by Alicia Butler
21. September 2011 15:00
Debt problems are so bad for most workers that they are paying out up to 40 per cent of their wages on loans and credit cards every month.
One in four spend 40 per cent or more of their take home pay on debts.
The average borrower is paying out £322 a month on unsecured credit before finding the money to pay living costs.
For many, taking home the average adult pay packet of £1,288 per month, debts are stacking up because income is eaten up by the rising cost of living and escalating fuel bills.
Some borrowers with severe debt problems (8 per cent) are handing over 80 per cent of their pay to credit companies.
This debt is borrowing on credit cards, personal loans, catalogues and store cards, and the scale of the repayments can impact on paying the rent, mortgage and other important bills.
Many borrowers could improve their finances by considering independent debt advice.
Debt advisers can help borrowers prioritise their bills so they have enough money left each month to cover their living costs.
Many credit providers will accept reduced payments to help those struggling with their finances.
The best way to deal with bills that cannot be paid is by putting together a finance management plan that offers every creditor a regular monthly payment.
In return, many lenders may freeze interest and charges as long as repayments are made in full.
The figures were compiled by financial comparison moneysupermarket.com, whose Tim Moss said:
“With the cost of living continuing to rise, consumers are feeling the squeeze on their wallets more than ever. It’s therefore worrying to see such a high number of people needing to use so much of their income just to service existing debt.
“Making the most of every pound really does count when it comes to the end of the month, and it’s vital that those needing to repay debt are doing so using the best method.”
The study revealed Londoners have the highest amount of personal debt, owing £8,478 on average, compared to those in Yorkshire, who owe £5,796.
However, those in London only use 22 per cent of their wages on average paying off debt, while 28 per cent of their wages to repay debt in Yorkshire.