Debt problems early on in life mean that young people from the UK are unlikely to be in a position buy their own home as their grandparents and parents did. This information has recently come out of a leading charity for debt counselling. The Consumer Counselling Credit Service says that people under 40 are struggling with shrinking incomes and increasing debts, they also say that people are having difficulty putting money aside for their retirement.
The research showed that people tend to be in the most debt between the ages of 35 and 45 but also showed that around one million people aged between 18 and 40 are already struggling with mounting debts and financial difficulties. The data also shows that around 75% of people under 40 have debts which are not secured.
The name of the report is ‘Debt and the Generations’ and it highlights how young people will be left with a great deal of mortgage debt because the price of a home is now much higher as a multiple of gross income than it was in the past. If this is not giving people more debt that is only because they cannot afford to buy a house at all. Student debt is another reason people are struggling to save, and the cost of this debt is constantly a problem.
The report says the younger generations have very little protection if they lose a portion of their income. Of those under 40 the survey found that over 30% of them gathered no savings every month – the cost of living with all of the money that they had. At the other end of the spectrum all the people were found to have more extreme debts that younger people. Around 7% of people aged older than 55 had debts of over £150,000.
The chairman of the CCCS is Wilf Stevenson and he said, “This is a very worrying future for a younger generation. They have fewer assets and higher debts and this is not a good financial position to be in and will likely mean that they have a lower quality-of-life when they are older. Consumers in debt should know that they can turn to debt charities such as CCCS where they can get free support and advice on how to manage financial difficulties.”
Debts can easily get out of control and many people are finding that their debts are increasing even when they are making repayments. Chris and Rebecca Canham experienced this first hand; they took out a loan of £4000 and could afford the payments. However when Rebecca fell ill she could no longer work and they found they were unable to pay the monthly repayment. They tried to claim on a payment protection insurance policy but when this was rejected they found their debts increased to over three times the original amount they borrowed.