Gregory Pennington - debt management company
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Debt management: making room for rising bills
Fri, 29 Aug 2008 16:49:58 GMTWhat do you do when your income doesn’t stretch as far as you’d hoped? Following the recent record price increase from British Gas, Adam Scorer (Campaigns Director at gas and electricity watchdog energywatch) commented that:
“…almost a billion pounds of profit in six months isn’t the sort of profit [British Gas’ parent company] Centrica wanted so it has raised gas prices by 35%.”
British Gas stated that ‘soaring wholesale energy prices have forced it to increase tariffs for domestic gas and electricity’ – but as Mr. Scorer points out:
“Consumers would love to be able to affect their bottom line so easily.”
Unfortunately, very few people have the option of charging their employer 35% more because their own bills have gone up. It seems making the same money stretch further is the only option. Or is it?Credit crunch causing couples to stick together
Fri, 29 Aug 2008 11:51:25 GMTLack of finance may be keeping couples together, according to research from online bank cahoot.
More than a quarter of British consumers questioned said they are less likely to split up with their partners due to the restrictions of the economic climate – this equates to 12.4 million people fearing the cost of living alone.
Living the single life may come as a shock to one`s finances, as formerly affordable mortgage repayments may become arrears and other debt problems may emerge.
According to cahoot`s survey, men are the most worried about becoming single, with 30 per cent saying they were less likely to break up due to the crunch compared with 25 per cent of women.
Managing director of the bank Matthew Timms advised: "The cost of being single can extend to thousands each year, but with a little careful financial planning you needn`t be tied to your partner purely for financial reasons."
Today, the Chelsea Building Society said families that are willing to help each other financially are less able due to the economic squeeze.
Managing debt at a time of record inflation
Fri, 22 Aug 2008 16:26:14 GMTFor anyone struggling to manage their debts, the inflation news on August 12th was not good – the CPI (Consumer Price Index) had risen from 3.8% in June to 4.4% in July.
Is 4.4% really high?
This jump marked both the highest CPI figure and the largest monthly increase since CPI records began in January 1997. According to the Guardian, the last time inflation was higher was in April 1992, when it hit 4.7%.Don’t let inflation land you in debt
Fri, 22 Aug 2008 16:47:44 GMTIt was recently announced that inflation has reached its highest level in 16 years. CPI inflation reached 4.4% in July, up from 3.8% in June, and already exceeding many economists’ predictions for total annual inflation.
Even more worrying are the alternative figures: RPI inflation (which measures mostly the same things as CPI, but includes mortgage & housing costs) reached 5% in July, and the latest figures from The Telegraph’s RCLI (Real Cost of Living Index), which attempts to measure the rise in essential living costs to the average consumer, measured inflation at 10.8% in July.
The news may be a particular worry to people struggling with debt, as rising inflation adds further pressure to the existing worry of rising utility prices and a volatile housing market.Stay out of debt with money-saving tips
Thu, 21 Aug 2008 11:35:43 GMTWhich? has been commenting on household spending and the push to save money.
According to its report, up to half of the people surveyed said they planned to cut spending on non-essential items like DVDs, CDs and clothes and nine per cent have decided against buying audiovisual equipment.
However, those still worried about building up credit card debt and other financial problems in difficult times have been offered tips on staying in the black.
The consumer website has recommended switching mortgage providers and energy suppliers to save hundreds of pounds and shopping around for car, travel and contents and buildings insurance to save even more.
Installing a water meter and swapping mobile phone contracts for sim-only could leave another £280 in the bank each year, it said.
Editor Jess Ross said: "Difficult times call for extreme measures and it`s clear that some people won`t be splashing out on luxuries in the near future.
"People still want quality, but it`s all about value for money."
Also this week, PayPal said top-up cards were a good way to stick to a budget when on holiday.
Top up to reduce debt this bank holiday
Wed, 20 Aug 2008 11:18:01 GMTThe banks may be taking a holiday this weekend but many British people will be going on trips away – and finding the money to pay for them.
For those worried about running up credit card debts or sticking to a budget, a top-up card may be useful.
Similar to pay-as-you-go mobile phones, cards are loaded with a predetermined amount of cash that can then be spent in the same way as money on credit or debit cards.
They are not attached to bank or credit card accounts so the limit cannot be exceeded, nor can thieves get access to more money if the card is stolen.
Carl Scheible, managing director of PayPal UK, which launched a top-up card this year, said: "People can ensure that they stick to a tight budget for the duration of their holiday; avoiding the headache of a huge credit card bill when they return."
Top-up cards may be suitable for those with debt problems who are not able to apply for credit cards. Parents who want to teach their children about budgeting may also want to try out the pre-paid option.
Travellers urged to get cover to avoid debts
Mon, 18 Aug 2008 10:04:40 GMTAutumn is around the corner, but people planning an escape from the cold have been encouraged to get medical expenses cover to protect against unexpected outlay.
The Association of British Insurers (ABI) said those who travel outside Western Europe are particularly prone to expensive medical bills following an accident or illness.
ABI spokesperson Malcolm Tarling said medical expenses cover becomes more important with the distance you travel.
"With the danger of very expensive medical bills, having adequate medical expenses cover is vital when travelling to the USA, " he said.
People over 70 years old are "more likely" to need medical help while on holiday, he added.
Furthermore, travellers should protect against other potential problems, such as pickpockets and lost luggage.
The advice follows many experts` comments on avoiding debt while on holiday this summer.
Figures from the FirstAssist Services indicate that, without insurance, an air ambulance home from the USA`s east coast could cost holidaymakers up to £45, 000.
Debt andamp; Holidays
Fri, 15 Aug 2008 16:30:22 GMTThe best way to manage holiday debt is not to go on holiday in the first place. It’s not a popular choice, but tough times call for tough decisions, and around 1 in 4 British adults has decided not to take a holiday this year, according to a new study on holiday spending by CreditExpert.
Giving up holidays may be an unpopular option, but for anyone struggling to manage their debts, it’s often the most obvious expense to cut. After all, unlike rent / mortgage, gas bills, petrol, food, etc. holidays aren’t actually essential.`Peer pressure` creating financial concerns for UK youth
Fri, 15 Aug 2008 11:29:08 GMTYoung people in the UK are at risk of getting into debt by trying to keep up with their peers, a new report has indicated.
Research released by Alliance & Leicester, carried out by Opinium, found young workers and teenagers are not saving wisely, instead preferring to spend money on clothes and accessories.
Almost a quarter (24 per cent) of people aged 16 to 21 said they were "under strain" to spend money to impress their friends, while 34 per cent thought their peers judged them on possessions such as handbags and sunglasses.
Getting into bad spending habits at a young age may potentially result in debt problems or credit card debts.
Current account manager at the bank, Andy Muddimer, said: "While spending on clothes and accessories to keep up with your mates is important to this age group, we would urge them to get savvy with their cash."
According to new research from American Express, people aged 25 to 34 are most likely to feel stress.
Fair Investment: Majority of endowment policy holders left with shortfall
Thu, 14 Aug 2008 11:15:57 GMTUp to 87 per cent of endowment policy holders believe the policies were mis-sold to them, according to a new study by Fair Investment.
The financial information service found the majority of those who agreed to the policies – which were seen as a way to repay interest-only mortgages while keeping a lump sum – may now face a shortfall.
This situation could lead to debt problems for many who are not entitled to compensation, which may be awarded if the risks were not explained at the time it was taken out.
According to the study, nearly half (47 per cent) of endowment policy holders questioned said they had been guaranteed a policy that would cover their mortgages.
Furthermore, an additional 27 per cent said risks were not made clear when they agreed to the policy.
Chartered financial planner at the organisation Sharon Bratley said people had taken out policies "on a false promise".
"This is not just a case of a small purchase; this is thousands of pounds for a house that we are talking about."
Also in property finance news this week, Abbey has found 1.6 million homeowners are considering renting out a room to raise extra cash.
Consumers urged to protect against debt
Fri, 8 Aug 2008 11:18:00 GMTProperty and pet owners have been urged to cover themselves against unexpected costs that may lead to debt this week.
Asda Financial Services has reminded people of the potential cost of pet emergencies after a Great Dane swallowed a two-foot-long stick recently, running up a predicted vets` bill of around £2, 000.
The average cost of emergency surgery on a family dog is £1, 312 said Asda, citing WhatPrice.co.uk.
Sums such as this could lead to pet owners facing debt problems, as they can cause "a massive dent in family finances", according to the supermarket.
Meanwhile, the AA has been recommending people with holiday homes to ensure they have sufficient contents insurance, after research from Zurich found one in ten owners of second properties are not properly insured.
"When you`re taking out insurance and you`re looking at contents, it`s important to make sure you`ve got sufficient cover for everything and that you do include everything, " said Ian Crowder of the company.
Zurich Private Clients said the average holiday home contains £15, 200 worth of valuables.
Two out of three worried about the next 12 months
Wed, 6 Aug 2008 11:4:50 GMTWho needs debt advice? A Populus poll for The Times indicates that the answer could be ‘More and more people’ – it seems that today’s economic problems have seriously damaged our hopes for the coming months.
The question was this: ‘How do you think the economy will fare over the next year for you and your family?’
Back in 2003, 65% of people questioned had said they expected to do well over the coming 12 months, and just 35% thought they’d do badly. Today, the figures are almost exactly reversed, with 32% expecting to do well and 66% expecting to do badly.
200320052008SepAprNovAprJulWell 6575635032Badly 3519284766We’ve almost grown used to bad news about the nation’s economy, but it seems the effects of the credit crunch, the mortgage crisis and dropping house prices are now affecting us as individuals. As a result, more and more people are worried about their finances. For anyone already struggling with debt problems, it’s a particularly worrying time – if they can only just manage their monthly debt repayments now, what will happen when their financial situation gets worse?
Time for debt advice?
Perhaps the only good news is that people are aware of the troubled times ahead. Anxious people are more likely to take steps to sort out their finances before it’s too late. They’re more likely to ask for help with their debts, whether that means taking advice from a debt expert or looking into professional debt solutions – a debt consolidation loan / mortgage, for example, or a debt management plan. For more serious debts (normally in the region of £15, 000 or more), they might find that an IVA (Individual Voluntary Arrangement) is the best way out of debt.
Why so many different debt solutions?
Debt management, debt consolidation, IVAs, remortgages… to someone in debt, the sheer number of debt solutions available might be confusing, but they’re there for a good reason. Everyone’s situation is different, and the debt solution that’s right for one person may be totally inappropriate for another.
If you’re in debt, it’s essential to talk to a debt adviser before you sign up to any particular debt solution. Gregory Pennington, for example, has been providing free debt advice for 15 years and offers a wide range of different debt solutions to help people with different kinds of debt.Crunch-hit Brits `not panicking`
Wed, 6 Aug 2008 11:25:34 GMTDespite the current economic slowdown, British consumers are maintaining "a stiff upper lip" regarding their finances, according to a study.
Research released by Mintel has found an increase in people describing their situation as "getting by" even though things are "tight". While 25 per cent agreed with the statement in 2006, the figure has jumped to 39 per cent.
Meanwhile, the number of people who consider themselves "comfortably off" or "managing easily" has decreased, from 64 per cent two years ago to 51 per cent now.
Senior finance analyst at the intelligence provider Toby Clark said: "The good news is that the vast majority of people can still afford to make ends meet.
"But there has clearly been a deterioration in people`s perception of their financial situation over the past two years."
Mr Clark said increasing interest rates and living costs are affecting the British public.
In another report by Mintel, falling house prices are causing a decline in consumer confidence in their financial security.
Consumers want "a treat or cheap deal"
Tue, 5 Aug 2008 10:59:11 GMTFollowing recent research indicating some British consumers are taking steps to cut spending amid the credit crunch while others continue to buy luxuries, the Grocer magazine has said mid-range products are faring badly at present.
Inflation expert for the magazine Alex Beckett said "shoppers seem to want either a treat or a cheap deal" and are avoiding mid-priced supermarket items.
Some shoppers are edging towards value products to cut costs while higher-priced frozen ready meals from Marks and Spencer and Sainsbury`s are also doing well, Mr Beckett said.
He added the price rises are due to growing populations in India and China which means prices are not expected to drop but rises may slow "as the world readjusts".
According to Defra, the lowest-income families in the UK have been hit hardest by food price rises. The poorest ten per cent of the country spend 15 per cent of their income on food, twice as much as the richest ten per cent.
Mothers-to-be urged to save
Tue, 5 Aug 2008 10:57:17 GMTExpectant parents have been urged to put aside money for after the birth to avoid getting into debt.
According to the Independent on Sunday, maternity rights in the UK are among the worst in Europe and new parents should ensure they have funds to cover the shortfall of maternity pay.
Currently, statutory maternity pay stands at 90 per cent of the average weekly wage for the first six weeks of leave, followed by 33 weeks at a maximum of £117.18. A further 13 weeks may be taken unpaid.
This is far less generous than in countries such as Norway and Sweden, the newspaper said.
Speaking to the paper, Natasha Freedman, consultant with Punter Southall Financial Management, said the drop in income when maternity leave starts can be "crippling".
"It is a very real problem for households that require two incomes to stay afloat, especially in today`s economic climate, " she said.
Ms Freedman went on to advise parents on the financial help available to them, for example the £250 child trust voucher than can be invested, perhaps in an Isa.
Parents may also be entitled to childcare vouchers and child tax credits.
Food prices are `driving up inflation`
Mon, 4 Aug 2008 11:41:34 GMTAccording to an inflation expert, food is a key factor in driving up inflation.
Alex Beckett, from the Grocer magazine, said: "Food inflation and energy price rises are historically linked."
Consumers may want to keep a closer eye on their food budgets as food stuffs that are dependent on grain and cereal have seen the steepest rise in costs.
According to Mr Beckett, the price of grain and cereal has doubled in the past year.
He added that all food prices will be affected to a greater or lesser extent as the distribution and manufacture of food is linked to energy.
He gave Cadbury`s as an example which announced last week that cocoa - the main ingredient in chocolate - is now 37 per cent more expensive than the same time last year.
According to research from Defra, food price inflation was 9.7 per cent in the UK last month.
Overall inflation was 3.8 per cent.
Energy price hike may put families in debt
Fri, 1 Aug 2008 10:37:21 GMTMore families and vulnerable groups in Britain may be hit with debt after another energy company announced increases in bills.
Following EDF`s statement that customers would see increases in bills and Scottish Power withdrawing its capped tariff, British Gas` announcement of price hikes has prompted concern from charities and action groups.
The Child Poverty Action Group said the poorest families would be hit hardest.
Kate Green, chief executive, said: "At a time when the cost of living is rising this is bad news for families and will cause further fuel poverty."
The National Pensioners Convention also commented on the matter, telling LDP Business thousands of older people will face financial problems.
British Gas customers will see a 35 per cent increase in their gas bills and a 25 per cent rise in dual fuel costs. Prepayment dual fuel customers have been hit with a 21 per cent rise.
Consumers concerned about debt problems may wish to seek professional advice.
Baby boomers shielding kids from credit crunch
Thu, 31 Jul 2008 11:02:23 GMTPeople concerned about their financial future or debt management may be weathering the storm at their parents` homes, research has suggested.
According to a survey by Mintel, almost ten per cent of parents in the UK have adult children still living at home.
Seven per cent of parents receive no financial contribution from their live-in children and 23 per cent of those questioned regularly help their grown-up offspring with money.
The findings may create concern that baby boomers – those over 50 who make up a third of the UK population – are not putting money aside in case of arrears or debt problems they may face in the future.
Mintel`s consumer research manager James McCoy said some older parents may have to delay some areas of retirement planning, such as releasing equity from the sale of a home.
"And with it now becoming increasingly difficult for young adults to get on the property ladder, the trend towards kids staying at home longer is likely to continue, " he added.
The over 50s are also called on for babysitting, cleaning and DIY, the study said.
Know your enemy - and the enemy is debt
Tue, 29 Jul 2008 15:31:57 GMTFrom battlegrounds to boardrooms, ‘Know your enemy’ is the golden rule of struggles everywhere. On a personal level, says debt management company Gregory Pennington, it’s just as relevant – most of us don’t engage in deadly combat these days, but overwhelming personal debt makes a fearsome enemy…
Understanding debt: the start of managing debt
What’s the difference between manageable debt and unmanageable debt? It varies from person to person, but the ‘rule of thumb’ debt advice is that anyone whose unsecured debts total more than half a year’s income is in trouble.
What’s almost as dangerous, however, is not knowing how much you owe. The vast majority of us have to get by with a pretty limited disposable income, so knowing how close we are to that limit is an essential part of managing our debts.
So the results of a recent CreditExpert.co.uk survey make troubling reading: 74% of respondents couldn’t accurately state how much they owed on their loans. Even worse, 10% had no idea at all how much they owed! For anyone in that ‘no idea’ group, getting to grips with their debts should be a no.1 priority – unless they do, they won’t even know when their debts are approaching unmanageable levels.
Debt management in tough times
Today, we’re dealing with higher interest rates and expensive food and fuel and we’re facing troubles in the housing and credit markets. In other words, we’re trying to achieve more with less – trying to stretch our budgets further, at a time when credit is generally harder to come by and more expensive. Inevitably, this makes debt management more difficult for just about everyone, and almost impossible for some.
The Q2 Credit Conditions Survey from the Bank of England (BoE) confirms that:
1) Lenders have reduced the availability of:- secured credit for the last two quarters
- unsecured credit for the last four quarters
...and lenders expect the availability of both to decrease further in the next quarter.
2) Lenders have become understandably ‘risk averse’, since default rates on:- secured credit have risen for the last four quarters
- unsecured credit were higher than expected in Q2
...and lenders expect defaults on both to rise further in the next quarter.
Lenders are facing their own problems and can’t always provide the debt help (in the form of credit) which people need. They can’t risk stretching their finances too far, so more and more people are being forced to manage their debts without debt consolidation loans, remortgages and credit cards. It isn’t easy, but if these tough times teach us to appreciate the importance of managing our debts, at least the credit crunch will have achieved something worthwhile!Brits cease city breaks to avoid debt
Tue, 29 Jul 2008 10:38:13 GMTWhile reports indicate many people are not scrapping plans for their main holiday this year, research has shown the credit crunch has affected the number of people taking short city breaks.
Holiday website TravelSupermarket.com has said short breaks are not as popular as in previous years.
Bob Atkinson from the company said: "Short city breaks were quite cheap before, but now with the cost of fuel and therefore flying being higher, these breaks are not as attractive as they previously seemed."
He added people are still taking main holidays and are possibly foregoing some luxuries in order to pay for them, for example eating out less often.
However, Mr Atkinson said some people are more affected than others and the definition of "luxury" varies for each person. Those facing debt management problems may be among those cutting back on trips away.
According to an online survey carried out by travel site Kayak.co.uk, over a third of people are prepared to cut spending on clothes, household items and dining out to pay for a holiday.
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