Workers and Rising Debt And How To Get Rid Of Debt
The saying of “work to live” has slowly been changed to “live to work.” This is due to rising debt among the U.K.’s workforce.
There is growing concern that household debt is rising sharply. It is reported that more families have to borrow to supplement their income in order to pay ever-rising bills and the cost of living and they do not know how to get out of debt.
Research has shown that there are unsecured debts which do not include mortgages have risen in recent years. These have reached an ever higher record of three £34.9bn.
Unsecured debt as a share of income on a household is now reached 27.4% which reveals consumer credit has fundamental problems as the economy is unstable.
General secretary Frances O’Grady said:
“These increases in household debt are a warning that families are struggling to get by on their pay alone. Unless the Government does more for working people, they could end the new year poorer than they start it”
What can the government do to help?
So what can the Government do to help? Workers, especially in the public sector have suffered severe cuts to their pay since 2010 and are long overdue a decent pay rise for their efforts.
It is important that the minimum wage rises each year so lower paid workers can keep up with the rising prices of food and energy bills for example.
As Brexit is on the horizon it is feared the UK economy is entering uncertain times and the surge in an unsecured debt is something the government needs to have a plan for.
For the moment, most borrowers are able to cope with the extra debt however if the economy was to suffer and borrowers find it more difficult to repay this debt, then some households may risk being exposed to arrears and sudden changes in their financial lives as they do not know how to get rid of debt.
This would have a knock-on to lenders if they can not recover their debts through the repayments. This could cause more damage to the economy which will affect us all.
It is important for the minimum wage to keep rising in order to enable the lowest paid workers to keep up with rising prices in all sectors of the cost of living.
Government and household deficits
As the government aims to cut its annual deficit each year on year until 2025, the UK’s households are sadly moving in the going opposite direction.
Since 2012 it is reported that households are adding to their debt rather than reducing it. Alarmingly the debt to GDP ration is heading back to levels before the financial crash! Household debt stood at £1,518.5bn in today’s prices yet it was announced in March 2017 that the current level is £1,630.1bn which shows a rise of 7.3% in the last 5 years.
Now over the same 5 year period, the average basic wage rise was just 0.7% over the rate of inflation which has forced households into looking at unsecured credit in order to help with rising living costs.
Unsecured consumer debt in 2007 hit a high of 45% which mainly made up of store and credit cards followed by loans and overdrafts however following the financial crash, many people changed their credit habit as saving increased and borrowing credit reduced.
Unsecured credit debt levels fell to 35% of income by 2012. Since 2012, however, it has seen that households have more often than not failed to clear their credit and store card bills at the end of each calendar month.
The higher interest rates on the outstanding debt on the credit and store cards increased the debt amount for each account holder. Financial forecasters now predict that the UK household debt will hit a new high of 47% by 2021.
The Bank of England reported that unsecured consumer credit debt has jumped 4.9% in the past year when it has been adjusted for inflation.
That is a total increased from £192bn (in today’s money) in July 2016 to £201.5bn in July 2017.
Other forms of debt to households that have seen workers struggling to keep up with the cost of living are:
Car Finance, Mortgages and Student Loans.
Student Loan debt has seen a significant rise in arrears since the funding system was changed in 2013 with outstanding debt loans rose by 16.6%.
There has also been a rise in Council tax Arrears of 12% in the last 5 years as well as on energy bills.
What about other Countries?
Make no mistake this is not just a problem in Britain as household debt is a global problem with people in every country facing the same problems as they do not know how to get rid of debt either.
We don’t get long on this Earth so we need to enjoy it while we are here and find a healthy balance but evermore it seems that money makes the world go round and we need this to do the things we want to be able to do.
Like many other people around the world, I am a single parent with 2 of my children having special needs as well as running a house and business life is not easy.
I dreamt of a solution or something I could find to help me make more money yet never took more time away from me that I needed to spend with my family.
I tried many things but it was one that helped me the most and gave me the chance to learn and to create an online business that I can do of an evening and does not take me away from my responsibilities.
I am able to supplement my income from this business now and all that is needed is for me to write reviews online for a Niche brand of my choosing.
There is more to it than that but that is as simple as I can put it!
I learned this new trade with multiple streams of income from Wealthy Affiliate University and after a year I have 3 established Niche Websites along with howtomakeealthonline.com that I created to help people.
You can learn more about this platform through my review that you can visit here: Home Business
I now work part-time while the kids are at school and I am there every day to pick them up on the school run so I am lucky enough to spend an extra 3 or 4 hours with them each day as I have no rush hour commute to do!
It is certainly worrying times with regards to debt as we seem to be under more pressure than ever.
If you are having worries over debt I plead with you to comment below and get in touch with me so I can help you as I have had my fair share of money worries over the years but I can tell you it does get better if you take action and come up with a solution to the problems as payment plans can be put into place quite easily with debtors.
subscribe below and let me keep in touch with you and help you.
It is not the end of the world and can be put right again but do not ignore it as that is the worse thing you can do.