There’s no denying that it’s been a tough few years for most people. According to July 2023 figures reported by The Money Charity, people in the UK
There’s no denying that it’s been a tough few years for most people.
According to July 2023 figures reported by The Money Charity, people in the UK owed a combined £1.8 billion – an increase of £37.3 billion on the year prior.
By drilling down further, the charity calculated that the average debt per UK adult was £34,666. That level of debt comes with an average interest rate that meant around 3.5% of earnings needed to be spent on paying interest alone.
Why is this?
Debt has increased due to the cost-of-living crisis. Soaring inflation has meant people’s earnings haven’t stretched as far. Rising food prices and energy bills have only made matters worse, with many facing the awful dilemma of heating or eating.
These factors forced many people to apply for credit so that they could continue to live the way they had become accustomed to.
How can you reduce your debts?
If, like many, your debts have increased in recent years, you may be looking for a way to cut them down. Here are a few ideas:
- Budgeting: Understanding all of your incomings and outgoings is essential. Once you have that information, you can look at areas to cut back. Is there a subscription you can cancel? Could you eat fewer takeaways? They may be small savings, but they can all add up to help you bring your debt under control.
- Prioritise high-interest debts: If you have credit from multiple sources, it makes sense to focus on paying off the ones that have the highest interest rates. By paying these off quicker, you’ll save money in the long run.
- Balance transfers: When you have credit card debt, it’s always worth considering a balance transfer. It may cost you a fee, but it could get you several months or a couple of years without accruing any interest on that debt.
It can be difficult to keep on top of multiple debts, particularly when they have differing interest rates and payment dates.
A debt consolidation loan can combine multiple loans into one, leaving you with a single repayment each month. This can make it far easier to keep track of your finances and give you a better view of the progress you’re making towards getting back in the black.
There’s no denying that being in debt can be stressful, but it’s important to face up to it and not bury your head in the sand.
If you feel that your situation is unsustainable, consider reaching out to family and friends for support. Alternatively, you could contact an organisation like Step Change that provides free debt advice.