UK family debts increase by nearly 50% in a year

Graham_Devon

The typical debt owed by a UK family has soared by 48% since January 2011, as rising inflation has taken its toll on household incomes, according to the latest Aviva Family Finances report.

Research by the insurance company found that the typical UK family owes £7,944 in unsecured borrowing on credit cards, loans, overdrafts and other forms of credit, compared with £5,360 in January 2011. The figure represents 32% of a typical net annual income and suggests families are falling further into debt as financial pressures grow.

Credit card debt was the biggest source of unsecured debt, with those questioned owing an average of £2,314 on plastic, followed by £1,739 on personal debts. The survey includes couples without children in its definition of families, and those who were planning to start a family admitted to the highest levels of debt, owing an average of more than £15,000.

Families are also saving slightly less than they were a year ago, with the typical amount put aside each month falling from £22 to £21. The report, which says 42% of families save nothing on a monthly basis compared to 40% in January 2011, reveals that the rising cost of living, the threat of redundancy and meeting the cost of unexpected expenses are the main areas of concern for families in the current economic climate.

The research, which is based on interviews with 10,000 people aged between 18 and 55, also reveals that despite pay freezes in many sectors the typical net income among those questioned has risen by 7% since January 2011.

This has surprised me. It's way more than I would have assumed.

And the "typical family" puts by £21 a month?!

It's another survey. But it's another survey showing how bad a shape family finances are in. Really am surprised in the increase in debt. I thought this was slowing?

http://www.guardian.co.uk/money/2012/jan/25/family-finances-debt

Generali

Graham_Devon wrote: »

This has surprised me. It's way more than I would have assumed.

And the "typical family" puts by £21 a month?!

It's another survey. But it's another survey showing how bad a shape family finances are in. Really am surprised in the increase in debt. I thought this was slowing?

http://www.guardian.co.uk/money/2012/jan/25/family-finances-debt

For want of a better word, I suspect this is balderdash.

Unsecured lending is falling at almost 1% per month according to the Bank of England who you'd hope would know!

Where has the money come from? Don't they know there's a credit crunch on?

Kennyboy66

Generali wrote: »

For want of a better word, I suspect this is balderdash.

Unsecured lending is falling at almost 1% per month according to the Bank of England who you'd hope would know!

Where has the money come from? Don't they know there's a credit crunch on?

Of course its balderdash.

http://www.creditaction.org.uk/helpful-resources/debt-statistics.html

This is a fairly reliable source for credit stats - they have been doing it for 7 years on a monthly basis.

Smilver

When interest rates are too low for too long debts go beyond what people can afford to pay when rates go back to normal.

suburbanwifey

I thought average family debt was shrinking not growing! Shocked!

quantic

Can't say I'm surprised really - I do hear a lot of people go on about how much they have on their credit card or that they are in their overdraft at the moment.

I had an interesting conversation recently, my partner was asked by her friends why she couldn't afford to do something (really extravagant holiday for hen do), and they continued to prod her, asking if it was because she had maxed her credit cards and overdraft... when she told them that we don't have any debt they couldn't understand how we could then not afford it.

She went on to explain that once her money is gone she doesn't spend any more. As a couple we now only spend what we have, we have no debt and none available to us - this absolutely baffled her friends.

They then went on to explain that in their mind, they are "skint" when all available funds are gone (be it their own or credit cards/overdrafts.) E.g. when everything they can get ahold of is maxed out.

Seem to encounter more and more people with the same attitude... also seem to encounter a lot of people who justify debt by saying "the kids can't go without" even though the thing they are talking about is generally not a necessity and very excessive given their situation.

nearlynew

quantic wrote: »

.... They then went on to explain that in their mind, they are "skint" when all available funds are gone (be it their own or credit cards/overdrafts.) E.g. when everything they can get ahold of is maxed out.

Seem to encounter more and more people with the same attitude... also seem to encounter a lot of people who justify debt by saying "the kids can't go without" even though the thing they are talking about is generally not a necessity and very excessive given their situation.

I personally know dozens of people like this.

They are debt-junkies, pure and simple.

Another interesting thing is when you meet people with this attitude who have a mortgage, you can be 99% certain that it is interest only.

Don't believe me?
Try asking them and you'll see I'm right.

suburbanwifey

nearlynew wrote: »

I personally know dozens of people like this.

They are debt-junkies, pure and simple.

Another interesting thing is when you meet people with this attitude who have a mortgage, you can be 99% certain that it is interest only.

Don't believe me?
Try asking them and you'll see I'm right.

I know someone exactly like this, they worry me!

Couple, one child, unmarried, house with mortgage of £142,000 on interest only mortgage, variable interest rate, sub-prime lender (nasty! and scary!) and when I ask if they have a savings vehicle to pay off their mortgage when it matures, I was told 'When her parents die, they will leave us the money and that will pay it off' (yet, they are not even married? would you pay off the joint mortgage of your daughter and her boyfriend ?? me thinks this scenario will not go as planned) AND he has around 20K on credit cards and last week (yes, last week) bought a new 50" Plasma, HD, 3D,2D TV (we needed one! the other plasma was 5 yrs old) etc. etc. :eek:

He also spends £5 a day on MacDonalds for his breaks at work, that's £30 a week on MacD's. When I said they could make cut-backs with not wasting money on crap like that I was told 'I like them' (then he complains about his expanding waistline )

Seriously, this guy works with my OH and he moans to him all day, every day about how 'skint' he is. Yet spends money like water on crap and says his mortgage will be paid off when someone dies ...

Despicable, stupid man, he really is.

Derivative

quantic wrote: »

They then went on to explain that in their mind, they are "skint" when all available funds are gone (be it their own or credit cards/overdrafts.) E.g. when everything they can get ahold of is maxed out.

What bothers me about this attitude is not misuse of debt.
It's actually the fact that the concept of 'pricing' doesn't seem to exist to some people.

I have a £30 weekly food/socialising budget. Does that mean I spend £30 per week on food? Of course it doesn't. I still spend as little as I have to!

"Skint" was the go-to word when all of my pocket money was gone. It has no place in an adult's vocabulary.

I don't make purchasing choices based on whether or not I have money - I make them based on whether or not they are worth it! I could have £10m in my bank account, and I would find it hard to justify a £500 holiday to some crappy resort.

"Insecurity" takes on a whole new meaning when people feel the need to spend all of their money on tosh. They're insecure all right - one gust of wind and they fall into the gutter.

RenovationMan

Our own household debt went up 650% in May 2010, and we're on an interest only mortgage. We're debt junkies.

Our household debt fell 17% by Dec 2011, and we're still on an interest only mortgage. We're still debt junkies I guess? I'm not sure of the definition and so I don't know when our overpayment will reach the point when we're not debt junkies anymore. Does anyone on here know?

nearlynew

RenovationMan wrote: »

Our own household debt went up 750% in May 2010, and we're on an interest only mortgage. We're debt junkies.

Our household debt fell 17% by Dec 2011, and we're still on an interest only mortgage. We're still debt junkies I guess? I'm not sure of the definition and so I don't know when our overpayment will reach the point when we're not debt junkies anymore. Does anyone on here know?

Believe it or not, but not every post is directed at you.