How to get out of debt as households now owe £15,400 each
Household debt has hit "crisis levels" with the average working family now worse off than before the financial crisis in 2008
DEBT levels hit record highs last year, with the average household now being £15,400 in the red, new research has revealed.
Unsecured debt - debt other than mortgages - rose by £886 in the third quarter of 2018 compared to a year earlier, meaning UK debt levels are now higher than before the financial crisis in 2008.
Total unsecured debt rose to £428billion between July and September last year, compared to £286billion before the financial crisis, according to an analysis by The Trades Union Congress (TUC).
Meanwhile, unsecured debt as a share of household income is now 30.4 per cent – the highest it’s ever been.
The average working family is now worse off than before the financial crisis, which means millions of households are reliant on borrowing to get by.
The TUC says government austerity and years of slowing wages are key reasons behind the increase in unsecured debt.
It blames weak wage growth on a low minimum wage, low UK investment and claims that workers don't have enough power to bargain for higher wages.
The trade union also said the government has prioritised corporate tax cuts over public sector pay.
How to cut the cost of your debt
BEING in large amounts of debts can be really worrying. Here are some tips from Citizens Advice on how you can take action.
Check your bank balance on a regular basis - knowing your spending patterns is the first step to managing your money.
Work out your budget - by writing down your income and taking away your essential bills such as food and transport.
If you have money left over, plan in advance what else you’ll spend or save. If you don’t, look at ways to cut your costs
Pay off more than the minimum - If you’ve got credit card debts aim to pay off more than the minimum amount on your credit card each month to bring down your bill quicker.
Pay your most expensive credit card sooner - If you have more than one credit card and can’t pay them off in full each month, prioritise the most expensive card (the one with the highest interest rate)
Prioritise your debts - If you’ve got several debts and you can’t afford to pay them all it’s important to prioritise them.
Your rent, mortgage, council tax and energy bills should be paid first because the consequences can be more serious if you don't pay
Get advice - If you’re struggling to pay your debts month after month it’s important you get advice as soon as possible, before they build up even further.
Groups like Citizens Advice and National Debtline can help you prioritise and negotiate with your creditors to offer you more affordable repayment plans.
Frances O'Grady, general secretary of TUC, said: "Household debt is at crisis level.
"Years of austerity and wage stagnation has pushed millions of families deep into the red."
"The government is skating on thin ice by relying on household debt to drive growth..
"A strong economy needs people spending wages, not credit cards and loans.
"Our economy is not working for workers. They need stronger rights and bargaining powers," O'Grady added.
"Trade unions should be allowed the freedom to enter every workplace to negotiate higher wages."
More on debt
If you've found yourself in a lot of debt, here's how to clear it by the end of this month in nine easy steps.
You can also take years off your credit card balance by increasing payments by just £1 a day.
Meanwhile, nearly half of Brits are hiding a total of £96billion worth of debt from their family and friends.
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