Monday, July 26, 2010
Category:
Consolidation
According to new research from uSwitch.com, 67 percent of consumers have been left feeling ‘worse off’ as a result of the Budget. However, it was revealed that while 51 percent now have less confidence when it comes to their personal finances, 42 percent have a greater level of confidence in relation to the country’s finances.
The research has highlighted that the Budget has left consumers with ‘mixed views’. It has been reported that 24 percent now have more confidence about the end of the recession, whereas 32 percent have less. With regard to employment, 29 percent reportedly no longer feel as confident about their jobs, yet 6 percent feel heightened security.
Further findings include the fact that 83 percent of consumers will be altering their behaviour following the Budget, with 27 percent of these cutting back on spending. What’s more the VAT increase in January has reportedly meant that 48 percent will re-consider large purchases, 50 percent will reduce expenditure on luxuries, and 24 percent will spend less on food.
Director of Consumer Policy at uSwitch.com, Ann Robinson, commented: "The good news is that consumers believe the Budget has been for the greater good. The bad news is that it has come at great individual cost. While it may succeed in tackling the national debt in the long run, consumers are clearly concerned about what it means for them personally in the shorter run.
"Now that the VAT hike has become a reality, many are thinking of rushing big ticket items through before January when the increase kicks-in. This may be a good thing for the economy, off-setting at least in part a general reduction in spending which is consumers' natural reaction to the measures announced on Tuesday.
"However, once the VAT hike takes effect, consumers will be cutting back on luxuries, and even necessities like food. The Government has bought itself some time, but come January it could be facing double jeopardy.
"The initial reaction will always be a knee jerk, but consumers should look at combating the impact of the Budget by cutting back painlessly on household bills. It's estimated that the increase in VAT will cost the average family an extra £500 a year - you can easily claw this back by ensuring you are paying the lowest possible price for the basics. This will free up some cash so you can carry on enjoying your current standard of living. It will be a challenge, but at least most consumers recognise a more positive future for the country, which will in turn mean a better future for them individually."
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Homeowners who are feeling the squeeze could consider taking out a secured loan to consolidate existing debts. One of many finance options available, a secured loan for debt
consolidation could be used to tie any existing debts up in one place. By taking this approach, expensive monthly commitments – such as credit card repayments – could be replaced with a single monthly repayment, which could be lower than the sum of current outgoings. This could leave borrowers with extra money each month, which could potentially be set aside in a savings account for future use. However, if opting for a secured loan to consolidate debt, it should be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.
