TUC Warnings about Household Debt

 

Today the Trades Union Congress has issued a press release warning about unsustainable levels of household debt. If one takes all the debt owed by private persons in Britain excluding mortgages but including student loans and then divides this figure by the number of households, we end up with a record £13,000. Apart from tuition fees which they probably shouldn't have included, this demonstrates that many people in Britain are buying things without first having the money to pay for them.

I have no doubt that sometimes obtaining items on credit is a good thing. When I bought my first house I did not have a wardrobe. I therefore purchased one on a 0% credit card and paid it off each month. Had I not done that I would have spent three or four months with my clothes on the floor or in boxes. However £13,000 is an awful lot of wardrobes. Doubtless, it also includes the cost of the car which most people simply cannot afford upfront.

I would suggest that this debt situation in Britain is a ticking time bomb. Interest rates are at an historic low. This means that, should they rise, there is an awful lot of people out there who are really going to struggle to make the repayments and make ends meet. Perhaps it's too easy for someone on a reasonable income like myself to lecture others on how they manage their finances.

Having told the parable of the rich farmer, Jesus concluded by asking the following question: "What does it profit a man if he gains the whole world but loses his own soul?". If interest rates should rise, many people in Britain will not only have lost their souls but will lose the goods they bought too. A poor deal if e'er there was one.