Money runs out on the 20th day after ‘payday’

According to research by insolvency trade body R3, more than four in ten adults in Britain struggle each month to make it to ‘payday’ (11% on a regular basis and 31% occasionally) and the average day this struggle begins is the 20th day after payday.

The main causes for this struggle have been identified as:

  • Credit card payments – cited by 35% of those who often or sometimes struggle to make it to ‘payday’
  • Spending on going out or non-essentials – 25% of those who struggle
  • Paying off bank loans, ‘big ticket’ purchases, making mortgage repayments – between 15-17% of those who struggle

R3’s President, Steven Law, said:

“Our addiction to credit cards is still out of control, despite the recession and a ‘tightening up’ of lending criteria.  There needs to be a cultural shift in consumer attitude to debt.  For too long we have got used to the idea that this is money we are entitled to.  Using a credit card is just delaying the inevitable day of payback – the sooner this is tackled and professional advice is sought, the smaller the final bill will be for individuals.”

 

Source:  R3 Press Release

 

A cap on excessive interest rates considered by government

A cap on excessive interest rates charged on credit and store cards is being considered as part of a review of consumer borrowing.

The government wants experts’ views on how consumer credit, such as credit cards and store cards, can be fairer.

This includes discussion on whether the regulator will be able to put a limit on high interest rates charged to those who might have difficulty repaying.

Bank charges and personal insolvencies are also covered by the review.

Read the full article here

40% of adults worry about their debt

Four in ten adults in Britain are worried about their debt, according to research by R3, the insolvency trade body.  The findings show that Londoners are the most likely to be worried, with almost half saying that they are concerned about their current level of debt.

Londoners are followed closely by those living in the North East and North West where 44% of residents are worried about their debts.

For those who worry about their debt, credit cards caused the most concern followed by overdrafts and then bank loans and mortgage payments.

Those living in the East of England were the least worried with just under a third saying that they were concerned with their overall level of debt.

R3’s President, Steven Law commented:

“It is alarming, but not surprising that so many people are worried about their debt.  The research shows how debt has become a fact of adult life – starting with a student loan and eventually graduating to a mortgage, credit cards and loans.  However, seeing debt as a way of life can lead to years of worries about financial stability.  People who feel that they are struggling with personal debt should seek professional advice on managing their household budget early.”

 

Source:  R3 Press Release

4 million women are in the grips of shopaholicism

A report by uSwitch estimates that 4 million British women are in the grips of shopaholicism, resulting in unsecured debts of £13 billion.  Shopaholics have an average personal shopping debt of £3,353 – nearly three times the national average of £1,147.

74% use a combination of credit cards, store cards, overdrafts and loans to feed their addiction and 41% will ignore their overdraft limit to purchase a ‘must have’ item.

With PayPal estimating that one in every £10 will be spent online by 2012, we have pulled together some tips for online shopping to ensure that if you are purchasing over the internet, you’re doing so safely and securely and getting the right price.

  • Ensure you have anti-virus and anti-spyware software installed as well as a firewall
  • Use an up to date web browser
  • Compare the price of what you intend to buy using price comparison sites
  • Shop with a reputable company (an easy way to do this is to type the name of the company and then the word ‘review’ into a search engine to read other customer experiences)
  • Look for an address and a landline telephone number and a returns policy
  • Ensure the web address of the page starts https:// before you enter any payment details
  • Print out any receipts, order numbers and delivery dates as evidence of any transactions you make

For more information on secure online shopping visit consumerdirect.gov.uk

If you find yourself struggling with credit card debt or other repayments, contact us today.  We may be able to help you.

 

Source:  Credit Action – October edition

Growing need for debt advice

As the UK faces up to public sector cuts – some 600,000 jobs will go within six years according to the Office for Budget Responsibility – it is increasingly important that if you are in debt, you have access to the right advice to help you tackle any personal debt issues.

With job losses, pay freezes and benefit cuts all likely to be a feature of the coming years, the repercussions will be felt far beyond the public sector.  Some private sector employers are likely to face reduced income from public contracts for example, which may lead to further cost-cutting measures.

As redundancies take effect, many people who were just about coping with personal debt could suddenly find themselves out of their depth and unable to meet repayments.

Although the hope is that the private sector growth will offset public sector losses; how that will ultimately play out is unclear for now.  For those who do manage to secure new posts, figures from the Office of National Statistics suggest many will earn less than before; the ONS reports that in the three months to May 2010, the number of part-time workers in the UK rose by almost 150,000.

If you find yourself struggling with debt and unable to keep up with your repayments, contact us today.

2012…..not just a year for the Olympics

As we hopefully celebrate a few gold medals at the 2012 Olympics, baby boomers will also be celebrating turning 65 years old in record numbers – in fact, according to Credit Action, around 800,000 in total.

But, as this historic year approaches, not all these pre-retirees are looking forward to retirement age and the possibility of having to juggle a pension and debt repayments.

It is an unfortunate statistic but, as highlighted in a report from Age UK, more than a third of equity release customers have used the cash to help clear their debts.  If you are thinking about this solution to clear your debts before or during retirement, you must consult an Independent Financial Adviser to ensure you understand the full implications.

If you do have a substantial amount of debt, there are some things you should do before you consider equity release:

  • Check to ensure you are receiving the correct personal tax allowance
  • Budget carefully – if you have more money going out than coming in, you’ll need to make cut backs
  • Pay monthly for your utilities so you’re not faced with large quarterly or annual bills and ensure you’re getting the best deal by using price comparison websites e.g. uSwitch.com
  • Consider downsizing your home which might free up some cash to help you pay off your debts
  • If you live in a larger home and your children have flown the nest, why not investigate the possibility of renting out a room to increase your monthly income

If you are struggling with debts, contact us today.  We may be able to help you.