Do loans keep people in the red?
People are running their personal finances dangerously close to the edge, or so a new report suggests.
According to studies conducted by an independent finance site, the average net income per household as of December 06 was recorded at £26’800. However, it has been revealed that coupled with common credit commitments such as mortgage and loan repayments, the average annual expenditure per household is around £27’500.
Experts suggest that these findings are the exact reason why consumer debt in the UK is at an all time high, as essentially over 40% of all people are constantly in the red. The situation is further worsened as a result of the UK’s current economic climate, in the past year interest levels have rose no less than 4 times and are expected to rise again in the not to distant future.
If there was ever a time when consumers could truly claim to be stretched to their absolute limits, then surely now is it. Analysts fear that a further rise in interest will have serious detrimental effects on a great many people, although an effect can already be seen as demonstrated through a rise in the number of people using extreme methods of coping with debt such as IVA’s.
For the vast majority of people, the constant acquisition of new credit agreements has been the major cause of their problems. We would suggest that if you feel your financial commitments are getting the better of you, rather than applying for an additional loan to consolidate outstanding debts, it would be prudent to seek professional assistance, from one of the many debt charities. In almost all cases, attempting to borrow your way out of a delicate situation will only increase your anguish in the long run.
