Soaring Debt of British

[Guest The Pom Queen]

 

• Some 3.9 million British families do not have enough savings to cover their rent or mortgage for more than a month
  
• Thousands of people are being made homeless every year because they are unable to meet their payments
  
• People are bearing the brunt of a 'perfect storm' of rising living costs, falling real wages, low savings and expensive credit
  
• Unsecured consumer debt has almost tripled in the last 20 years, reaching nearly £160 billion
  
• Essential bills have increased by 25 per cent since 2007, with one in six payday loans now used to pay for an outstanding household bill
  
  

 

 

The recovery of the financial slump may be around the corner, but rising personal debt and a soaring cost of living is pushing people's finances to the brink of collapse, a worrying report has warned.

Despite signs of a national economic recovery, the Centre for Social Justice found personal debt in the UK remains close to its all-time high of £1.4 trillion, while average household debt now stands at £54,000 - nearly twice the level of a decade ago.

Rising personal debt has become a 'significant problem' for people in Britain, with millions of families struggling to pay their rent or mortgage, according to a study by the CSJ.

 

 

 

 

 

Some 3.9 million British families do not have enough savings to cover their rent or mortgage for more than a month, while thousands of people are being made homeless every year because they are unable to meet their payments, the study found.

More than 26,000 UK households were accepted by councils as homeless in the last five years because of rent and mortgage arrears, including more than 5,000 last year, the think-tank said.

There are now fears the number of households being made homeless will increase in the coming years should interest rates rise, the CSJ warned.

 

The CSJ's report, Maxed Out, said poor people were bearing the brunt of a 'perfect storm' of rising living costs, falling real wages, low savings and expensive credit that has seen unsecured consumer debt almost triple in the last 20 years, reaching nearly £160 billion.

 

 

 

Households in the poorest 10 per cent of the country have average debts more than four times their annual income, the study found, with their average debt repayments amounting to nearly half their gross monthly income.

The Bank of England has said it will only consider raising rates when unemployment falls from its current 7.6 per cent rate to 7 per cent.

The report concludes: 'Rising personal debt levels represent a significant problem for people in Britain.

'While most personal debt is healthy and manageable, such as an affordable mortgage, student loan or low-interest credit card used to bridge income gaps, for many people their debt has become unhealthy and unmanageable.

'While people of all income levels can end up seeking debt advice or declaring bankruptcy, the problem of debt seems to be more of an issue for low-income and vulnerable households.

'A perfect storm of rising living costs, decreasing real wages, low savings and expensive credit seems to have pushed many to the edge and over a financial cliff edge.'

CSJ director Christian Guy said: 'Years of increased borrowing, rising living costs and struggling to save has forced many families into a debt trap that is proving very difficult to escape.

'Problem debt can have a corrosive impact on people and families. Our report shows how it can wreak havoc on mental health, relationships and wellbeing.

'Across the UK people are up until the early hours worrying about their finances and bills.'

'Some of the poorest people in Britain are cut off from mainstream banking and have no choice now but to turn to loan sharks and high-cost lenders.'

Essential bills have increased by 25 per cent since 2007, with one in six payday loans now used to pay for an outstanding household bill, the study found.

 

 

 

 

The market for short-term high-cost credit from companies such as payday lenders is now worth £4.8 billion a year, it said.

Payday lenders have increased business from £900 million in 2008/09 to just over £2 billion - around eight million loans - in 2011/12, according to the CSJ.

Around half of payday loan customers reported taking out the money because it was the only form of credit they could get, the study found.

The number of people going to loan sharks is also said to have increased, with the current estimate at 310,000 people.

Former work and pensions minister Chris Pond, who chaired the report, said: 'With falling real incomes and increasing costs of basic essentials, many - especially the most vulnerable - are sliding further into problem debt.

'The costs to those affected, in stress and mental disorders, relationship breakdown and hardship is immense. But so too is the cost to the nation, measured in lost employment and productivity and in an increased burden on public services.'

The report found around 1.4 million people have no transactional bank account, while the CSJ estimates that millions of other people do not use their bank account because of fears over penalties and overdraft charges.

The number of people seeking free professional debt advice from charities reached 1.7 million people in 2012, with some 5.3 million households said to be struggling to meet credit commitments.

 

 

 

 

[AJ]

Not really surprising! Some people spend spend spend without giving a thought to saving any incase of being paid off etc. Some people just want everything now! My OH works contract here and we always make sure there is enough away in the bank to live on for the weeks inbetween contracts.

[Guest]

That's my thought as well. The public of the UK and most other developed countries are growing more stupid as time goes on and spending on things that exceed their income.

I have a mate who is a social worker and some of the problem homes that cant feed kids etc still have cars and satellite TV etc...

[HappyHeart]

Its only money..cant take it with you...we overcomplicate life and money with our desire for unecessary 'stuff'

[k8bug79]

 

• Some 3.9 million British families do not have enough savings to cover their rent or mortgage for more than a month

• Thousands of people are being made homeless every year because they are unable to meet their payments

• People are bearing the brunt of a 'perfect storm' of rising living costs, falling real wages, low savings and expensive credit

• Unsecured consumer debt has almost tripled in the last 20 years, reaching nearly £160 billion

• Essential bills have increased by 25 per cent since 2007, with one in six payday loans now used to pay for an outstanding household bill

 

 

The recovery of the financial slump may be around the corner, but rising personal debt and a soaring cost of living is pushing people's finances to the brink of collapse, a worrying report has warned.

Despite signs of a national economic recovery, the Centre for Social Justice found personal debt in the UK remains close to its all-time high of £1.4 trillion, while average household debt now stands at £54,000 - nearly twice the level of a decade ago.

Rising personal debt has become a 'significant problem' for people in Britain, with millions of families struggling to pay their rent or mortgage, according to a study by the CSJ.

 

 

 

 

 

Some 3.9 million British families do not have enough savings to cover their rent or mortgage for more than a month, while thousands of people are being made homeless every year because they are unable to meet their payments, the study found.

More than 26,000 UK households were accepted by councils as homeless in the last five years because of rent and mortgage arrears, including more than 5,000 last year, the think-tank said.

There are now fears the number of households being made homeless will increase in the coming years should interest rates rise, the CSJ warned.

 

The CSJ's report, Maxed Out, said poor people were bearing the brunt of a 'perfect storm' of rising living costs, falling real wages, low savings and expensive credit that has seen unsecured consumer debt almost triple in the last 20 years, reaching nearly £160 billion.

 

 

 

Households in the poorest 10 per cent of the country have average debts more than four times their annual income, the study found, with their average debt repayments amounting to nearly half their gross monthly income.

The Bank of England has said it will only consider raising rates when unemployment falls from its current 7.6 per cent rate to 7 per cent.

The report concludes: 'Rising personal debt levels represent a significant problem for people in Britain.

'While most personal debt is healthy and manageable, such as an affordable mortgage, student loan or low-interest credit card used to bridge income gaps, for many people their debt has become unhealthy and unmanageable.

'While people of all income levels can end up seeking debt advice or declaring bankruptcy, the problem of debt seems to be more of an issue for low-income and vulnerable households.

'A perfect storm of rising living costs, decreasing real wages, low savings and expensive credit seems to have pushed many to the edge and over a financial cliff edge.'

CSJ director Christian Guy said: 'Years of increased borrowing, rising living costs and struggling to save has forced many families into a debt trap that is proving very difficult to escape.

'Problem debt can have a corrosive impact on people and families. Our report shows how it can wreak havoc on mental health, relationships and wellbeing.

'Across the UK people are up until the early hours worrying about their finances and bills.'

'Some of the poorest people in Britain are cut off from mainstream banking and have no choice now but to turn to loan sharks and high-cost lenders.'

Essential bills have increased by 25 per cent since 2007, with one in six payday loans now used to pay for an outstanding household bill, the study found.

 

 

 

 

The market for short-term high-cost credit from companies such as payday lenders is now worth £4.8 billion a year, it said.

Payday lenders have increased business from £900 million in 2008/09 to just over £2 billion - around eight million loans - in 2011/12, according to the CSJ.

Around half of payday loan customers reported taking out the money because it was the only form of credit they could get, the study found.

The number of people going to loan sharks is also said to have increased, with the current estimate at 310,000 people.

Former work and pensions minister Chris Pond, who chaired the report, said: 'With falling real incomes and increasing costs of basic essentials, many - especially the most vulnerable - are sliding further into problem debt.

'The costs to those affected, in stress and mental disorders, relationship breakdown and hardship is immense. But so too is the cost to the nation, measured in lost employment and productivity and in an increased burden on public services.'

The report found around 1.4 million people have no transactional bank account, while the CSJ estimates that millions of other people do not use their bank account because of fears over penalties and overdraft charges.

The number of people seeking free professional debt advice from charities reached 1.7 million people in 2012, with some 5.3 million households said to be struggling to meet credit commitments.

 

 

 

 

 

 

 

 

We had very little debt in the UK in comparison to some. But we were never in a position to save. We wouldn't have been able to eat next week if we were put out of work let alone pay the rent. We didn't have any extras either. I think it's more of a reflection on the bracket of middle income earners who are penalised for working as no mater how hard they work they are never any better off.

[Guest The Pom Queen]

Have to admit we lived on credit cards in the UK. We refuse to have them here.

[AJ]

 

Have to admit we lived on credit cards in the UK. We refuse to have them here.

So if you(in general) can do without Credit Cards here but needed them in UK, does that not show you that Australia cannot be as expensive to live as people make out!

[Keith and Linda]

Have to admit we lived on credit cards in the UK. We refuse to have them here.

 

We are the exact opposite of you not used in UK but we do here, though we were not keen at first, but it was part of the deal with a line of credit mortgage, I did see the benefit of this method but the wife was really scared, but after 3 years see could see the great benefit of such a mortgage and the house was paid off in just over 5 years. Though we have no need to do so now we still use the credit card the same, we carry very little cash in our pockets ($10 would be a lot) even a pint of milk is on the credit card.

I thoroughly recommend this type of mortgage, it really can knock down the interest you pay over the term, especially if you are paid weekly/fortnightly, but you have to be really budget aware and change your spending habits to get the full benefit.

[k8bug79]

So if you(in general) can do without Credit Cards here but needed them in UK, does that not show you that Australia cannot be as expensive to live as people make out!

I'm only 3 months into our Oz adventure but we personally think Oz is way cheaper than the UK. We find that generally $ = cost in £s, and where it doesn't if you look at hours taken to earn the money to pay for it Oz v Uk Oz always wins. We are surviving....just ....on 1 wage and we will always be better off by working , as I said above we weren't in the UK. I find it easier to pay in Oz also. Because things like rent are paid flexibly (weekly/ monthly as long as we don't go into arrears) I find it easier to manage finances also.

[Guest The Pom Queen]

So if you(in general) can do without Credit Cards here but needed them in UK, does that not show you that Australia cannot be as expensive to live as people make out!

I agree although things have changed now since we came to Australia prices have gone up and it was our savings that we lived off from our house sale in the UK

[garyupnorth]

3.9 million seems a lot but UK's population is approx 68million. Doesn't surprise me though, it's down to the lending habits of the banks and the " I want it now" attitude. Banks and lenders encourage people into the credit trap with offers, buy now pay later, 0% interest for 12 months....etc.

 

People need to earn it and save it before they should spend it, if they haven't got it they shouldn't spend it.

[CaptainR]

Of course having people in debt and with large mortgages helps maintain employment, who is going to change jobs or go unemployed when they have such debts.

[Guest Andy]

3.9 million seems a lot but UK's population is approx 68million. Doesn't surprise me though, it's down to the lending habits of the banks and the " I want it now" attitude. Banks and lenders encourage people into the credit trap with offers, buy now pay later, 0% interest for 12 months....etc.

 

People need to earn it and save it before they should spend it, if they haven't got it they shouldn't spend it.

 

 

I agree with this in some case's however i would bet good money that some people are getting in debt now just to cover their living expenses, if you earn say minimum wage for doing a full time job what are you meant to do when almost month on month your shopping bill or heating bill or car insurance has gone up way beyond the level of inflation and your next pay rise will be 15p an hour? It's all very well saying if you have not got it don't spend it but if it comes down to eating and keeping a roof over your head then there is little choice. I am fortunate enough not to be in this position but feel desperately sorry for those that are working hard but still cannot make ends meet due to the greed of others.

[simmo]

Our family car is on lease and the misses hits the credit card quite a bit but the thing is according to the bank, Me with lots of cash from jobs coming in then going straight out on materials and wages but never overdrawn and no credit card purchases or loans is bad? and my misses with less money going in but the credit card getting a good work out is apparently a well managed account! Wrong or right it seems that some well managed credit is a good thing (as far as banks are concerned)

 

here's a good article on personal debt.

http://www.zerohedge.com/news/2013-06-04/debt-nations

 

[nicolac34]

I hate debt, yet it follows us around. I wish I could save but it just doesn't seem to happen. Yes I think I am in the generation of wanting material goods and having things NOW not when I've saved up - you only have to take one look at my ever growing credit card statement to work that one out.

 

If we'd stayed in the UK I would be debt free now, as it is we've brought the same habits to Australia and it's snowballed thanks to a new house, new car and the OH being out of work for 8 months. It's so difficult to get out of the cycle once you get into it.

 

If I could speak to my 18 year old self (on my birthday) my one bit of advice is DO NOT GET THAT CREDIT CARD. But I do think financial responsibility should be taught by parents.... mine live of many credit cards and loans, transferring one balance to another - I thought that was just what people did. Their motto in life? 'You only live once' my grandmas motto? 'Spend a bit and save a bit' - should have spent less time rolling my eyes at granny and more time listening!

[Jacaranda]

I'm 52,and have lived in both countries and had no debt in either!Its all about living within your means is'nt?My OH and I are working class people,and manage really well with our finances.We save for what we want/need,and the satisfaction of doing that is immense!Can't imagine what life must be like living on credit.I would just find it extremely stressful living that way.One lady I know at work,works full time.She's 29 and still lives at home.She pays board to her parents (min amount)and she still can't manage her finances.Her pay is gone the day after she is paid!Crazy stuff!Its not just a UK thing either.I know people in Oz heavily in debt.You hear on Oz radio all the time ads for debt help etc.

[Keith and Linda]

I hate debt, yet it follows us around. I wish I could save but it just doesn't seem to happen. Yes I think I am in the generation of wanting material goods and having things NOW not when I've saved up - you only have to take one look at my ever growing credit card statement to work that one out.

 

If we'd stayed in the UK I would be debt free now, as it is we've brought the same habits to Australia and it's snowballed thanks to a new house, new car and the OH being out of work for 8 months. It's so difficult to get out of the cycle once you get into it.

 

If I could speak to my 18 year old self (on my birthday) my one bit of advice is DO NOT GET THAT CREDIT CARD. But I do think financial responsibility should be taught by parents.... mine live of many credit cards and loans, transferring one balance to another - I thought that was just what people did. Their motto in life? 'You only live once' my grandmas motto? 'Spend a bit and save a bit' - should have spent less time rolling my eyes at granny and more time listening!

 

You can get out of that cycle, it's really up to you! I am not saying it will be easy or quick but only you can do it. We have always had to work for our money something that our mother instilled on us from a very early age. Our two children now in their early 30's are also quite good with money (except for one time with our daughter which we sorted out and she paid us back, lesson learned), our son who never really had until recently a full time 9-5 type job accounted for his very small earned income very well so he had no debts after his rent food and other bills were paid if he had $2 or $22 for himself he was happy, with no debts. When I 1st got married every penny had to be accounted for, if we spent 50p too much on our groceries we had to check and see where it went. You say you come from the age of having things now! but I think you are also, correct me if I am wrong, get things which you want rather than need! We generally still only buy what we need, a flat screen tv did not come until our old tv broke down, no designer clothes, my wife has an old mobile phone on a annual $20 pay as you go sim, we do not have smart phone or Ipads, Ipods, surround sound, gaming machines, fox tv, and the like, I would definitely like to have some of them but we do not need them, but an occasional treat helps now and again, a laptop was not bought until our desk top died last year.

 

It's really about mind-set and a persistent willingness to make it happen. I am really happy about the way we lived (never jealous of what the Jone's had or their kids) as it has now reaped great lifestyle for us, house paid for an investment home, new car, the wife has retired, I have some 8 years to go yet! we fly off around the world on extended holidays once a year, I am not boasting here just telling you of my life and how it came good for me-----hard work!

wishing you and all like you well.

[nicolac34]

You can get out of that cycle, it's really up to you! I am not saying it will be easy or quick but only you can do it. We have always had to work for our money something that our mother instilled on us from a very early age. Our two children now in their early 30's are also quite good with money (except for one time with our daughter which we sorted out and she paid us back, lesson learned), our son who never really had until recently a full time 9-5 type job accounted for his very small earned income very well so he had no debts after his rent food and other bills were paid if he had $2 or $22 for himself he was happy, with no debts. When I 1st got married every penny had to be accounted for, if we spent 50p too much on our groceries we had to check and see where it went. You say you come from the age of having things now! but I think you are also, correct me if I am wrong, get things which you want rather than need! We generally still only buy what we need, a flat screen tv did not come until our old tv broke down, no designer clothes, my wife has an old mobile phone on a annual $20 pay as you go sim, we do not have smart phone or Ipads, Ipods, surround sound, gaming machines, fox tv, and the like, I would definitely like to have some of them but we do not need them, but an occasional treat helps now and again, a laptop was not bought until our desk top died last year.

 

It's really about mind-set and a persistent willingness to make it happen. I am really happy about the way we lived (never jealous of what the Jone's had or their kids) as it has now reaped great lifestyle for us, house paid for an investment home, new car, the wife has retired, I have some 8 years to go yet! we fly off around the world on extended holidays once a year, I am not boasting here just telling you of my life and how it came good for me-----hard work!

wishing you and all like you well.

 

Oh don't worry, I fully understand where all the money goes - on all the latest gadgets and gizmos, eating out several times a week, holidays each year, foxtel, gym membership, cleaner, new iphones, new camera, that scuba diving trip we just had to do... I have moments where I think 'what have we done?' and others where a I think 'meh we'll pay it off one day'.

 

We've set ourselves a goal though, by February we'll have paid off the credit card and the store card (furniture for the new house) and start overpaying the mortgage as a sort of 'savings plan' as it will be harder for us to take it out of there once it's in it!

 

Three of us kids, me pretty bad but trying to get out of it, my brother is even worse than me with money - owes my parents thousands after they've bailed him out over the years, has an expensive motorbike and a $40k 4x4 on finance and then our sister - the most sensible person in the world, no debt and savings in the bank!

[Que Sera Sera]

Had credit cards and loans in the UK. We paid it all off with the house sale .Here , apart from the mortgage we are debt free but we live within our means .

[Slean Wolfhead]

3.9 million seems a lot but UK's population is approx 68million.

 

It's 3.9 million families.

[KIRK AND CO]

Through my own experience having money is a good thing, well your wrong. It makes you selfish, self praiseing, you get lost in your own worth, screws your life up. If you have debt at least you work together as a family in some cases to ease it.I would rather be in debt than what i have now.

[Guest Ptp113]

I'd rather be in debt in Oz than back with the PB's and money. No brainer that one!

[jac2011]

I got brought up not valuing money and watching my mum struggle from day to day and strangely enough I have spent the last 13 years doign exactly the same, spending every penny, borrowing off whoever will lend to me and it actually makes me feel sick. My husband, is the exact opposite, he values every penny and has slowly taught me that we do not want to be paying debt forever, Australia for me will be a fresh start, all my UK debt is nearly paid off (apart from a student loan) and hopefully when we move to Oz I would rather live in a house with no furniture, TV's etc than be laden with debt and monthly repayments. Part of me still doubts I can make the change but hopefully my OH will keep me on the straight and narrow.

[Keith and Linda]

Through my own experience having money is a good thing, well your wrong. It makes you selfish, self praiseing, you get lost in your own worth, screws your life up. If you have debt at least you work together as a family in some cases to ease it.I would rather be in debt than what i have now.

 

How strange! though I do not know what you have now! but I would rather have earned and payed my debts and have $1 in my pocket rather than owe $1, cannot see how working hard to give your family a home, keeping them clothed and fed and having money... $1 in my pocket makes one selfish.

[KIRK AND CO]

 

How strange! though I do not know what you have now! but I would rather have earned and payed my debts and have $1 in my pocket rather than owe $1, cannot see how working hard to give your family a home, keeping them clothed and fed and having money... $1 in my pocket makes one selfish.

I have a past on here which I am not proud of. I feel I have had the 3rd ghost visit me, was it too late, I expect so.