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Published on September 19th, 2014 | by Pete

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How Personal debt is affecting people in the UK in 2014

Baines and Ernst, one of the UK’s leading debt solutions companies, is concerned about rising levels of debt. They recently published an Infographic detailing how personal debt is affecting people in the UK in 2014. But how does this new data compare to figures from a similar Infographic they published in 2013?

Back in 2013, 42% of UK adults expressed concern over their level of personal debt. Worryingly, 2014 has seen this figure rise to 51%, suggesting that personal debt is becoming increasingly unmanageable.

The reasons given for slipping into the red also indicate a distressing trend. In 2013, 37% of those polled cited rising living costs as a major factor. In 2014, rising food costs was mentioned by 59% of participants and increasing energy bills by 52%. This is a staggering leap. In addition, other essential expenditure such as rent, mortgage payments, rising home energy prices and monthly loan repayments were more frequently given as a cause of rising debt in 2014 when compared to 2013. People are finding themselves less able to make savings each month as they have already cut back on non-essential items such as nights out and gym membership, stripping their spending down to the bare minimum.

There was an increase in worry regarding every type of debt, including a massive 89% rise in concern about paying back bank loans. In 2013, 9% of those taking part in the survey cited bank loans as the most worrying of all their debts. By 2014 this had more than doubled to 19%. Those worrying most about credit card repayments also rose by 34% between 2013 and 2014. Other debt listed as causing the most worry included overdrafts, mortgages, loans from friends and family and, perhaps most concerning of all, debts incurred through payday

One of the difficulties people face once they are in debt is getting back out of it, especially if there is little or no disposable income. More and more people can only afford to pay off the interest on their debts each month, so there is a tendency for it to increase, or at the very least, to stay the same rather than be

Lack of savings to fall back on in difficult times is also causing problems in the current economic climate. In 2013, 25% of those people taking part in the survey admitted that they had no savings — a statistic that had risen to 28% by 2014. And it would seem that people are turning to alternative methods to cover their outgoings, such as taking out payday loans. Evidence of this can be seen in the 1% rise in those using payday loans to pay their bills between 2013 and 2014. Unfortunately, loans of this nature only help in the very short term and will serve to exacerbate the problem in future.

People in the UK continue to be pessimistic about their financial circumstances. In 2013, 20% did not feel there would be any improvement within six months. 25% of those asked a similar question in 2014 felt their situation would actually be worse in six months.

What do people feel the government could do to reduce financial pressure? 2013 people were asked this question. The answers included reducing VAT, income tax and green taxes. Many of those questioned also believe an increase in the minimum wage and a rent cap would make a difference, as would an extension of the Help to Buy scheme and a freeze in rail fares.

So what can people do to get themselves out of debt? Firstly, it is important not to ignore the problem. There are a number of options for people struggling financially. Finding a Debt Management Plan Protocol Approved company is a good first step to take. They can offer advice and talk through what can be done to make the situation easier and more manageable.

Baines and Ernst, who are members of The Debt Managers Standards Association (DEMSA), offer a number of debt management solutions, such as Debt Management Plans, Individual Voluntary Arrangements, Protected Trust Deeds, Debt consolidation, Debt Relief Orders, Debt settlements and Bankruptcy.

There is also a wealth of help and advice on their website dedicated to all aspects of personal finance from dealing with debts when getting a divorce to various money saving tips.

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