According to new figures from the Bank of England, household debt in the UK hit a record high in recent months. Individuals now owe in excess of £1.43 trillion – far more than at any other point in recent history. The total amount of household debt now exceeds the level recorded in September 2008, just after the financial crisis.
On average, each UK adult has approximately £26,489 in debt – a figure that’s made up of everything from credit card balances to home loans. It’s a startling amount – a figure equivalent to an entire year’s worth of income for many of the UK’s workers.
Want to avoid falling even further into the debt trap? As the country borrows more and more, a growing number of households are saying ‘no’ to the great temptation of borrowing and are reducing their debt using three simple strategies.
Keep track of savings
A lot of household debt is the result of poor money management, not a lack of cash or overly costly lifestyle. Keep good records of where you keep your money, what you spend it on, and when it comes in and goes out and you’ll be more aware of the reasons for your borrowing.
Double check your insurance
You might be paying for more than one form of insurance cover. If you buy a new car or consumer product, check to see if you receive coverage from the manufacturer or retailer. You could be spending more than you need to on insurance for items that are already protected.
Use your credit cards wisely
Credit cards might not be a blessing, but they certainly don’t need to become a curse for your personal finances. Use your credit cards wisely, and apply a common sense approach to whether or not you can really afford to buy something. If you can, use a credit card that gives you the best deal, not the longest repayment window.