Debt is a major issue for many New Zealand families. The Ieriko family knows how despairing it can be struggling to makes ends meet when crippled by unpaid bills.

The Ieriko home is happy now. Four children tumble out of a van from the school pick up run as their parents make their way into the house to prepare snacks.

Reminders come frequently for Waikato family. There are dance lessons to get ready for, there's homework to be done, and all of the fruit in front of them needs to be eaten.

It's a world away from the past few years.

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The problems started with Robert Ieriko, and he readily admits it.



He'd set out in 2002 a bright-eyed businessman, ready to make his own way in the world.



But over the next six years the dream slowly crumbled into a mound of bills.



When Katie Ieriko went on maternity leave, the contagion began to spread through the rest of the family's finances.



She can still remember the day she found out how bad it was.



"I remember being heavily pregnant, I think it was with our second child, and having a repo guy turn up to our house.



"And that's when I thought, 'hang on, why is the repo guy here? Haven't you been paying the bills? Where's the money going to? That's when I sort of knew we were in trouble."



Questions exploded into anger after the door was closed, and the pattern which would dog the couple's relationship for the next few years began.



Bill after bill, phone call after phone call, Robert Ieriko's promises to fix things failed.

At his lowest, sitting up alone at night, he wondered whether he would ever find a way out of the all-consuming hole.

Depression took hold.

MIKE SCOTT/FAIRFAX NZ When they were mired in debt Robert and Katie Ieriko found hope with an organisation geared around helping families get out of their financial situation.

Feeding the beast

There was a point, says Katie Ieriko, when they starved the kids to feed their debt.

At the time, it didn't seem like there was any other option. The debt collectors on the other end of the phone said it wasn't their problem.



The repo guys said the same.



And the endless pile of letters arriving each day laid out only the cold, hard, facts of the Ieriko's ever-growing debt.



There was no way out. And with every unpaid bill their debt just kept growing.



The couple would find reasons to visit the in-laws just so the kids could get a real meal.



Katie Ieriko never told them. Neither did her husband. The shame burned far too deep.



After all, they were both educated. Robert Ieriko had a business diploma and ran his own business.



Katie Ieriko was university educated and had had a steady job before maternity leave.



Things just should not have been that bad, but they were.



She tried not to let it show in front of the kids. But the endless phone calls, letters and knocks on the door took their toll.



And even a silent phone was a reminder of the all-consuming hole they had fallen into. It meant the line had been cut off. That, or the power.



Finally, Katie Ieriko had had enough. She packed her husband's things into a bag, and kicked him out.



She just couldn't take it anymore, and neither could he.



No matter how much they threw at their debts, the beast remained hungry.

MIKE SCOTT/FAIRFAX NZ. Robert Ieriko found himself in debt after running into trouble with his small business.

Credit crisis

In September 1992, New Zealand's credit card debt hit the billion-dollar mark for the first time in history.

That was just over a decade since record began showing a mere $95m of debt in 1981.



Over the next two decades, that debt has grown - and faster too.



Seven years later credit card debt hit $2b.



Three years after that, Kiwis had $3b in outstanding credit card debt.



All of that doesn't take into account store cards, loans from financial institutions other than banks or non-mortgage personal debt at banks.



While the financial crisis of 2007 saw us pull in that spending in for some time, it has started to climb again.



Kiwis are now carrying a record $6.5b of credit card debt alone, and Consumer Affairs recognises that budget blues can hit hardest just after Christmas.



The Ministry of Health recognises that financial stress is one of the contributors to our 500 suicides a year, and plays a role in mental health struggles.



While there is plenty of help out there for those interested in budgeting, serious debt is another issue altogether.

MIKE SCOTT/FAIRFAX NZ. The Ieriko family - Robert, left, Iliyas (5), Vincent (9), Kaydence (11) and Azaria (13) with mum Katie behind.

Among the bewildering range of government initiatives, not-for-profit budgeting agencies and school programmes trying to reel in our debt, it can be hard to know where to start looking for help.

Weapon of choice: Compound Interest

What the Ierikos didn't understand was the weapon they were up against; compound interest.



Not many do.



It's a weapon most lenders in New Zealand use, from banks to loan sharks. If you understand it, it can be your best friend.



But if you don't, and compound interest can become a relentless foe.



For every unpaid bill, the debt grows bigger, and so too does the interest owed on it.



It may all sound dramatic, and it is. A quick scan of the online lenders shows interest rates ranging between 300 and 500 per cent each year.



In the research that informed new laws for lenders, which came in this year, specific mention was made of how few borrowers understood the implications of that interest.



Of course, not really understanding what you are signing your name to doesn't mean it's someone else's fault.



And it doesn't mean you have a way out of the debt.



It just means you need a little help.



Cold, hard, cash



Behind closed doors, two years of intense money pressure had almost destroyed Robert and Katie Ieriko; their relationship, the businesses, their family.



That's why Robert Ieriko couldn't tell his wife about the visitors coming over until just before they turned up.



After all, they had nothing to offer a guest.



But these guests were different.



They were money coaches, from the charity Christians Against Poverty (CAP).



Robert Ieriko has seen an advertisement for its free debt counselling service on television one night, and decided it was time to call for help.



His wife was sceptical at first.



"We'd just gone through so many years of Robert saying 'yeah, I'm going to get on top of things and nothing happening'."



But by the end of the first visit, she says the couple saw hope for the first time in years.



CAP gave the couple a the budget that included food for the children, and focussed on necessities first.



It told the couple they would be using cash - not credit cards - from then on. There was no possibility of spending more than they earned.



Finally, CAP took over dealing with the couple's creditors.



That was when the weight lifted, say the pair. They didn't have to find excuses every time the phone rang.



They could say call my money coach.



And the phone calls stopped. The letters - slowly - stopped coming too.

Statistics New Zealand According to Statistics New Zealand, Kiwis have been spending more than they earn for years.

Thanks to negotiations by CAP, Robert getting a job, and Katie heading back to work, the bills were being met.

When it happened

Robert Ierikowas dropping his wife off at work when she got the call.

It was February 13, 2014 "at about 2.18pm" says Katie Ieriko. She answered the phone and moments later was yelling, jumping, throwing her hands in the air.

Her husband had a feeling it was the "the call we had been waiting for for a long time".

The couple were officially debt-free. Over two-and-a-half years they had paid off $25,000 of debt.

According to the New Zealand Federation of Family Budgeting Services, that's the average debt its 45,000 clients walk through the door with each year.

Since then, life has slowly turned around, says Katie Ieriko. The couple have managed to stick to the budget CAP helped them build.

They talk with the children about money, and explain why the family can't afford some things.

They don't use credit cards, and always apply the "do we want it or do we need it" test before big purchases - although the flat screen TV they paid for in a sale, with cash, was the family's one exception.

Katie Ieriko is now a money-coach with CAP, and recently started a full time job with the charity.

Sharing their story, say the couple, is their way of trying to spread the word that debt doesn't have to destroy you.

"I wanted to give back. Because someone had done it for us we couldn't just leave it at that," says Katie Ieriko.

Finding Help

CAP NZ free phone: 0508 227 111

New Zealand Federation of Family Budgeting Services free phone: 0508 283 438