This post follows on from Part 1 , Part 2 and Part 3
(See all 5 posts by clicking on the 'debt' quick-search link in the sidebar)
The truth is this, there are a very significant proportion of people in the Western world who are simply overspending. When you sit down and calculate realistic income versus outgoings, too many households will discover they are literally spending more than they are making.
So how does this happen? Credit cards and loans are the simple answer, the solution is not to consolidate with more loans – the solution is to STOP SPENDING…. However, there is another closely related truth, the Western economies would be dealt a huge blow if everybody did actually stop overspending. This is not hyperbole, a downturn in spending on ‘gadgets’ and non-essentials would bring some industries to their knees. However, as long as controlling ones spending does not become a major trend, we can probably rely on the debt-ridden population to prop up the economy.
If you are seriously considering taking control of your spending, then I applaud you – you don’t need to take the exact steps that I have, just employ some resolve, take control of your outgoings and watch the debt fall. I was inspired to write this whilst reviewing another blog, and would like to suggest that you check out the tips and advice at http://financial-independence.net/
I also found some very revealing facts whilst researching this subject which I have copied here:
Total UK personal debt
-Total UK personal debt at the end of March 2007 stood at £1,318bn. The growth rate increased to 10.5% for the previous 12 months which equates to an increase of £116bn.
-Total secured lending on homes at the end of March 2007 stood at £1,104bn. This has increased 11.5% in the last 12 months.
-Total consumer credit lending to individuals in March 2007 was £214bn. This has increased 5.9% in the last 12 months.
-Total lending in March 2007 grew by £10.8bn. Secured lending grew by £9.9bn in the month. Consumer credit lending grew by £0.9bn.
-Average household debt in the UK is £8,833 (excluding mortgages) and £54,452 including mortgages.
-Average owed by every UK adult is £28,024 (including mortgages). This grew by £168 last month.
-Average outstanding mortgage for the 11.6m households who currently have mortgages is £95,170
-Average interest paid by each household on their total debt is approximately £3,525 each year.
-Average consumer borrowing via credit cards, motor and retail finance deals, overdrafts and unsecured personal loans has risen to £4,550 per average UK adult at the end of March 2007.
-Britain's personal debt is increasing by £1 million every 4 minutes.
Today in the UK:
-Consumers will borrow an additional £318m today
-The average household debt will increase by over £13 today
-300 people today will be declared insolvent or bankrupt
-Bank and building societies will hand out £1bn in mortgages today
-Citizen Advice Bureaus will deal with 5,300 debt problems today
-The average car will cost £15 to run today
-The average home will cost £30 today to run
-Raising a child to the age of 21 will now set you back £23.50 daily
-The price of a typical house will increase by £46 today
-24.3m transactions worth £1.3bn will be spent on plastic cards today
-£82m will be spent online today
-1/3rd of all groceries we buy today will end up in the dustbin.
read the full article by Richard Talbot on www.creditaction.org.uk here
(extract used with permission of Credit Action)
I plan one last post in this series for other money-saving tips just to round off the subject.
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