Debt

Just about everyone has some debt, even if it's just your mortgage or car payment. However it's all too easy to accrue other debts especially credit card debt; in fact credit card debt in the UK is at its highest level in 12 years, accounting for about 70 billion pounds of the country's total 200 billion pounds of personal debt. And it isn't just individuals - business debt numbers are also high, and in a typical year, around 9 billion pounds are lost in unpaid invoices. 

More information on business debt


The Practical Effects of Having Too Much Debt 


We all know why it isn't a good idea getting into debt, although it is all too easy to do so; often people are approved for a credit card or loan when they have little ability to actually pay it back. The amount of debt you have and how effectively you are paying it back affects your credit score, which in turn can affect your ability to borrow money, or be approved for a car loan or mortgage. A few points difference on your credit score can make a big difference on the amount of your monthly payments, especially when compared over the term of the typical 30 year mortgage, meaning you can end up paying thousands of pounds more. It may seem unfair, but some employers also take into account an applicant's credit score when looking through job applications, and even renting a house or flat can be a challenge if you have poor credit. Once you have poor credit, it can be time consuming and difficult to reverse the trend, and many people find that it's all they can do to afford to pay even the interest on their credit cards and other loans, making it even harder to catch up. In addition to struggling with trying to make the payments on time, being in debt also means an endless stream of phone calls and letters from your creditors, demanding payment.


Stress, Anxiety and Embarrassment


Not surprisingly, being in debt can be stressful, especially if you just can't realistically see a way out of the situation, or are in danger of having your home repossessed. Being in debt often means constantly juggling payments and deadlines, trying to work with a budget that isn't realistic, and sometimes using credit cards to pay for everyday items and expenses, which of course simply makes the situation worse. About 7 million people in the UK lose the equivalent of 11 nights of sleep every year simply worrying about their debt; this of course can lead to irritability, anxiety and a lack of focus at work or school. In fact, just over 60 percent of those with money worries claim that it affects their concentration and ability to focus; an equal number say that they feel frustrated or overwhelmed by their debt situation. And it isn't hard to see where all of this can lead if the situation continues - a downward spiral of depression, sometimes leading to medical treatment and even suicide.