Debt management blog
Tips, help and information for people with all kinds of debt issues
Unless you’ve been living in the wilderness for the past few months, you may have noticed your energy prices going up – and not by a small amount. Rapidly growing wholesale costs of natural gas and oil have meant that the energy companies have scrambled to keep up – and that means increased bills for you.
Let’s assume you’re doing everything you can to save money. You’re only using gas and electricity when absolutely necessary, you’re switching lights off, your house is well insulated, you use energy-saving light bulbs, etc. You can control those things, but energy prices will continue to rise regardless – and that’s where fixed-price energy deals come in.
Why do so many people need debt help? Simple lack of financial understanding is one of the main culprits. If children knew more about money, they’d stand a much better chance of coping with their finances – now and in later life.
Online help in the battle against debt
This is why financial education plays a big part on the Nationwide Building Society’s www.nationwideeducation.co.uk website, a site which contains all kinds of useful, fun and informative resources, from games and quizzes to fact sheets.
Energy bills are rising at an unprecedented rate. Only recently have a number of utility companies put their bills up by around 30%, and it’s not likely to stop anytime soon: a report by the National Housing Federation suggested that average household electricity bills are expected to increase to more than £500 per year by 2010, and gas bills to around £900 – a total of approximately £116 per month.
With that in mind, it’s essential that you keep on top of your bills. Evidence suggests that energy companies are putting their prices up as frequently as every few months, so it makes sense to ensure you are paying exactly what you owe every month, instead of letting your costs build up.
Debt management can be a very formal process - but that doesn’t always have to be the case. While it’s true that debt management should always be taken very seriously, some methods are less formal than others, and as such, different debt solutions will suit different people.
Here we compare the different types of debt management, and how flexible each of them are.
What do you do when your income doesn’t stretch as far as you’d hoped? Following the recent record price increase from British Gas, Adam Scorer (Campaigns Director at gas and electricity watchdog energywatch) commented that:
“…almost a billion pounds of profit in six months isn’t the sort of profit [British Gas’ parent company] Centrica wanted so it has raised gas prices by 35%.”
British Gas stated that ‘soaring wholesale energy prices have forced it to increase tariffs for domestic gas and electricity’ – but as Mr. Scorer points out:
“Consumers would love to be able to affect their bottom line so easily.”
Unfortunately, very few people have the option of charging their employer 35% more because their own bills have gone up. It seems making the same money stretch further is the only option. Or is it?
For anyone struggling to manage their debts, the inflation news on August 12th was not good – the CPI (Consumer Price Index) had risen from 3.8% in June to 4.4% in July.
Is 4.4% really high?
This jump marked both the highest CPI figure and the largest monthly increase since CPI records began in January 1997. According to the Guardian, the last time inflation was higher was in April 1992, when it hit 4.7%.
It was recently announced that inflation has reached its highest level in 16 years. CPI inflation reached 4.4% in July, up from 3.8% in June, and already exceeding many economists’ predictions for total annual inflation.
Even more worrying are the alternative figures: RPI inflation (which measures mostly the same things as CPI, but includes mortgage & housing costs) reached 5% in July, and the latest figures from The Telegraph’s RCLI (Real Cost of Living Index), which attempts to measure the rise in essential living costs to the average consumer, measured inflation at 10.8% in July.
The news may be a particular worry to people struggling with debt, as rising inflation adds further pressure to the existing worry of rising utility prices and a volatile housing market.
The best way to manage holiday debt is not to go on holiday in the first place. It’s not a popular choice, but tough times call for tough decisions, and around 1 in 4 British adults has decided not to take a holiday this year, according to a new study on holiday spending by CreditExpert.
Giving up holidays may be an unpopular option, but for anyone struggling to manage their debts, it’s often the most obvious expense to cut. After all, unlike rent / mortgage, gas bills, petrol, food, etc. holidays aren’t actually essential.
Do I need debt advice? How much debt is too much? Are my problems sorting themselves out or getting worse?
If you’re in financial difficulties, some well-timed debt advice can make all the difference – and the word ‘well-timed’ is important here. In general, the sooner you get debt advice, the easier (and cheaper) it’ll be to put your debts behind you.
Back in April, visitors to this site may have read about the FSCS (Financial Services Compensation Scheme), which will refund some or all of a saver’s money if their bank / building society goes bust.
It’s very bad for the economy (and people’s confidence in our whole financial system) when an institution goes bust, and it can cost the taxpayer billions to prevent this – as happened with Northern Rock.
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