Drop in earnings makes it harder to repay loans

Even thought the UK is gradually coming out of the recession and signs of positive growth can already be seen, many Britons are finding themselves in a difficult situation and feel inadequate at repaying their loans and other household bills.

A recent research conducted by the Institute of Fiscal Studies (IFS) has demonstrated that the average individual’s earnings in the UK has decreased by about £360 per annum since 2008, which is a drop of 1.6%, when according to the expectations, people should have seen a rise in their income of around 5 per cent over this period.

This is the first time the UK residents have experienced a drop in average income since the early 90’s. Still, some public sectors are in a worse condition than others. For example, the average retired individual is now 2.4% worse off than they were in 2008, whereas 10% of wealthy people are 3.8% worse off.

Consequently, such a decrease in average income, in combination with soaring costs and inflation, has forced many individuals to stretch their budgets even more than before and although a great percentage of people are trying to reduce their expenditure, others are taking out personal loans and using credit cards to keep up their lifestyles.

Consumers who fail to manage their finances are recommended to consider the option of a debt consolidation loan that could help reduce household’s outgoings and improve their financial standing.

One word of warning though: consumers should stay away from using credit cards or applying for personal loan to meet their everyday expenses, since doing so will only add more financial pressure.
 


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The cultural transformations that have made people accept life in debt have had a direct impact on the approach youngsters take to money matters, which could lead to negative consequences in the long run as many of the next generation would resort to IVAs to cope with serious financial issues.

When we put efforts into our work and get paid for this, we get an amazing feeling of satisfaction. Our hard hard work seems to have been remunerated financially. We go shopping and buy the items we need and the items we simply want.