Essential costs 'a struggle for many'

24/09/2009

Essential costs now take up 68 per cent of the average personal income, Bright Grey said today.

According to the life insurer, 25 per cent of people are currently "struggling" with their bills.

Meanwhile, 39 per cent said that they would find it difficult to cope if their essential costs went up by just £50 a month.

The recession has contributed to households' money worries - leading many to seek help to solve debt problems.

Unemployment has reached a 14-year high, affecting the personal incomes of many.

Meanwhile, wage freezes have also been imposed by many firms due to shrinking corporate profits.

"The frightening truth is that many Brits are already struggling to afford their monthly bills - and all it would take is a small increase in bills or drop in income for people to find themselves in trouble," Roger Edwards at Bright Grey said.

Also commenting on the report, EuroDebt director Kevin Still said: "It is a concern that a modest increase of £50 per month in household expenditure could upset the equilibrium and result in people getting into financial difficulty. For people using credit this can occur very easily by credit card companies increasing their interest rates and minimum payment policies, as has been seen in the last year with the average rate at over 18 per cent.

"More people are now seeking debt advice, but often too late. If mortgage rates start to rise then earlier planning may be required, as £50 contingency will not go very far. There are a number of managed debt solutions available for people who struggle with their budgeting skills and are in an unmanageable debt situation, for example Debt Management Plans or an IVA."

Gas and electricity bills were found by the report to have risen by 325 per cent over the past six years.

Tags; Budgeting Advice, Young Family Finances,

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