MONEY COMMENT
Britain's Debt Disaster

By Cliff D'Arcy
March 30, 2004

Every month, my hopes are raised, only to be sent crashing back down again. Every month, I check the Bank of England's latest figures on personal debt, hoping that we've borrowed a little less than the previous month. And, every month, I'm left disappointed, because personal borrowing continues to break all records.

For example, at the end of last month, our mortgage debt was just shy of £784 billion and our unsecured debt (credit and store cards, personal loans, overdrafts and so on) exceeded £172 billion. That's a total of £956billion. Here's how these figures compare to those for February 2003:

So, over the last year, our total debt increased by over 13%. This wouldn't be a problem if wages grew at a similar rate, but average pay rises are running at 3-4%, not 13-14%!

So, the average UK adult (there are roughly 46 million of us) owes roughly £2,435 more than s/he did a year ago. Of course, homeowners will argue that they feel far richer this year, thanks to soaring house prices. However, I consider this argument to be questionable at best, because the only way to realise this wealth is to sell your home without buying another!

The harsh, cold reality is that our debt is in danger of spiralling out of control – if it hasn't already. Eleven weeks ago, I predicted that our debt would exceed a trillion pounds (£1,000,000,000,000) by this August. The way things are going – with people hypnotised by the property bubble and living well beyond their means – I've brought forward my prediction to the end of June!

However, if you want to step away from the edge of the debt abyss, start by reading these articles:

• 25 Quick Money-Saving Tips
• Join The Money SAS!
• Upgrade Your Life - Or Cut Back!
• How To Diminish Your Debts.