Abacus Daily Debt News

Debt causes major stress in people because it is such a persistent problem, an expert has noted.

Therapist Dan Roberts said this aspect makes being in deep money trouble even worse than traumatic events such as bereavement and divorce, since the latter category are one-off occurrences from which people can bounce back.

He noted: "The thing about debt is its chronic stress, day in day out - a trickle effect that doesn't really go away," adding this can be "really damaging" to many people.

Mr Roberts explained that this effect is seen specifically with "unmanageable" debt rather than people owing money at levels they can cope with, as it is when it becomes impossible to maintain repayments that the personal strain becomes too much.

And the expert anticipated seeing more clients with such problems as a result of the weak economy generating more redundancies in the near future.

Figures from Credit Action for June indicated that 1,271 people per day are being made redundant.

By Amy White
 

A new survey has been identified as a sign of the need for children to be better educated about issues of personal finance - something that may help them stay debt free.

Over half of those questioned in a Clydesdale Bank survey said they anticipated earning £50 a week or less in their first job after leaving school, which may suggest many are unaware of the value of money and the cost of living.

This prompted retail director Steve Reid to suggest the young are often left with too little knowledge of finances.

Such findings "suggest that children this age could be better educated when it comes to finances and the future" and "highlights the need for numeracy and financial capability and awareness within schools," he argued.

Many people who are adults now have problems managing their budgets, with half of consumers in England and Wales sometimes or frequently struggling to manage until the next payday, according to a Halifax study published this month.
 

Retail sales may be sluggish partly because consumers with credit card debt are trying not to add to it.

The latest official government data on sales has shown the value of retail sales in June was four per cent higher than in the same month in 2010.

But the volume was down in food stores by 4.2 per cent, which may be linked to the impact of higher prices.

Non-store retailing did best, with a 24.4 per cent surge that was the highest year-on-year jump since comparable records began in 1988.

Commenting on the data, the British Retail Consortium's Stephen Robertson said the signs for the food sector were "worrying" and increases elsewhere may be linked to widespread discounting.

This meant the overall picture is "better but still not great".

Such a situation may continue because of the concerns people have with debt and those struggling most may wish to seek debt management help for this.

By James Francis
 

The Association of British Credit Unions (Abcul) has welcomed moves that will extend the range of services they can offer.

A legislative reform order has been introduced to Parliament this week by the government to amend the Credit Unions Act 1979, reducing the limits on their functions.

People living in and working for housing associations will be eligible to get loans for the first time under the new regulations.

This may benefit people who might otherwise have been tempted to turn to forms of lending likely to land them in large levels of debt.

Chief executive of Abcul Mark Lyonette commented: "Credit unions around the country along with their partners have been eagerly awaiting these changes and so I'm delighted that they are on track to be in force by next year."

Other plans announced by the government this week include a study on the potential consequences of a cap on the amount of interest that can be charged on credit card debt.

By Joe White
 

People living in England and Wales are more likely to struggle to make it through to the next payday than Scots, despite the latter borrowing more in recent months.

This was what a survey by insolvency professionals body R3 discovered, with 13 per cent of those living in Scotland adding to their levels of loan and credit card debt in recent months, compared with 11 per cent in England and Wales.

However, while 43 per cent of Scots said they sometimes or often struggled to avoid running out of cash by payday, 50 per cent of people living in England and Wales owned up to this.

One reason could be the lower unemployment rate in Scotland, as English and Welsh households may see more pressure being placed on the finances of the remaining breadwinners when their partners lose their jobs.

The northern half of Britain as a whole has fared worse economically than the south since early 2008, according to a Halifax study of regional variations in the impact of the recession and the subsequent slow recovery.
 

Soldiers may be among those needing debt help in the near future as more redundancies could be planned in the armed forces.

Defence secretary Dr Liam Fox has unveiled a policy to trim the full-time Army from 101,000 members to 82,000 by 2020, reducing it to the smallest size in 110 years as the government seeks to balance the Ministry of Defence's books.

He said the gap will be filled by reservists along similar lines to those operated by countries such as Australia and the US, where part-time soldiers make up a larger proportion of the total fighting force.

Soldiers made forcibly redundant may need debt help to deal with what they owe, not least if they are unable to swiftly readjust to civilian life and find good jobs.

Other public sector employees facing debt worries may include those suffering compulsory job losses at Selby Council, which is reducing its payroll in the wake of government grant cuts.

The authority is letting 48 people go and has only had 34 volunteers for redundancy, the Wetherby News reports.
 

Some holidaymakers may be tempted to cast their budgets to the wind in preparation for their getaway, however doing so could incur pricey debts.

According to a Post Office Travel Money survey, parents spend on average £80 on extra things for the beach, with more than five per cent of respondents admitting to parting with more than £200 after giving in to their children's pestering.

British mums and dads rack up a typical bill of £78.98 when it comes to seaside extras, with many buying ice creams and buckets and spaces, and hiring pedalos to ensure their family has a pleasant break.

Post Office Travel Money said that Bulgaria was the cheapest destination for parents likely to tot up a little bill of beach extras, while the Vendee region of France was the most expensive.

This follows a report by Aviva, which found 24 per cent of mums and dads have parted with their cash in order to back up their playground boasts.

By Amy White

Rising energy prices could result in many older people being driven into deeper and deeper debt, as nearly half of retired households face fuel poverty.

According to figures released by the Department of Energy and Climate Change, the number of homes that find affording light, heat and power difficult has increased to 5.5 million for 2009, a rise of one million since 2008.

Age UK has identified that elderly pensioners will be among the most vulnerable when it comes to these expensive energy bills.

Charity director Michelle Mitchell said: "This figure only looks set to increase as energy companies announce further double digit per cent price increases, leaving more older people desperately trying to meet rising bills."

Consumer group uSwitch said earlier this year that UK householders would be forced to pay record fees for their heat and power - and those already struggling with bills may be pushed into real debt if asked to pay more.

By Joe White

People who rely heavily on their flexible friends to stay afloat have been advised to seek financial advice with regards to credit card debt.

According to Money Advice Trust spokesman Paul Crayston, there are budget management facilities available for people who find their income slips through their fingers before they have paid for all their living costs for the month.

He noted that credit cards are useful tools but if a person finds they are relying too heavily on them for everyday living costs then they could be building up a substantial mountain of debt.

"Using credit cards on a regular basis is one of the main signs that you have a borderline debt issue. It can be a dangerous spiral," he stated.

Trades Union Congress general secretary Brendan Barber said yesterday (July 12th) that families could be forced into serious debt as a result of high living costs, rising inflation and stagnant wages.

By Joe White

Families could be forced into debt as a result of the perfect storm of high inflation rates and the rising cost of living.

This is according to Trades Union Congress general secretary Brendan Barber, who claimed the fact that the price of essential everyday items and services was climbing at twice the speed as wages is forcing people to stretch their incomes further every month.

In response to figures published today (July 12th) by the Office for National Statistics, he said the recorded small drop in overall inflation was not going to do much to raise the spirits of households struggling to pay for transport and food.

"With a weak labour market, growth at a standstill and both business and consumer confidence down, inflation is the only measure that's bounced back… creating a toxic mix for families," Mr Barber remarked.

Last week, Child Poverty Action Group spokesman Tim Nichols said there were many households with no financial safety net to turn to when their money runs out - which puts the poorest families at risk of serious debt problems.

By Amy White