In the news today is the latest research by the TUC saying that UK household debt is now at £13,000, excluding mortgage and other secured debt.  Of course a left-leaning trade union organisation will spin this as not enough pay and income, and argue for pay rises that outstrip inflation.

But will having more money really reduce credit card and student loan debt?  Is it not as likely that it is human nature to spend beyond our means regardless of income. Student finances alone are only going to increase the debt level as it is unlikely students will ever pay up front to avoid the long term financial commitment.

The latest figures from the Bank of England, which excludes Student Loan debt, put total debt at £192bn. But as student loans have increased dramatically since 2012, and students are likely to have in excess of £40,000 debt on completion of their studies, this lump of money is likely to seriously affect young households in the coming years. A couple of young graduates buying their first home and starting a family are likely to have £80k combined debt to take into account as part of their financial planning.

Personal debt is undoubtedly pernicious and damaging, but it is likely that much is self inflicted as we succumb to marketing and other temptations.

Let me pin my colours to the mast here:  I know what it is like to be in debt. When I was in my twenties I spent far more than I earned, ultimately amassing £9000 of unsecured debt.  I had grown up in get-by household, where we only had what we could afford, and now I saw I could have all those things I had gone without. It did not take long for the debts to start growing, and my income being used to pay off what was due every month.

For many today, it is all too easy to have car loan, latest mobile phone on contract, TV entertainment package with all the add-ins of movies and sport. On top of that there may be busy social life, drinking, smoking, and annual holidays paid on a credit card or two.

I was thirty when I realised that I had to do something about this, and set about resolving the problem. It was not a quick, easy or pain free process! It took years of dogged payments and the support of a good wife and my friends, but that final credit card payment was such a hugely exciting day.

That was over twenty years ago, and I have been debt free since. I have a credit card, but it gets paid off every month, the mortgage is paid and we are able to fund our daughter through university in Europe (where it is much lower cost than UK).  Since then we don’t buy if we cannot afford it, we have learnt to save, and not be afraid to go without. Ultimately, we live now within our means.

I worked my debt problem out alone, but these days there are so many organisations out there to advise and assist. Citizens Advice, Step Change, and Christians Against Poverty, among others that can be found with a quick web search, all offer routes to a debt free life. Of course you have to want the desired outcome as they will not pay off your debts for you, but they will help you find a way out that works for you.

Don’t think that having more money will always help with debt problems. There are people at all income levels with just as much debt as a percentage of income. Having more income will unlock higher credit card debt levels and so the spiral will continue. Of course, having more income is always nice and to be aspired, but living within your means is surely the best option, whatever income you have.



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