Sep
04
2012

30% of Consumers Feel They’ll Never Be Out of Debt

Posted by with 5 Comments

Debt is weighing us down and many feel it will never end

Image source: Vice.com

We all have debt – most of us lots more than we can handle. Although consumer confidence appeared to buoy in the post Olympic period, indications are that reality has set in and we’re getting worried about our finances once again. A recent survey by MyVoucherCodes asked people about their debts and ability to pay them off and the results were both disturbing and depressing. Most people surveyed ranked their financial stability as “fairly bad.”

What’s interesting is that the news indicates we’re reducing our debt, so we should be happy, right? Financial Times reported two weeks ago that debt levels were stabilising and that things were better than they’d been in 20 months. Household debt is down somewhat, but with the surge in re-mortgages, British Bankers Association believes many are tapping into equity to pay down debts. If the long-term interest from tacking debt on to the mortgage is lower than the credit card interest, this may not be a bad deal. If, however the consumer turns around and loads their credit cards back up, they’ve doubled down on trouble.

The debt spiral has many trapped and hopeless

Image source: Money.aol.co.uk

Mike Pearson of MyVoucherCodes says, “It’s best to avoid debt at all costs if possible, as what starts as borrowing a few hundred pounds on a credit card can quickly escalate into loans, overdrafts and more. Always be wise when it comes to borrowing and only ever do it if you know you’ll realistically be able to pay the money back.”

It’s the concept of payback that’s got most consumers stressed over debt. The survey asked participants how long they expected to be in debt. 32% said there seemed to be no end in sight, answering that they felt they would be in debt “indefinitely.” Another 27% said it would continue through the “foreseeable future.” Neither of these answers is very encouraging and shows that 59% of respondents expect their debt to continue for quite some time.

Debt is increasing across the UK - and we increasingly can't afford payments

Image source: BBB.org

Despite the seeming good news reported by FT, Office for National Statistics shows the consumer debt to disposable income ratio has risen for the first time since 2008. The Consumer Credit Counseling Service charity also expects debt to become more of an issue in the coming months. CCCS says, “While insolvencies for Q2 are down on same period last year, they’re still staggeringly high. Highlight how many are struggling with debt.”

For those that feel they will never be out of debt, there’s not a lot of good news as the recession lingers on. What’s worse, according to The Sun, is that people are increasingly turning to payday loans when they can’t make payments and this is fuelling what they call a “debt epidemic.”

We're in debt and deeply worried - some turn to payday loans

Image source: Guardian.co.uk

One of the worst things you can do is turn to a payday lender – a legal loan shark – that will only add to your debt and your stress. According to CCCS, 48% of people who take a payday loan never explore alternatives to the mega-interest loans, but there are lower cost alternatives out there.

If you’re sweating under debt, CCCS provides free counseling to help you find solutions that can make you more optimistic about decreasing your debt and improving your future. I don’t think the future is all doom and gloom, but neither is it wine and roses unless we get our spending and debt habits under control!

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5 Responses to “30% of Consumers Feel They’ll Never Be Out of Debt”

  1. AnselG says:

    Thank you, your website and your posts are very cool!

  2. Beverly Montero says:

    I sympathise with their feelings. I think about my debt and then not having any extra money to pay it down and it gets depressing. Then when money is too tight or I need an auto repair, I can’t pay cash, so it goes on my bank card and then there’s more debt. It’s a terrible cycle.

  3. Addison says:

    Very useful info. Hope to see more posts soon!

  4. [...] to pay the light bill or buy food because they can’t do both, even though they work two jobs and feel they’ll never be out of debt. If they borrow earmarked funds from another account, they won’t be able to easily replenish it. [...]

  5. [...] to pay the light bill or buy food because they can’t do both, even though they work two jobs and feel they’ll never be out of debt. If they borrow earmarked funds from another account, they won’t be able to easily replenish it. [...]

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