It is evident that as a society we have taken on too much debt, too swiftly. Unsecured debt became easy to qualify for and lending institutions where often prepared to lend without doing careful financial checks. As we know this has led the economy to a disastrous fiscal state.
If you begin to struggle with loans is it your fault?
Many people believe that if you have money troubles it is because you have not managed your finances correctly, however a new survey shows this is rarely the case.
In a survey by one of the biggest debt management suppliers in the UK - EuroDebt - the largest origin of debt difficulties was reduction of earnings. Over one third of financial problems were brought about by this reduction of earnings, even if you have a sensible level of debt a severe reduction of earnings can initiate acute financial stress on a family. With most families having minimal savings a reduction of income for three months or more would put nine tenths of families in serious financial difficulties.
Another twenty percent of financial difficulties were caused by a change in circumstances such as the birth of a child, divorce or illness. Divorce alone was the origin of ten percent debt problems, as families split there is a need for additional accommodation, transport and sometimes child care. These extra costs can make it very difficult to meet financial commitments.
Sudden illness is another key contributor to financial hardship. Many people do not have the necessary insurance to cover them if they fall ill, the temporary reduction of earnings can put consumers in to a financial position that they struggle to recover from.
Only thirty percent of instances of financial hardship are actually from debt mismanagement or debt spiral.
As we have already talked about it did become too easy for members of the public to get debts they could never have enough money to pay. In this situation both the credit institution and the consumer have to take some blame for the financial situation.
When you analyze the causes of these debts it’s not surprising that all walks of life succumb to financial problems including jobs such as Doctors, Police and Teachers. After all no one profession is immune to illness, job loss or divorce.
So what should you do if you find yourself struggling with your finances?
Importantly know you are not by yourself and lots of good people have the same problems. What is important is that you understand you are having problems and you take action quickly.
Depending on the root of your difficulties you may need to explore at some of the following solutions.
Try to consolidate some of your debts in to a lower payment and a lower interest rate.
Call to your creditor, describe your predicament and ask what your options are.
Get some professional financial advice from a debt management company who can often cut your debt payments to a amount you can manage.
Debt problems can be a result of many different circumstances and it can happen to anyone. If you struggle with your finances taking action fast will stop the problem from growing out of control.
