Personal Debt in an Improving Economy

The travails of personal debt

Personal Debt is the subject of the following guest post from a financial writer looking to discuss the particulars of how the changing economy affects those holding debt.

Earlier this year, there were a few signs that the UK’s job market was about to experience some much-needed growth. Today, the number of people out of work has now dipped below the 2.5 million mark, giving many hopeful job-seekers reason to believe that there may be good news just around the corner, but all isn't completely rosy just yet.

Despite the fact that the UK economy as a whole is starting to slowly rebound after the downturn which lasted from 2007 until the end of last year, personal debt remains a massive problem, especially for those on low incomes. Among those most likely to find themselves with debt to pay off are low-wage workers, part-time workers and anyone who is long-term unemployed.

Homeownership affects debt levels

One of the main indicators of whether or not someone is likely to get into debt is income, but home ownership can also have a profound impact on the likelihood of someone’s finances being in the red. A study from revealed that there was a sizeable disparity in incomes between home owners and non-home owners in favour of the former group.

Typically, home owners earn £900 per month more than those who don’t have a place to call their own. However, more of that money is likely to go on mortgage repayments than debt, as well as taxes such as stamp duty which home owners tend to be lumbered with. As mortgages tend to be pretty expensive, home owners are likely to have more debt, but it’s usually manageable.

Low incomes mean more problems?

The study also revealed that, of the people coming to them for debt advice, just 23% were home owners, and that, on average, non-home owners spent 88% of what they earned. Although that’s a pretty high figure, it’s lower than the same statistic for home owners, who typically spend up to 97% of their income each month.

Nevertheless, it seems that non-home owners are more vulnerable, especially when it comes to repaying certain types of debt such as loans or overdue bills due to the likelihood that they earn less. To learn more about how home owners and non-home owners differ when it comes to personal debt, income and dealing with debt, view the full results by clicking here.

Interested in guest posting or writing a sponsored post? Feel free to send me an email (mrmoneybanks<at>multimillionaireroad<dot>com), find me on twitter @millionairer0ad or comment.

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