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Welcome to iCalculator's monthly Tax and Finance guide and news for November. On this month's news we take a look at:
Figures released by the Office for National Statistics (ONS) in march 2018 states that the UK, household debt has grown sky high and stands at £119 billion with an increase of 11%. The wealth and asset survey are published by the ONS every two years. It also states that the UK's household wealth has grown as well by 13% up to around £14.6 trillion, however, the growth in household could present some challenges in the near future.
The household debt includes debts like mortgage for residential properties, personal credit cards, consumer loans, personal loans, student loans etc. The average household debt has been increased to £9,400, which is mostly the result of higher student loans and the so called 'buy now pay later' deals. The student loans debts are standing at a whopping figure of £32 billion, according to a report, young people have five times more loans than people aged over 55 in the UK. People are using credit to pay for day to day spending, and wages have been stagnant or even decreased in some cases. Payday loans have also impacted those in lower earning famalies.
Though the mortgages and student loans are considered secured loans, they rise with a considerable number during the last decade. Moreover, these loans, especially student loans are not expected to be repaid in all the cases. Other than these overdrafts and credit card debts have seen some big rises.
Many studies and surveys are being conducted in the UK to see the consequences of rising household debt, in order to foresee the future and try to minimize the impact. The results of these studies are terrifying. A study conducted by Thinktank has described the situation as 'Crisis' and says that the rising levels of debt will affect the country as a whole and at every level.
The study also claims that the impact could be worse in the form of rising prison numbers, un-affordable health care, and the government will be forced to bail individuals and banks out because they won't be able to support themselves.
The chairman of Debt.com Mr. Howard Dvorkin, describes the situation as 'Doomsday Scenario', that will have to be dealt with by future generations. He tells Metro.co.uk that the technical advances in the finance industry will be significant, but that won't solve the debt problems, and we will keep borrowing just because we can, rather than considering the loan term goals. I have no clue when it will come crashing down, I just know it will, he added.
Not all debts are same, debts like mortgages are considered to be good debts, but living off your credit cards and overdrafts could be considered as a poor choice. It's a good thing if you are one of those people who see the debt as a burden and want to take a step towards avoiding them.
Additionally, shopping around for better deals can lower your risk of getting into a never ending debt, or just think twice before financing that car, if you really need it or can do without it form some more time and save up enough to buy one in cash.