Debt Book - Introduction
In the UK we are among the biggest borrowers in the world. Britain has in excess of 60 million credit card holders and this figure is rising all the time.
Poverty and low income are the main reasons for debt. It is very easy for people to fall into debt as a result of losing their job due to ill-health or redundancy or losing the main bread winner in the family.
However, many of us are already living with debt, but may not recognise this. If we own a house we will usually have bought it with the help of a mortgage which is after all a very large unpaid debt. If we live in rented accommodation we will owe rent. If we love to shop we will probably own a number of store cards and if we enjoy our holidays we will probably have travelled using credit cards.
We may not consider ourselves to be in debt because we can comfortably afford all the repayments on our borrowing and still have a reasonable amount left in our pay packet at the end of each month. However most of us simply sustain our debts by paying the interest alone. This stops us falling into arrears but does not actually clear the capital sum. It only takes the loss of a job, a pay freeze, illness or matrimonial breakdown to upset the balance.
The old adage, "if you haven't got it, don't spend it" seems easy to say but less easy to follow. However, the move away from dealing in cash and relying more on cheques and debit cards means that we are often unaware how much we have spent until the next monthly bank statement arrives by which time it may already be too late.
Here we consider the various forms of debt and how they arise together with suggestions for debt management and debt prevention.