10 Ways People Get Into Debt
March 14th, 2010 | 
Author: 10 Ways People Get Into Debt
The total accumulated UK personal debt at the end of September 2008 stood at 1457bn according to a recent report. The report also highlights the shocking statistic that the growth in UK debt in 2008 is 1m every 8 minutes. It is so easy to get into debt. All it takes is missing a few credit card payments or forgetting to pay a household bill and suddenly you are trapped in a downward spiral of debt.
Here we look at the 10 most common ways that people get into debt.
Credit Cards
The majority of people dont realise the effects of neglecting credit card payments until they are so deep into debt that they dont see a way out. One sign of having too much credit card debt is being only able to afford minimum payments and as soon as a payment is missed the problem begins to spiral. Keep up with regular card payments through Direct Debit and try to pay more than the minimum amount.
Living beyond your means
In todays buy now pay later culture consumers are living beyond their means by running up high credit card bills and spending borrowed money. The outrageous amount of money is normally spent on luxury goods which need time to save up for such as holidays or the latest must have! Living within your means is to only spend the money you earn each month in your wage packet.
Burying head in the sand
A recent survey by CallCredit reveals that 60 of UK consumers are unsure exactly how much they owe while 15 admit to actually not having a clue at all. There are many ways to find out how much debt youre in and in most cases these are free such as The Experian Report. This report is shown to creditors when a consumer applies for a loan or credit card.
Rent Arrears
Rent is a priority debt. It is important to keep up regular payments and keep a record of what you have paid. In a worse case scenario the landlord can evict you without a court order depending on the tenancy agreement.
Bills Bills Bills
Home is where the heart is! So it is important to make sure all household payments are paid for on time. Missing a payment can seriously result in losing the services such as electricity water or gas and then the added costs for reconnecting the service.
No savings
The latest ONS figures suggest that the savings ratio is down to its lowest level at just over 1.1 for the first quarter of 2008. Saving is on the decline because there isnt enough in the pot at the end of the month but its better to save a little than not to save at all.
Gambling
There are now around 1700 gambling websites and with the rise of online gambling sites it has never been so easy to get addicted to gambling and land into a serious amount of debt.
Borrowing money
The first rule when borrowing money either from a loans company or friends/relatives is always make sure you can keep up the regular payments and you can afford to pay everything back including the interest.
Unexpected life events
Such as a relationship breakdown illhealth or unemployment can cause financial plans to become disrupted resulting in financial hardship.
Lack of financial capability
May result in people signing agreements when they may not have understood the full consequences of doing so.
If you avoid falling foul to any of the points above you can greatly reduce the chance of getting yourself into debt however when you do find yourself in financial difficulty there are companies that can offer quick cash loans to help you get back on your feet.
About the writer: Julie is a freelance writer and loves to write on a wide variety of subjects.
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