Tuesday, May 22, 2007
Category:
Consolidation
Scottish Widows have recently revealed that almost half of UK households, 11 million homes, depend on more than one salary to cover the bills and maintain an acceptable standard of living.
Research also found that the level of debt increased with children. The average household with 2 children had on average £100,000 of debts compared with a childless household that had £80,000 of debt.
Commenting on the findings, Scottish Widows’ interim protection market director Richard Jones said: “Our report reveals that the mixture of relatively low interest rates and high job security means borrowing has been an attractive option in recent years. The problem is that servicing this debt eats into our take home pay and exposes us to financial hardship should we be unable to work. Low inflation also means debts are eroded more slowly over time – again increasing the need for financial protection.”
Figures show that of the 7.1 million UK households with dependent children there are 3.5 million that are reliant on two salaries. This dependency on two salaries may be as a result of a rise in consumer credit. The report shows 47% of Brits have a mortgage, 60% have secured or unsecured loans, overdrafts or finance agreements and a similar number of 63% have credit card or store card debt. As expected, those with children have higher levels of debt on both loans and credit cards than those without.
Richard Jones continued: “This reliance on two incomes to buy and run the family home means millions of households are effectively doubling the risk of financial hardship should one of bread winners become unable to work.”
The report published by Scottish Widows also shows that many do not have much in savings tucked away for a rainy day. Around 27% have no savings at all to live off if circumstances change while a further 25% have less than £3,000. This amount would last less than three months, which means that half of all UK household would struggle if a problem arose.
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With growing families and a greater dependency on two salaries many homeowners may be finding themselves with multiple credit and store cards that they would like to clear. Homeowners could consider consolidating debts with a secured loan. Also, a debt
consolidation loan, one of the many options available, could put all your debt into one place, making it much easier to keep an eye on your monthly money outgoings. Secured loans can be paid over a term to suit the borrower from 5 to 25 years. Homeowners should remember that repaying over a longer term may increase overall interest charges.
