in weather related claims and increase in costs being charged to insurers, as reassurers were changing their view of how risky New Zealand is, is also adding to the cost which is being passed on to us, the consumer.

Now look,  even before the weather events of this year, many of us have seen some pretty impressive increases in our insurances over the last few years. There are, of course, steps that you can take to lower your premiums. You could increase your excess, for example. But is it getting to the point where you need to make some pretty significant changes to your insurances or get rid of some of them altogether? So we're always told, (this is what sensible people do, you know, financially savvy people do this) We're always told to reassess our insurances each year, aren't we? And to make sure that they're still appropriate for our age or our situation. But I wonder if heading into 2024, you might be taking a slightly more dramatic approach as to what you think is necessary and what isn't. 

What insurance policies do you think are important to have? What wouldn't you live with? If the price is getting a bit too high for those policies, how are you dealing with it? Have you thought about getting rid of one or two insurances, or are you looking at doing things like increasing your excess to try and drop the cost of your premium.

 Or are you planning on getting rid of some of your insurances in 2024 altogether? 

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