The Effects of Consumer DebtWritten by Nicola Bullimore
Consumer Borrowing Consumer borrowing in UK has now crashed through £1 trillion barrier. 80% of this is due to credit card borrowing, loans and mortgages. How are people managing to handle their debt and what effect is debt having on families today?The National Consumer Council reports that 6 million families in UK are already struggling to make repayments towards their debt, and Citizens Advice reports that over last 6 years, they have seen a 44% increase in number of people seeking debt advice. This may be just tip of iceberg. There must be many families in UK who have debt problems, but are not aware of free help and advice available. Tackling Debt According to a DTI survey carried out in 2002, a household is likely to be over-indebted if: §25% of your annual income is spent on repaying Creditors §50% of your annual income is spent on repaying credit and mortgages §You have 4 or more companies that you owe money to. People find it difficult to make repayments for a number of reasons. Generally, underlying cause is some kind of change in personal circumstances such as job loss, divorce, illness or a new baby. In these instances some people may resort to more borrowing in order to pay creditors or household bills. This is not always best option. Effects of Over-Indebtedness The personal effect of struggling to repay debt can be far reaching. Sometimes a lack of financial awareness can lead to stress, depression, anxiety, mental health problems, relationship breakdown and even suicide. Raising Financial Awareness The Government recognise need to raise financial awareness amongst general public. The financial cost of debt is not only on an individual level, but there is also a cost to society in general.
| | Disaster decision - Do you need insurance?Written by Jakob Jelling
The expenses involved with owning a home can be overwhelming at times - routine maintenance, repairs, seasonal preparations, improvements. Not to mention taxes, fees, and all those monthly bills. Some homeowners, in trying to reduce their expenses, wonder if they really need disaster insurance. Disaster insurance is typically defined as additional homeowner's insurance to cover events like hurricanes, tornadoes, earthquakes, and floods. Home insurance policies typically cover hurricanes and tornadoes (review your policy to be certain in covers damage from such events). But often damage from floods and earthquakes isn't covered. This extra insurance, if desired, must be purchased in addition to your standard homeowner policy, and it can be expensive, depending on where you live. Because disaster insurance can be expensive, it's a type of coverage some homeowners opt not to buy. But in some cases they are required to buy. For example, mortgaged homes in US that are located in designated flood hazard areas
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