Accepting good debt and managing bad debt

Debt is something many of us feel uneasy with and unable to talk about with friends, family or colleagues. However with unsecured UK household debt reaching its highest levels in 2018, at a total of £428bn, this equates to £15,385 per household if averaged out across the country.*

There are times when debt is positive, enabling people to move forward in their lives and being a necessary part of managing their finances, ie helping them to purchase a home. However from a recent survey of 2000 adults by “Know Your Money”, 62% held some type of debt, with the most common being 35% on credit cards, 24% holding mortgages and 11% owing student loans.

What is more worrying is that 29% said they’re not in control of their debts with 67% saying they don’t have any savings with which to help pay these off. With 61 mortgage possession claims being made every day, this shows people are taking on debts without really considering how they’ll manage them, finding repayments can be a burden and preventing any money being set aside for emergencies.

It’s no surprise therefore that money can be associated to poor mental health; the more we worry about our finances, the less able we are to manage them and we enter into a downward spiral, that impacts our relationships and ability to work effectively. Younger people, aged 18-34, are especially prone to mental health, stress and anxiety issues linked to money.

The key is to face issues head on and see where savings can be made in day to day costs; this could be as simple as switching supermarkets, transferring credit card balances to interest free deals, fixing a mortgage to guarantee monthly payments or even looking at re-mortgaging or a second charge to reduce general interest payments on debts. These days there are also ample opportunities to take on freelance work or find a secondary job in order to generate extra income. There are also plenty of online and face to face resources available should these be needed.

Small savings can soon add up, eventually enabling people to slowly start building a small savings balance to take the pressure off any emergency or unforeseen bills.



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Birchwood Investment Management Ltd,
8 Prospect Place, Welwyn, Hertfordshire, AL6 9EN

01438 840888 *

* Please note calls to and from the above number are recorded for training purposes.