Household debt shoots up at it’s fastest pace since the recession
Posted by Paul Culshaw, Editor | Posted in Advice, Economy, Family Finances
I was pretty shocked to read over Christmas that household debt has shot up at the fastest pace since the recession, due to pre-Christmas spending. What with this and all the images of people out at the sales and on the streets carrying bulging carrier bags stuffed full of purchases, it really makes you wonder what’s going on. If people don’t have the money to live on – and many admit that they don’t – why are they out spending?
Apparently there was a near-record deterioration of household finances in December and things are expected to worsen, rather than getting better any time soon. Reports say that many households are downbeat about their financial prospects in 2012, which pretty much means that many people are on a financial knife-edge and could topple at any moment.
My mate Tom is a classic example of someone foolishly thinking that their bank balance is half-full, rather than half-empty. I know he has massive personal debts, am pretty sure he stuck to no kind of budget for Christmas spending and know that the money he does currently have at the bank is all promised elsewhere. Despite this, he won’t put his house in order and just refuses to accept that he needs to speak to a debt adviser.
He seems to have a natural aversion to figures and just can’t bring himself to list his outgoings and earnings, which is the starting point for getting everything back into balance. He is truly living an unaffordable lifestyle and it’s catching up with him fast. As I keep telling him, by picking up the phone and speaking to a debt adviser, someone else can crunch the numbers for him and work out what he can and cannot afford.
All he needs to do is make time for self help by making a list of his direct debits, Council Tax, energy costs and so on. As I’ve told him, if he doesn’t pay his way and gets a CCJ against his name, he’ll be making this list to tell the Court what he can afford to pay to debtors!
If you’re reading this and staring at the bulging carrier bags that you’ve brought back from the sales, knowing you couldn’t afford to buy these things, tell yourself that this was your last blaze of glory before sorting out your personal debts in 2012.
Don’t keep piling up the baggage when what you really need to invest in is some debt counselling and debt advice that will tell you whether you need a debt management plan, an IVA, or a more drastic response to your financial position.
Picking up the phone now you’ve hit the sales could give you a better night’s sleep and a more positive outlook on 2012 into the bargain!