News Release: MARCH 17 2010
A growing ‘debt net’ has been created by recession and job losses, according to debt solutions business Invocas Financial, which has identified four groups of people most likely to be caught.
The company, which offers debt advice and access to a range of workable debt solutions http://www.turndebtaround.com/our-solutions/index.aspx, looked at patterns of debt across the UK, including occupation, assets and personal circumstances, and found four categories into which the most at-risk debtors fall.
The research took into account data from a sample of 4,038 debtors who needed professional help in turning their debt problems around.
Invocas Financial director Brian Ferguson said the financial conditions of the last 18 months had widened the net to include greater numbers of higher earners, and showed that anyone could find themselves struggling with debt.
He said: “Our research shows that the UK’s debt problem is having a serious effect on people from extremely varied walks of life, for all kinds of reasons.”
The four groups are:
Young Shoppers:
Younger, single people, with no dependents, low-to-modest incomes and few assets, but a taste for retail therapy and keen to keep up with latest trends. They are still optimistic about their future earning potential and tend to spend on credit and store cards in line with their aspirations, rather than with what they can actually afford right now. They tend to work in a variety of roles including admin, call centre positions, retail and catering.
Traditionalists:
Wary of using credit, but having raised families on low incomes, Traditionalists have little saved for rainy days and own few assets now their children have flown the nest. Typically they live in rented or council accommodation, may be divorced, and have suffered job loss, injury or illness. Having been forced to use credit to survive, they’re now struggling with debt repayments. They are often retired, or like Young Shoppers, work in blue collar or support roles.
Overspenders:
A more upmarket group, Overspenders are skilled, white collar workers, usually in their 40s or 50s, and own the greatest assets of all the debtor groups. But they spend beyond their not-insignificant means to keep up with their lifestyle expectations – splashing out on expensive clothes, holidays and cars. However, their savings have suffered as a result and they are eventually unable to fund their lavish lifestyles as debt repayments grow. Sudden life changes such as redundancy or divorce can also lead to stretched finances. They work in offices or senior clerical roles, and may include accountants, engineers, health service professionals or managers.
Hard-Pressed Families:
With young families, and often single parents, this debtor group lives in low-value housing and struggles to make ends meet on restricted incomes. Working in a variety of roles which might include admin-level public sector staff, office administrators, HGV and delivery drivers or support workers, Hard-Pressed Families are very credit hungry and use alternative forms of finance to avoid paying cash. Usually in their 30s or early 40s, they enjoy shopping sprees but are usually unable to indulge because of family spending commitments.
Brian Ferguson said: “Our research gave us an extremely useful insight into exactly who is being caught in the debt net; and more importantly, how and why they get into debt.
“We’re not saying these people shouldn’t use credit at all, but they, like anyone else who finds themselves struggling with repayments, should think carefully about how they use credit and if it’s the right thing to do under the circumstances.
“It might sound boring, but the best approach is to make sure you have enough savings under your belt in case things change and you find yourself worse-off financially. Any debt you do take on should be easily repaid as part of your normal monthly outgoings.
“If you think your debt is becoming unmanageable then it’s worth speaking with someone (please link to http://www.turndebtaround.com/enquiry/index.aspx who can help you reassess your spending priorities and get your finances back on track. If it’s too late for that and debt has become a problem, then speak to a professional who can give you right advice on how you can turn debt around.”
Research
The research was carried out by Davies Hickman Partners, an independent consumer research, marketing and service strategy company. Davies Hickman analysed the occupations, lifestyles and behaviours of a sample of 4,038 individuals who had received an insolvency treatment – Protected Trust Deed/IVA or sequestration/insolvency in the last three years.
