The Personal Debt Problem And How It Effects The National Debt

coping with debt

Coping with Debt

Yet again we find an article in the news regarding DEBT and how people are struggling.

Every morning I check the headlines on either Sky News or BBC news, today on there is an interesting article with regards to the government’s limited understanding with personal debt and the effects it has on the individual and their families and also the family unit.

 

Coping with debti

 

The National Audit Office (NAO) announced that some people who have a problem with debt that is actually costing the British taxpayer £900 million a year at the national and regional level. Among that figure is £248m which is paid out to cover housing and health services expenses.

This day it is estimated Fx 8.3 million people around the UK and a further 40% of the population struggle with the day-to-day management of their finances which I believe is caused by a lack of financial education and advice on money matters which could be easily remedied with financial education in schools at an early age.

People are not taught how to manage their money and if a person’s parents have struggled with mismanagement of finances then they will pass their knowledge down to their children which then has a knock-on effect for the whole country.

Of course, this is not the only problem but is one of the major problems. There are the other reasons why people fall into hardships through no fault of their own.

For instance, I struggled financially 3 years ago due to a marriage breakup where I lost my businesses during the break up which left me with no income as I ran them with my WIfe.

Tackling the problem

 

Further figures estimate that around 600,000 people required help but could not access the services they needed.

Amyas Morse, who is head of the NAO, explained that:

“Problem debt has significant consequences both for individuals and the taxpayer.”

“While the government has made progress in seeking to address this issue, its attempts so far have been insufficient.

“The Treasury needs a better understanding of the scale of people’s debt problems and how it is impacting their lives and the taxpayer so it can effectively resolve the problem.”

The report went further and accused government and local government bodies of being behind the banks and other lenders in following good debt management advice.

There are many problems involved between various agencies which include the lack of information and data than shared between government departments and debt recovery methods that can be very aggressive at times particularly by councils chasing outstanding debts.

 

Coping with debt

Frank Field who chairs the work and pension committee of MPs has spoken out about the findings and he blames the rollout of the new scheme of universal credit’s and other government payment policies.

He was quoted as saying:

“This report shows that in the last six years, the proportion of reported problem debt owed to Government has doubled to 40%, while the reported consumer credit part of the problem has closer to halved – a sorry indictment of the benefits policy and administration locking lower-earning families in this country into a miserable cycle of debt and hunger, easy prey to loan sharks and forced to resort to food banks.”

There are now calls by various debt charities to set up cross government strategies to tackle the problems with dates so government departments agencies and debt collection companies can have a more consistent approach in helping people who are in debt.

It comes down to education we need to educate people that are in that not only to how to get out of that but how to manage their money better so they don’t fall into the same trap again of all the Temptations of credit and lines around there.

That advice is now to as a five-year high which puts the demands on the funding pending and supply from the charities and companies are there to help people more funding will close the gap for supply and demand.

The government is taking steps already according to the article I read by creating a Single Financial Guidance Body and there are also new plans for a statutory Breathing Space scheme to help people.

Household Bills

The main bills that households fall behind are bills such as council tax and electricity and gas. The Citizens advice bureau estimates that outstanding bills cause anxiety for families everytime the doorbell rings thinking its the bailiff turning up.

While a Local Government has a duty to collect taxes it seems to me like a vicious circle all caused by debt where the majority is caused by my financial mismanagement.

Collecting outstanding debts costs money in staff wages and admin costs which all add to the problem. As I mentioned before the main solution is educating people to prevent it happening in the first place.

Self Help

Adults who don’t have the financial knowledge to prevent debt can still get help by helping themselves! Knowledge is power and reading can help get that knowledge.

One of the best books I read to help me was Rich Dad Poor Dad written by Robert Kiyosaki. This series of books are brilliant to enable you to learn and see that you can help yourself in the long run.

Other books I recommend are by people who have been in debt and made a success of themselves. One such person is Rob Moore and his business Partner Mike Homer who founded progressive properties. Just two ordinary guys in Peterborough, their books are really with a read.

 

You can find all their books on Amazon.

 

From a business point of view and a personal one is a story of a childhood friend of mine who, in 5 years has built an employment agency that has gone for zero to £10 million turns over with a database of 27000 registered workers. For me that’s inspirational. Danny founded Romax Solutions from his flat and now has offices in a picturesque postcard setting.

 

Romax solutions

 

If you’re reading this and you are in debt I can tell you that there is hope and things will get better. One way I helped myself was to start a home business within the marketing industry, if you want to read my review then you can here!

 

Thank you for taking the time to read my article, if you want any help or advice or if you have any questions then please comment below as I am here to help!

 

Darren

Wealth Online

Sharing is Caring!

2 Replies to “The Personal Debt Problem And How It Effects The National Debt”

  1. Great article

    National debt is a very disastrous situation and individuals should be taking their time to educate themselves so that they can be financially free forever.

    I like that you are recommending books like Rich Dad Poor dad because that is exactly what will help in this situation (people educating themselves).

    I can say I have read this book and apply these principles in my life and I can say things are starting to look up.

    1. Hi Thabo

      I am so pleased that things are looking positive for you and it is a prime example of how principles in these books can be applied but only if you are willing to accept them. Good for you my friend.

      What is it that you are doing now?

Leave a Reply

Your email address will not be published. Required fields are marked *