It is no secret that debt is a huge problem for UK families at the moment, however, the bad news is that this is not set to continue but also rise as time goes by. In fact, the TUC states that it is expected that the level of debt seen by an average UK family is going to be around the £15,000 mark.
This increase, compared to previous years is rather shocking. During 2016 the level of debt was £13,200 and during 2017 it was £13,900. This debt is the unsecured type, which covers store cards, credit cards, pay day loans, bank loans, student loans and also car loans. However, it doesn’t include mortgage payments which is a separate level of debt.
Why is there a rise in unsecured debt?
Rather than being down to lavish spending, this particular problem comes because many families in the UK struggle with basic living standards and they find that they are running on empty when it comes to their bank accounts.
This situation then leads to borrowing money through some of the costliest methods. This includes payday loans and credit cards too. Both of which are attributed to long term pay offs and high rates of interest too.
The problem comes with an increase of lower paid jobs and these low wages have an impact on the amount of money that families have to live on, paying out for their everyday needs such as food, utilities and of course rental property.
Not only this, but investments and saving of money is much less common then it used to be. Which in turn has an impact on the amount of money that people need to borrow, often from these high interest sources.
What can be done?
With no sign of wages increasing in the near future, it seems that the best way to tackle this particular financial issue is to look at how to improve it for those families that are struggling the most. With the rate of County Court Debt Judgments up by 35%, it seems that the problem is going to soon become a major concern.
The chance should come from one place, that is the government. They have the power to make a change and to ensure that the UK comes back from the brink of the financial danger zone that we seem to be firmly in at the moment.
They could do this by looking at providing a boost the minimum wage, by ending pay restrictions that are seen within public sector jobs and also looking at the communities where high paid jobs are in short supply.
By looking at these things, and making the steps towards change, hopefully we can pull ourselves back into the black instead of worrying about living in the red!