Debt advice news: Families hit by slowdown in discretionary income growth

22/12/2009

Demand for professional debt advice looks set to soar in 2010 as families are hit by a slowdown in disposable income levels.

According to the latest 'income tracker' report from Asda, millions of families across the UK have benefitted from lower utilities bills and falling housing costs over the past few months, with interest payments on the typical mortgage having fallen by around 40 per cent over the past year alone.

However, these gains are slowly but steadily being offset by stunted earnings growth and rising transportation costs, meaning that the average British family now has a weekly discretionary income of just £162 a week.

The average family is now just £8 a week better off than in late Christmas 2008, with the year-on-year rate of growth in disposable income levels continuing to ease.

Charles Davis, an economist at Cebr which compiled the report for Asda, has suggested that personal income worries are only likely to get worse in the New Year for millions of families.

"The rate of growth in discretionary income has slowed - and the VAT reversal could put more pressure on family incomes in the New Year," he warned.

Recently, the Alliance Trust Research Centre reported that older Britons are being particularly hard hit by price rises for goods and services.

Kevin Still, director of EuroDebt, said: "These discretionary income figures don't take account of unsecured debt repayment and the average household unsecured debt [for people using credit] is over £21,000. Assuming you are only paying a minimum repayment of two per cent per month then this equates to over £400 per month which really eats in to the average disposable income of just over £700 per month.

"There is a delicate balance between being in control of your finances and not managing. Paying the minimum monthly payment with very high interest on credit and store cards is also likely to mean your balance is barely reducing. Long-term debt solutions like Debt Management Plans and IVAs help management your monthly finances and significantly reduce your debt burden."

Tags; Income Worries and Debt,

• Share
• 
• 
• Store
• 
• Follow
•