I read a disturbing story in a national newspaper about statistics produced by Which. The end result was that over 5 million households in the UK are using credit cards, savings or an overdraft to purchase food.
The survey of over 2,000 people confirmed that 20% of people in the UK are borrowing money to purchase food.
Who’s To Blame
There always has to be somebody to blame, doesn’t there? We must find the culprit and point the finger. So, who’s in the firing line?
– The Government: Benefit cuts and high unemployment mean people are struggling
– Credit companies: The credit companies know that people are using their card to pay for essential items, like food. Should they not do more.
– The people themselves: At the end of the day, we all have to be responsible for our own budgets and take responsibility for our own problems.
Credit cards are used by 20% of people for food and other essential items. The UK has become a nation of “Borrow nows, pay laters” and as a result it shouldn’t be a shock that credit is used for essential purchases. What we need to do is find a solution to the credit problems people face. If food is being placed on credit cards then that typically suggests people can’t afford to eat without borrowing money.
Me, Myself and Jane
I was helping Jane, a friend of a friend last week and she said she didn’t have a debt problem, there just wasn’t enough money coming into the household. I delved a little deeper, almost knowing what I would find.
Jane said that the shortfall was being met by payday loans. This meant she could eat, heat her home and survive. When I asked, “how do you repay the payday loan?” She said, “I just roll it over”.
In the UK, there is no limit to the number of times a payday loan can be rolled over. This is unlike payday loans in most of the U.S. and Canada which has a far better system. However, most of you know I hate payday loans.
Jane and I sat and discussed what would happen in 6 months if this continued and her payday loan debt would have reached over £2,000.
I gave Jane the only advice I could. It’s time to budget.
Budgeting Can Be Fun!
Nobody likes to feel constrained, whether it’s geographically, emotionally or financially. However, budgeting can be fun!
The objective is to remain within a tight budget. I start by listing my income so
– Working tax credits
– Child tax credits
– Other benefits
Then I list my expenditure, so,
– Mortgage / rent
– Council tax
– Gas / Electricity
– Car costs
… plus the rest!
Day to day I then look at my expenditure and decide what I can afford me and my family can spend. You win if you spend less than your budget every month.
Food is vital, as is paying for a mortgage/ rent, council tax, gas/ electricity and water rates (if applicable). If anybody requires credit to afford these essential month to month necessities then it’s time to seek help.