Personal Debt – Lesson Learned?
Personal Debt Lesson Learned?
The Recession is over according to Government officials and the UK is making a slow recovery, but have we learned our lesson?
In recent years personal debt has risen to unprecedented levels, 3.2bn to be exact, and some experts have claimed that this has been a factor in causing the Recession.
Excluding their Mortgage, the average person in the UK owes in excess of 6,000. In fact, in 2008 there were more credit cards in the UK than people.
The average person's 6,000 debt is spread across credit cards, loans and overdrafts, with loans accounting for a significant proportion of the debt.
A recent survey suggests that people are borrowing so much in order to purchase such things as cars, holidays, gadgets and home furnishings. The average person has used 646 of the 6,000 to pay for home improvements. In short, despite various warnings from the Government and leading economic experts which call for people to manage their finances responsibly, people are getting themselves into debt in order to satisfy their wants rather than their needs
However, perhaps one of the most concerning findings of the survey is that approximately 25% of people use credit cards or overdrafts to meet the cost of everyday living, paying for such things as petrol or food. Sadly, the prediction is that this may become the case for many more people as price increases predicted in these areas become a reality
If all of the above isn't enough cause for concern then the following fact may well give you nightmares: 42% of people are now relying on credit just to make it to the next payday, running out of money as early as the 20th of each month. Ironically the most common reason quoted for this financial difficulty is the need to meet highly expensive credit card bills. Clearly, if this is the case, the vicious circle of debt that many people in the UK have fallen into may prove to be harder to break than first thought
Considering all of the above it seems apparent that some people in the UK continue to borrow irresponsibly for the sake of satisfying their wants and whims. Those people are testament to the fact that to a worrying extent we have become a nation of consumers concerned with the here and now and blind to the financial consequences.
On the other hand some people who have behaved responsibly with their finances have simply become helpless victims of the economy, losing their jobs, seeing a sudden drop in their investment income and a hike in the cost of living. These economic victims are simply clinging to credit as part of their monthly battle to keep their family financially afloat
Unfortunately, which every explanation you accept as the truth or feel is more likely, the simple fact is that either way the outlook is not good. If we as a nation have any hope of regaining control of a tumbling economy, we need to first learn a very important lesson:
Whether we pay now or later, we still have to pay
If this is the case, perhaps we have failed to learn our lesson.
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