70 Days Work To Cover Debt Interest
Today has been dubbed “Debt Freedom Day”, although not for the best of reasons. The average Briton will take 70 days just to earn enough to pay off the interest on their debt before they even begin to pay off the principal. Not only that, the day has fallen over a month later than it did last year, when it was on February 1st, as the UK slides deeper into debt.
Of course, the day means little to anyone in a practical sense, being an estimate based on national statistics. But it does give a sense of scale to the level of debt faced by many in the country. 70 days is only the average – it is sobering to consider that many of the most indebted people could well be spending half their working year or more just to pay off the interest on their debt.
Other new statistics released today show that credit card debt has decreased slightly, falling from £55.6 billion to £54.9 billion, but that the amount owed in loans has shot up from £2.6 billion to £9.8 billion. While the slight fall in credit cards is a good sign (perhaps prompted by increased caution from card providers) it will do little good if loans continue to rise. Credit cards have become such a bogeyman of debt that it is easy to forget about personal loans, many of which have punishing levels of interest. Failed consolidation loans, particularly when they are secured to a property, can be very dangerous. While it still remains small compared to credit cards, loan debt shouldn’t be taken for granted.
The other upside of Debt Freedom Day is that it gives the nation something to aim for, a tangible measure of how much the UK spends on servicing its debt each year. Next year, perhaps it will come a month sooner rather than a month later.
