Our government continually tells us to put our own financial affairs in order when they have made the most almighty screw up of all time over the last few parliaments. Unfortunately we are not handling things much better ourselves. We owed a staggering £1.537 trillion at the end of May 2017, up from £1.489 trillion at the end of May 2016 – an extra £929.97 per UK adult. The only difference between us and the government is we as individuals are allowed to fail and end up insolvent or bankrupt (currently 248 a day), we can lose everything, but the government can’t!
Did you know that more than a third of young adults are in debt to the tune of around £3,000 and the average total debt per household in this year – including mortgages – is £56,731. Frightening.
Rents are rising, bills are rising, food prices are rising and soon interest rates are likely to rise as well, great for savers but not if you have debt or a mortgage just reaching the end of a very low fixed rate. It would be OK if wages were rising at close to inflation, but they are not and inflation is starting to run away, it was 2.9% at the end of May, the highest in 4 years whereas wages are only rising at 1.8%.
We are a long way off the crazy inflation rates of the 1990’s but we have to be realistic, they are only likely to go one way. People have been forced to take out huge mortgages just to join the property ladder, so let us hope that we do not see a return to mass repossessions. Currently just 14 properties are repossessed every day, nowhere near the rates of 205 per day as seen in 1991, however with increasing interest rates we could see a significant rise in these numbers.
Everything seems to be going the wrong way at the moment, we are saving less than ever as a nation, so how are we going to pay for our old age? There is a £1.3 trillion black hole in the public sector pension fund, which suggests there will be nothing for any of us in the near future. How are we going to fill the gap, can someone let us know?
Based on May 2017 trends, the UK’s total interest repayments on personal debt over a 12 month period will be £50.002 billion, this means that households in the UK would have paid an average of £1,845 in annual interest repayments or £966 per person. All that money going to financial institutions when you could have been spending it on yourself and your family.
If you find yourself in debt, don’t bury your head in the sand, that’s the worst thing you can do. It won’t just go away, in-fact all that will happen is you will fall further and further into a black hole. One day you may find a bailiff knocking on the door, by then it’s almost too late and you could lose everything.
We at EcoFrenzy have a section giving you a whole host of organisations who will help with debt management for free. Have a look and give one of them a call. That first step may be the most difficult, but it may be the best financial decision you make.