UK works 31 days solid just to clear card and loan debt
Latest figures from Unbiased.co.uk, the organisation promoting the benefits of independent financial advice, show that as a nation, we have worked 31 days solid to earn enough money just to service the interest on the our credit card and loan debt, and thus Thursday 1st February 2007 is hailed as Debt Freedom Day.
Independent analysis of official figures shows that in order to clear the £2,012 interest on an average person’s credit card and loan debt, it would take someone earning the UK average of £23,556, all of January (31 days of the year) to earn enough just to service the outstanding interest on their debt, let alone re-paying the actual debt itself, emphasising the nation’s continued reluctance to rein in spending and take control of their financial situations.
While levels of personal debt have been reduced by 7% over the last three years and average levels of interest payable on this debt has come down by 59%, Debt Freedom Day signifies just how much debt people still have to their name, and most importantly, the proportion of income needed to service this financial burden. Recent Savings Brake figures from Unbiased.co.uk also show that we are continuing to rely on borrowed money, and for every pound saved are borrowing 49p.
David Elms, chief executive of Unbiased.co.uk, said: “Although Debt Freedom Day is of course a hypothetical point in the financial calendar, it does serve a real purpose and should be seen as a wake up call to those who carry personal debt. Debt Freedom Day does fall slightly earlier this year, which is undoubtedly good news, as it means average levels of personal debt continue to fall year on year, but the real headline will come when official figures show people controlling their spending behaviour and increasing their saving power, and this date becomes a non entity.
“Why spend an entire month slaving away to earn just enough money to service the interest on this financial burden? Surely people would rather see this money work hard for them in return, and deliver them a healthy savings pot or a nest egg to enjoy in the future. An independent financial adviser can help you sit down and assess your financial situation and help you identify where your monthly budgeting could be improved and help you embark on the path to saving.”