Debt Problems on the Increase

According to London's Guardian, people seeking help for debt problems is on the rise dramatically over the same time last year. Charity Citizens Advice reported seeing 83,000 new clients in January 2007 compared to 72,000 in January 2006. The problem has created a need for the agency to hire more counselors to handle the load, with February and March typically being the busiest months as people are hit with bills from Christmas spending coupled with high fuel bills.

Of all the new cases, 25% are related to credit and store cards. The difficult part is that many people make the choice to consolidate debt only to find themselves right back where they started. How can they be? The problem is that what many people do is consolidate their debt in order to free up the credit limits on their cards for new purchases instead of using it as a way to eliminate debt completely. It becomes of vicious circle of getting out of debt, consolidating to lower the payments, and then getting right back into debt again.

Other contributing factors are the increased cost of heating and council taxes that are plaguing many people in the United Kingdom. The months of January and February are the coldest winter months, and when that is added to the other costs, it makes it difficult for many people to meet daily expenses. The increasing cost of daily living makes it a struggle for those on fixed income or those already living on shoestring budgets that are stretched to the limit already. For those people the struggle is endless, with little hope in sight for a future free of financial pressures. For those creating their own financial problems, the answer is learning to create and live within a budget and not using a consolidation loan as a key to increase spending.

March 9th, 2007

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