The Financial Blog

The increase in food, energy and fuel prices has caused the number of people concerned about their debts to jump from 33 per cent to 38 per cent in the last 3 months.

Moneyxpert.com reveals that there are an ever increasing number of people who are in debt with their bank or other financial institutions and these people are becoming concerned about their ability to manage the debts they have.

Approximately 13.1 million people say they’re concerned that they may not be able to make repayments on the debt they have.

Moneyexpert.com say that the increasing cost of living is probably the main reason behind the biggest jump in the UK’s inflation rate for nearly 6 years. This is obviously having a serious affect on people’s ability to repay their debts. With house prices falling every month people cannot use the equity in their homes to refinance in order to pay off existing debts.

Director of MoneyExpert.com, Sean Gardner, said: “There are many economic and political measures of a downturn, but there is nothing quite as real as people in debt saying they can’t repay the money they owe.”

“With close to forty per cent of those who owe money worried about their ability to stay on top of their debts, these latest figures add up to a collective cry for help as Britain’s enormous debt mountain looms larger than ever.”

“But the important thing is to work out a repayment plan and not bury your head in the sand.”

There are professional debt advisory services for people who may be struggling to keep up with repayments on their finances and if you are unsure the best starting point is your local Citizens Advice Bureau.

The Citizens Advice Bureau are offering help to the 4.5 million people now in fuel poverty, suffering from fuel debts.

Teresa Perchard, Director of Public Policy at Citizens Advice said: “The fuel poverty action programme published today by Ofgem represents a serious commitment from the fuel industry, government and regulators to do more to tackle the growing and pernicious problem of fuel poverty. With an estimated 4.5 million people now in fuel poverty and rising numbers struggling to pay their bills all agencies need to play a part to resolve this. We are pleased to be rolling out the Energy Best Deal campaign, providing local financial education and information sessions to low income households, on a national scale.”

“In the first two months of this year bureaux saw an 11% increase in the number of fuel debt cases they were seeing compared to the same period last year. Yet the recent Energy Best Deal pilot we ran with Ofgem in Devon and Cornwall, Yorkshire and Wales revealed how much people could save simply by switching providers, tariffs or moving off a pre-payment meter, once they had access to clear information from a trusted source and we are looking forward to taking this project forward.”

“However there is still much more that needs to be done to help hard to reach parts of the community. In addition to raising awareness about social tariffs and disseminating information about all the help that is available, intermediary help needs to be made available to the most vulnerable customers who may not have internet access, need help using a telephone or simply find the process of switching or applying for help daunting.”

Click here to get advice from the Citizens Advice Bureau today.

New research from Alliance and Leicester Current Accounts revealed that 34 per cent of UK adults realise they will have less disposable income over the next 6 months.

79 per cent of people said the this was because of the ever incresing costs of food, household bills, fuel prices and consumer goods and services. No real surprise there. I’m sure we all realise this is becomming more neccissary as UK household finances are stretched to breaking point.

Interestingly, 55 per cent of Brits in the research  had started changing the way the budget and started to improve their financial situation by selling expensive non essential items like cars or jewellery. I think this is the main point here; people need to decide what exactly they need to live comfortably and adapt their lifestyles accordingly, especially if they cannot afford luxuries.

The most popular money saving tips were;

• 20 per cent of people say change utility bill providers
• 12 per cent say switch credit card providers to one with a 0% rate
• 8 per cent are changing current accounts
• 7 per cent are consolidating credit card debts into a personal loan
• 6 per cent are changing jobs to a higher salary
• 6 per cent of people are taking on a second job
• 5 per cent choose to sell expensive items such as a car, jewellery or down-sizing their house

Some good news from this research was that 42 per cent of people questioned said they are budgetting more carefully and trying to live within their means. People are also looking at cheaper supermarkets for food shopping.

Current Account Manager at Alliance & Leicester, Emma Walkley, said: “It is encouraging to see people are making positive changes to their spending and budgeting habits. This will hopefully stand them in good stead should they see their disposable income affected over the forthcoming months.”

“Taking advantage of the best financial deals on the market is always important, but more so in the current environment.  We would advise people to take a good look at their finances and see how they can be improved. Often making simple changes like switching to a current account provider offering a better interest rate can make any belt-tightening feel a little bit easier.”

>>Click here to compare current accounts and apply online!

>>Click here to compare savings accounts and find the best rates

>>Click here to compare loans and find the lowest rates

The BBC’s Tim Muffet reports on the rise in mothers returning to work, something like 1/3rd of families with children under 2 years have both parents working. 

According to U-Switch.com it’s the recent sharp rise in the cost of living that’s putting a strain on family finances.

>>Click here to watch the BBC report from Tim Muffet>>

So what exactly is a charging order? Put simply it’s a second mortgage on a home that gives a creditor security on a loan or credit card debt if they find that a customer is not repaying the money they owe.

If you take out an unsecured loan or a credit card and then have trouble trying to make the repayments so fall into arrears your bank can take you to court. If you still cannot or do not pay, the court can issue a charge on your home.

New figures from the Ministry of Justice suggest that from 2005 to 2007 the increase in charging orders is near to 100 per cent.

John Fairhurst, from the debt advice company Payplan, said “Lenders are worried about people’s ability to repay and a charging order gives a guarantee to the lender that at some point in the future they will get their money back. What’s quite difficult for a creditor to do is to follow the charging order through to repossess the house” he said. “Repossessions as a result of charging orders are extremely rare.”

Lenders are prepaired to do almost anything to secure the repayments on their lending so don’t think that if you’re applying for unsecured credit it means that the debt might be written off.

If you’re struggling to keep up with debt repayments then seek professional debt advice

The Chiltern Debt Monitor is a regular analysis of Chiltern Debt Management’s database of live customers to determine the profile of debt and debtors in the UK.

• Average level of debt: £25,945
• Average age of debtor: 44
• Yearly gross income: £23,444
• Male: 42%
• Female: 58%
• Average number of creditors: 8
• Affordable payments as a % of contractual payments: 25%
• Monthly living costs: £1086
• Monthly disposable income: £225.36
• No of months to be debt free: 146

The average level of debt of someone on an informal debt management plan has fallen below the £26,000 mark for the first time and is now at its lowest amount since the Chiltern Debt Monitor started.

This average total debt amount is down by almost £400 since the beginning of the year, which shows that customers are dealing with their debts sooner and preventing their debts from escalating further than previously.

However people’s disposable incomes are dropping, with household expenditure rising, which suggests that household finances are still under increasing pressure. Already this year we have seen fuel, food and energy increases putting further strain on already overstretched budgets.

Credit is becoming increasingly more difficult to secure amidst the global credit crunch, with credit card holders seeing their limits reduced and homeowners having reduced mortgage options.

The Council of Mortgage Lenders (CML) has indicated that there have been 30 per cent fewer home loans offered so far this year than the same time last year, and many lenders have pulled the plug on their 100 per cent deals.

Chiltern’s Nathan Gladwell says: “The current climate is encouraging more people who are struggling with their finances to seek alternative options, as credit becomes harder to get hold of.

“Add to that the rises in food, fuel and energy costs and it’s no surprise that most people are feeling the pinch in their pockets.

“People struggling with their finances need to readjust their spending to more realistic levels and be open to alternative options, like informal arrangements.

Options like debt management can offer a valuable short-term solution whilst debts are brought under control, and they ensure that debts are prioritised so mortgage or rent and utility bills are accounted for first.”

If you’re struggling to keep up with repayments or your finances seem like they’re out of control then Click Here to get some professional debt help, start today.

Price comparison web site http://www.Moneysupermarket.com reveals that 30 per cent of Brits think they are on the brink of financial meltdown. 84 per cent of Brits say they have financial worries following last week’s budget.

With nearly £1.5 trillion owed on credit cards, loans, and overdrafts, the UK’s debt mountain is set to hit recored breaking figures but it seems as though more and more people are not able to cope with their repayments.

Head of loans and debt at moneysupermarket.com, Tim Moss, gave some good advice following the survey: “I am really surprised by the extent of worry out there. Close to a third of Brits have obviously been really spooked by the budget.

“There is little doubt many Brits will find their annual road tax as high as the value of their car as from next year, creating a massive headache for people who are really struggling. These are some of the unintended but very real victims of the budget.

“Just 16 per cent of Brits said they had no financial worries, indicating people from all walks of life and income levels are feeling the pinch from rising bills and taxes.”

“Anyone starting to worry about their financial situation shouldn’t bury their head in the sand – problems are easier to tackle when addressed early.

“People should start by gathering their paperwork and working out the true scale of their problems. From there they must prioritise bills and pay the essentials such as mortgage or rent first. Non-essential items such as magazine subscriptions and pay-TV might have to sacrificed.

“If you feel unable to sort out your money worries yourself, start by getting some free independent advice from organisations such as the Citizens Advice Bureau or the Consumer Credit Counselling Service.“

New figures put together for the BBC reveal that more and more people are concearned enough to get help with their mortgage arrears.

The BBC has surveyed more than 300 offices and found that there has been a huge 35 per cent jump in mortgage related enquiries, to the Citizens Advice Bureaux (CAB) over January and February 2008 compared to 2007. The good news is that people seem to be learning not to continue spending on credit cards as the credit card related issues fell by 9 per cent.

The CAB had around 5.7 million issues to deal with in 2007 and almost a third of these enquiries were related to debt; a rather worrying trend. As well as mortgages, the ever increasing energy bills and general household bills are huge contributing factors to the 215,000 new debt related enquires taken by the CAB this January and February.

Citizens Advice Director of Policy, Ms Teresa Perchard said: “The combination of big increases in household bills, especially fuel prices, and rising housing costs is putting additional pressure on people’s finances when they are already stretched to the limit.”

The CAB are also saying that the usual Christmas credit card debt enquiries have fallen by 9 per cent in January and Febraury this year compared to last year, however overdraft enquiries were up 7 per cent on the same time period. So it looks like people are just shifting the debts to other forms of credit, it will be interesting to see the number of debt consolidation loans and general unsecured loans taken out and the number applied for in January, February and when we get to the end of March this year. I bet there are lots of people trying to shift debt to unsecured loans, although the credit crunch has lenders tightening their lending criteria, making it more difficult to get accepted for a new loan.

The advice being given by the CAB is to tell whoever you owe the debt to as soon as possible if you’re struggling to make repayments. The CAB can also help you put together income and expenditure plans and explain the options you have available. The worst thing to do is bury your head in the sand.

New figures released today from http://www.unbiased.co.uk an Independant Financial Adviser search web site, shows that during the last year the UK’s borrowing peaked at a 3 year high of £76.7 billion, which is an increase of over £11 billion from the same period in 2006.

These staggering figures reveal how much we continue to borrow dispite the recent headlines and coverage on the UK’s rising debt mountain. For every £1.00 we saved in 2007, we owed £0.52! I suspect most people wait until it’s too late, they struggle to make payments on their loans or mortgage and then make further borrowings to keep their heads above water every month.

Chief Executive of Unbiased.co.uk, David Elms, said: “2007 has been a turbulent year with regards to finances. Not only did we see three base rate rises last year, but we also witnessed the beginning of the so called credit crunch credit crunch. Consumers no doubt will worry about the impact of the financial markets and the economy on their wallets and it is great to see that savings levels have increased compared to 2006.

“However, our figures also show that consumer borrowing is now at a worryingly high level and it remains doubtful whether we will see a significant improvement in the Savings Brake ratio in 2008. It has never been more important for people to take control of their finances to ensure their savings and borrowings remain at a healthy level.”

If you are struggling to keep up with repayments on your mortgage, a loan, credit card or any form of credit then you should seek professional financial advice or debt management help if you’re still borrowing or using credit to pay for your monthly outgoings.

New reasearch from Callcredit points towards the over 55’s facing financial difficulties as they struggle to define the amount of debt they owe.

A staggering 16 per cent of over 55’s are financially unaware of the level of debt they’re in and so the pensions gap increases with 25 per cent of UK adults not making pension contributions. The situation doesn’t look good; over 1.1 million UK homeowners who are retired still have a mortgage of £38,000, on average and one in eight of these people still owes more than £50,000. Over 1.5 million over 55’s in the UK say they cannot retire because they simply can’t afford to.

It’s not just mortgage debt, one third of over 55’s still carry an average of nearly £6,000 worth of unsecured debts like credit card and personal loan debt. All this puts massive pressure on people when it comes to making provisions for retirement.