Falling disposable income means less protection
on: November 24, 2008, 8:11 am
Release Author: Debt
Release Summary: Debt Advisers Direct have responded to findings
that Britons’ disposable incomes have fallen by nearly 30%
on average in the past two years, warning that the pressure on
incomes could increase as the economic crisis progresses, and
have advised consumers to take care of any debts as soon as possible.
Release Body: Responding to research by Abbey Credit Cards claiming
that British citizens have seen their disposable income fall by
nearly 30% during the past two years, Debt Advisers Direct
have warned that the squeeze on incomes could become tighter in
the coming months, and have advised consumers to take care of
any financial issues, especially outstanding debts, as soon as
to the research, the average household now has only 25% - around
£382 – of their monthly income left after essential
costs such as mortgage payments and energy bills have been paid.
figure is down from £541 in disposable income available
to British households just two years ago – a 29% fall.
research also claims that one in ten spend 90% of their income
on bills and other essential costs, leaving only 10% as disposable
average, British households were spending 7.4% of their total
income on repaying debts, not including mortgages, the research
an average 24% went towards mortgage or rent payments, 17% on
household bills, 16% on food, and 8% on transport costs.
incomes have been put under pressure on two fronts throughout
the economic crisis, with costs of living such as energy bills
and food prices rising rapidly, and the credit crunch limiting
access to additional funds in the form of loans and mortgages.
effects have been tangible, with overall retail sales gradually
declining over the year, and profits for ‘budget stores’
increasing – a sign that consumers’ perceived priorities
are shifting as their disposable incomes shrink.
expert from Debt
Advisers Direct said: "Many people consider disposable
income a luxury that can be spent on 'unnecessary' items, but
it's important to remember that disposable income is also a very
important buffer against unexpected rises in outgoings.
example, if someone depends on their car to get to work, and they
have to pay for a £500 repair with only £200 disposable
income, that person could be forced into debt in order to make
ends meet. That’s why it’s important for people to
minimise their outgoings, and make savings where possible.
overall situation has become worse over the past year because
costs of living, especially energy prices have risen so quickly.
Food and other retail products are now falling in price, but energy
prices have shown no sign of doing the same – and this continues
to push more people towards debt.”
Debt Advisers Direct
spokesperson added that there are a number of debt solutions that
can help to minimise outgoings when finances are limited.
people with multiple debts, a debt
consolidation loan can be spread out across a longer period
of time than the original debts, meaning monthly payments are
lower," she said. "Interest rates can also be reduced, especially
when consolidating high-APR debts such as credit cards. However
if the debt is repaid over a longer period, the additional interest
from this can counteract some of the savings made.
debts that are becoming unmanageable, a debt
management can help. It involves arranging to repay creditors
in smaller amounts, based on how much the person in debt can afford,
over a longer period of time.
always, we advise anyone looking to tackle their debts to seek
professional debt advice beforehand.”
Details: Melanie Taylor
0845 056 6480
South Langworthy road