More and more people are falling under the shadow of the global credit crunch. While many people in working class areas have been feeling its effects for the past few months, the current economic downturn is now beginning to affect the more affluent.
Debt services are reporting a dramatic increase in inquiries throughout Britain, not only in disadvantaged areas. Professionals and home owners with good salaries are finding it difficult to make ends meet as the cost of credit, utilities, food and other items has rocketed in the past year.
There are a number of reasons why more affluent people are beginning to feel the pinch in recent times. These include:
- The increase in the cost of living has not been matched by increases in wages.
- More affluent families have been living according to their means, and face large bills for costs such as private healthcare insurance, college fees, housing and transportation.
- The culture over the past decade has been one of borrowing rather than saving, so many people already had large debts before the credit crunch took hold.
Basically, what was affordable a year or two ago is now proving to be very expensive for many families so they are running into debt problems. And while banks and other lenders may have shown a reasonable degree of flexibility in the past, they are now becoming increasingly stringent. In addition, even the slightest blemish on your credit rating will make it very difficult to get credit in the future so do everything you can to keep up with repayments on all loans.
If you do feel that you are running into financial difficulties, or if you have already missed repayments, it is essential that you act immediately. In today’s credit culture, debt problems affect millions of people and as a result there are countless debt help agencies offering help and advice to people who run into financial difficulties.
Many of these agencies, such as the Consumer Credit Counselling Service (CCCS) offer their services for free and have a proven track record in helping people to deal with debt.
Very often financial difficulties can be overcome with some careful budgeting and cutting back on a few luxuries. Alternatively, there are other solutions such as consolidating debts into one low-cost loan to save money on repaying expensive debts such as credit cards. However, in the current climate it may be difficult to get such a loan approved.
In more serious circumstances a Debt Management Plan may be necessary where you and your debt help agency reach a compromise with your lenders. Alternatively, you could consider an Individual Voluntary Agreement (IVA), although both of these should be seen as last resorts.
In many cases, debt problems can be seen as far more daunting than they really are. If you are struggling to make ends meet you should seek advice as quickly as possible. The chances are that a meeting with a debt help specialist will help you get your finances back in order.