A Lifetime with Debt?

by David Redmond on 19 Jul, 2012

It has never been easy to lead a debt-free life and for many people, it is a necessary evil to achieve their dreams…rather like the bitter coffee cream in a box of sweet chocolates.

However, increasingly, debt is taking over and many individuals spend their whole lives handing over their hard earned money to a long line of creditors.

The latest official figures show that on average, every Brit owes £8,002 (excluding their mortgage) and has to pay £2,427 every year in interest payments alone. This means that across the country, £172 million is spent every day, just to pay interest on debts!

And it’s not just the cash-strapped families who are having to rely on their credit card to survive; students could now end up owing as much as £30,000 by the time they get their degree…. a statistic which is forcing many youngsters from less affluent backgrounds to reconsider whether they can afford an education.
However, rather than continue to submerge deeper into a swamp of debt, it is possible to fight your way clear by taking decisive action.

Many people who are struggling to make ends meet make the fatal mistake of taking out more credit simply to survive. Whilst this can help in the short term, in the longer term, it simply has the effect of increasing loan repayments or pushing up the total amount owed.

However, in some cases it is possible to clear what you owe with more finance, providing the loan is purely for debt consolidation purposes and doesn’t simply add to your existing balance. Professional debt management firm, Baines and Ernst, have warned that in many cases individuals end up taking out the new loan or credit card but, ultimately, revert to using their existing borrowing facility too, resulting in an even higher level of finance to pay off.

Baines and Ernst suggest that if you are struggling with debt, the first step is to enlist someone to talk to. Worrying about what you owe can be exhausting and a very isolating experience. It doesn’t matter whether it’s a family member, friend or even a professional such as one of the trained experts from Baines and Ernst; the key is to get some help.

It’s also essential to prioritise what you owe. Ultimately, keeping a roof over your head and food on the table and essential bills such as gas, electric, water and council tax should be your main priority.

Work out how much money you need to pay for your rent or mortgage, council tax, utility bills and food before attempting to pay your unsecured debts. And if you find you don’t have enough cash left over, you could consider getting help from a company such as Baines and Ernst to negotiate a reduced, more affordable repayment rate on any unsecured debts you owe.

Debt is a fact of life but that doesn’t mean you have to let it rule yours.

About the Author

David Redmond

David Redmond is a Partner of Don Gilliard Finance Group. He is a fee-only, independent financial advisor and financial planner. For over 15 years, he has been helping individual investors and their families realize their investment goals.