Psychology of Money: 28

In case you haven’t had your daily fill of scary research findings, consider these:

  • In the UK, individuals currently owe nearly as much as the entire country produced during the whole of 2010
  • Average household debt in the UK is ~ £8,144 (excluding mortgages).
  • This figure increases to £15,661 if the average is based on the number of households who actually have some form of unsecured loan.
  • Average household debt in the UK is ~ £55,870 (including mortgages).
  • Citizen Advice Bureaux dealt with 8,004 new debt problems every working day in England and Wales

For more go to Debt Statistics – compiled May 2011

In case these numbers don’t mean much to you – the national average income for people who have been working between 10-20 years is £35,000.

Now, not all debt is bad, just like not all drinkers are alcoholics. Try getting a credit card or buying a house if you’ve never incurred debt in your life (you have no credit rating and won’t get the loan.)  But not many of us have this problem, that’s the obvious moral of the past 2 years.

The good news is that according to Barclays Young Ultra Forward-Thinking Savers (YUFTIES) now account for between 32% of 20-29 year olds who save, on average, almost 20% of the monthly earnings. Younger people are mending our bad habits.

If this doesn’t include you and the idea of getting out of debt is the last thing you want to think about, you might want to consider getting yourself a SPENDING PLAN as recommended by Debtor’s Anonymous.

Now a financial advisor will tell you to make a budget, get out of debt, then start to save and then hurry up and make losts of investments before you find that you’ll never be able to retire. This is why people like me don’t consults financial advisors. They’re just impossible to reason with.

D.A. suggests a different approach where you put together a plan that starts to pay off your creditors while also proving to yourself that you can create cash reserves (i.e. savings) right now. And for most of us who have never pulled off the budget/clear debt/save method and stuck with it year in and year out, D.A.’s spending plan is the saner way to go.

As the title suggests, the plan is designed to help you manage your spending rather than detail out a budget that’s only going to make you bite all your fingernails off. There are worse things than being in debt and one of them is refusing to do anything about it. Trust me, the stats I found on debt-related death and disease were even more depressing.

Yours, cheerfully. Back tomorrow with brighter tales

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1 Comment

Filed under Money

One response to “Psychology of Money: 28

  1. Heidi Barry

    INDEED!! The DA plan is so much more reasonable, my husband convinced me of that. I was VERY resistant, but went with it because he is the business administrator in our household. We learned the hard way, totally overspending and living WAY above our means. Relocation and unemployment scared the pants off of us, and forced us to be responsible with money. Much better…… and it will be so much better when we become closer to being debt-free, and someday, homeowners…

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