Debt is an increasing issue for many people across today’s society, with increasing numbers being eligible for a debt management plan or debt consolidation loan . Some recent findings have shown that two areas which are increasingly getting people into debt are weddings and smart phones. Weddings in particular are increasingly becoming a financial burden on couples with people spending obscene amounts of money on their big days, largely funded by credit cards and payday loans.
Some research was recently carried out by The Sun into people who had found themselves in a lot of debt due to the cost of their weddings. It seems like girls have an idea in their heads of what they would like their wedding to be like and will stop at nothing in order to get it. However, these things come at a great cost and after the big day reality sets in as to how much debt they’ve fallen into.
There were case studies depicted in The Sun showing how much debt couples have found themselves in. For example, one couple in the article, Katy and Tom Osborne, are currently living on tinned food and have been doing ever since their wedding over a year ago. Their debts were spread out over credit cards and payday loans as well as borrowing money from family members. Other couples were revealed to have moved house in order to try and clear their debts.
Wisdom shone through from older married couples who were interviewed by Aviva as they would advise younger couples to save money on having smaller weddings in order to keep cash aside for savings and living expenses.
The amount of people owning smart phones these days has increased a lot in the last couple of years. More and more people are now converting to smart phones as opposed to the basic mobile phones which means larger phone bills to contend with each month. The Money Advice Trust have noted that a lot more people are now in arrears with their phone bills due to the added services that they use on them. Customers are adding apps to their phones without thinking about the additional costs that will be mounting and therefore cannot afford to keep on top of their monthly payments.
Consumer Choices have warned people that they need to be careful as they could receive penalty charges for exceeding their monthly allowances. This would once again increase the amount of debt they are in.
The Office for nation (ONS) latest figures show that unemployment in the UK rose by 48,000 to 2.67 million in the three months to December 2011. The unemployment rate edged up to 8.4%, the highest for 16 years, causing an increased need in debt consolidation and debt management.
Women made up two-thirds of that increase and there was a new record in the number of people working part-time who want full-time jobs.
There was also a new record for the number of jobless young people. The number of 16 to 24-year-olds without a job rose by 22,000 to 1.04million, taking the unemployment rate to 22.2%. This figure includes young people in full-time education who are also looking for work. The number of people claiming Jobseeker’s Allowance in January increased by 6,900 to 1.6 million.
Prime Minister David Cameron described the latest rise in unemployment as “disappointing”, but pointed out that the number of people in work had also risen. The number of people who are in jobs went up by 60,000 in the last three months of the year, December 2011, which takes it to 29.13 million. Labour’s shadow chancellor, Ed Balls, accused the government of “complacency”. He stated that if we do not act now, we will pay a long-term price as a society as you can’t get rid of long-term unemployment quickly.
Feeling the pinch on your finances?
Feel like you’ve not got enough money left at the end of the month due to unpaid debts, need to reduce your outgoings? A debt management plan could give you the extra money you need by consolidating your debts into onelower payment, while freezing interest and charges on any money you owe?
Studies have shown that the amount of disposable income left at the end of the month is at the lowest amount for 4 years. It has not been this bad since 2008. Although in April 2012 inflation was actually at the lowest level than it has been for two years, people are still struggling with their finances.
Some research carried out by Asda has shown the effect that the poor economic situation of Britain has had on families. The average family will be £6 per week worse off this year as opposed to in 2011. This works out at £312 a year. It was also reported that families had an average of £144 a month discretionary income in April 2012. The last time it was this low was in November 2008. Due to financial constraints such as these, many people are taking out loans to help them cover even their basic living costs on a daily basis. If people are taking out loans such as PayDay loans they often end up with bad credit against their name and in a lot of debt.
Statistics show that people are struggling with the rising cost of food and utility bills. Although there was a cut by some energy suppliers in March 2012, in general these costs have been increasing for many months now leaving families with even less disposable income. Within the last year we have seen the following increases in bills: Electricity Up by 8.1%
Gas Up by 15.4%
Food Up by 4.3%
In order to try and cover these increasing costs people are more often than not taking out any loans they can find. They apply for loans over the internet or see adverts on the TV advertising PayDay loans and think it would be a good idea to take them out. Unfortunately this adds to their bad credit rating and they find themselves in more debt.
Another area in which people have struggled to keep up with increasing costs is fuel. Between April 2011 and April 2012 petrol had gone up by 4.9% and diesel by 4.2%. With many people receiving pay increases below the inflation rate it is understandable why so many are finding it hard to pay their monthly bills.
A growing number of Britons are facing serious debt difficulties, as they are using borrowings to pay for essentials like food and fuel, it has been revealed.
Paul Crayston, media officer at the Money Advice Trust, said it is likely that this issue will get worse in 2012, with more people resorting to loans or credit cards to make ends meet.
What may surprise many people is that the typical profile for those heading into debt at present is not the individual who has recklessly spent, but a person who has seen their income diminish over recent years through the combination of low pay increases and rising inflation.
The current economic pressure on British households is causing a growing number of people to rely on a credit card or payday loan each month in order to live comfortably. This can easily lead to personal debts growing out of control as the interest accumulates if they are not cleared quickly.
This situation is becoming increasingly common, causing many people to eventually seek some form of debt help, such as a debt consolidation plan, in order to make monthly repayments affordable.
Mr Crayston commented: “If you’re using a credit card or a loan to buy food, pay rent or pay utility bills, that’s a pretty sure sign that you need some advice.”
According to PricewaterhouseCoopers’ latest Precious Plastic 2012 report, the average UK household currently has approximately £7,900 of debt.
However, levels of unsecured borrowing fell for the third successive year by over £355 per household in 2011.
How does Debt Management work?
With debt management you are able to come to agreements about your repayments of existing debt with your creditors when you can no longer afford to meet your current repayments. It is common that that with debt management plans you can reduce your overall repayments as well as freezing interest charges you may already have.
In recent years there has been a growth in this industry and due to new legislation being brought into action, it is possible for you and your creditors to come to reasonable agreements, its common that debt which you can no longer afford to repay to be written.
What are the advantages of debt management programmes?
There are several advantages for people who have struggles with their debt;
If you have a debt management plan, this will stop any payment demands in the future from your creditors.
The interest charges on your current debts can be reduced or even frozen as well as being able to avoid any penalty charges.
With a debt management plan, your income is taken into account so that you are only paying as much as you can afford each month.
Need help with a debt management plan?
With a debt management plan you are able to come up with a way of getting in control of the debts you have, these plans also provide an opportunity for you to reduce your final repayment amount as well as only paying as much as you can afford, a debt management plan could be your solution to becoming debt free.
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