With the Christmas festivities now over and the New Year beginning, households up and down the country inevitably begin to reflect on their financial situations and prospects for the year ahead.
And with the average household debt at a record high, most of us will have a lot of head scratching, belt tightening and financial management to do in 2014.
Here, we look at some of the key facts and figures ready for January.
The vast majority of household debt is made of secured loans like mortgages. This sort of debt comprises around 90% of Britain’s personal debt and currently stands at around £1,268 billion.
Other household debt includes credit cards, store cards, rent arrears, bills and short term loans. They currently total around £159 billion. This is the sort of debt that can easily be exacerbated by Christmas or vacation spending when many people increase their credit in order to pay for gifts, food and festive parties.
In total, this works out to around £54,000 of debt per household; almost a 50% increase on ten years ago when the figure was just £29,000.
Though they can be incredibly useful and good for your credit rating when used correctly, credit cards can cause havoc with your personal finances and leave you in serious debt for years to come when used irresponsibly.
To help ease the pain of credit card debt, you could try to increase the number of payments that you make every month, thus reducing the amount of interest you’re paying and helping to repay your debt sooner. You should check this with your lender first though as some firms may not allow you to break the terms of the loan agreement – even to make early payments.
You could even consider taking out a new credit card with a low introductory interest rate and use it to pay off your existing, high interest credit card although this is something which should be approached with caution.
Debt management plans
If your New Year financial assessment is especially bad or leaves you feeling scared and unsure how to cope with your personal debt, a good option is to create a comprehensive debt management plan.
You can either do this yourself, or if you find it too overwhelming you can call in a professional company to help you make sense of your finances and outline your best options for the New Year.
A professional debt management company will often use the services of experienced document collection agents to ensure everything is completed accurately first time. This will help to ensure that all paperwork is submitted correctly and efficiently, helping to resolve your financial problems as quickly as possible.
With UK household debt on the increase and the global financial situation still uncertain, it’s never been more important to ensure that your own finances are in as good a condition as possible. If they’re not as healthy or robust as you’d like, now’s the perfect time to do something about it and stand yourself in great stead for the coming year.
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