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Why we're dicing with debt
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| (C) Rex Pictures |
Shamed reality TV star Jade Goody is now being forced to live off her savings, the tabloids are reporting. But she’s not alone – many of us are living beyond our means and eating away at our precious cash reserves. We show you how to rein in your spending to avoid falling into debt
After being accused of racist behaviour against Shilpa Shetty in the last series of Celebrity Big Brother, news reports suggest Jade Goody is seeing offers of work dry up. She is apparently being forced to rein in her previously lavish lifestyle and dip into her savings to get by.
But while Jade may have millions in the bank to fall back on, most of us don’t have the same luxury - leaving us spiralling into debt if things go wrong.
dealing with debt
About half of all Britons have less than two months’ salary tucked away in reserve, with one in three of us admitting they saved nothing at all last year, according to figures from Alliance & Leicester.
“Having savings is vital to ensure that should there be a change in personal circumstances or the wider economic situation tomorrow, there is a financial safety net,” Chris Tapp of Credit Action warns.
Between October and December last year nearly 30,000 of us fell into insolvency in England and Wales - that’s nearly 50% more than the same period in 2005.
According to Credit Action, 300 people become insolvent every 24 hours, while KPMG figures show the big banks had to write off around £1.4bn last year as a result of people having to take out Individual Voluntary Arrangements (a form of insolvency known as an IVA) after falling into serious debt.
And it’s easy to see why. The UK is now responsible for a third of all consumer debt in Europe, owing more than £1.3trn as of January. We borrow around £360m every day - 10% of which is on credit cards, overdrafts and loans.
But you can stop yourself getting caught in a debt spiral if things go wrong – follow our tips and be prepared.
