A recent report by the debt advice charity StepChange points up two main issues:
- Regional variations in debt burden
- The special risks for self-employed people.
There are bound to be regional variations in almost anything. What was notable, though, is that the region where people are spending the highest proportion (30%) of their disposable income on debt interest payments, is the South East.
However, the section in the summary that hit me in the face was this:
“Self-employed struggling: partly because of high levels of secured borrowing – possibly taken out to keep businesses afloat – self-employed people advised by the charity owed on average £300,000.
“Clients in part-time or full-time employment had an average debt load of 4.1 times their income. For self-employed people this rises to 18.6 times their income.”
[Note: The figures apply to debtors who are or were clients of the charity. They are not necessarily typical of the population as a whole.]
The difference between 4.1 and 18.6 is remarkable; and I can empathise, because I was in the same situation fifteen years ago. I had a business that had done well for five or more years but then “fell on hard times”, to put it euphemistically. Like the clients of StepChange, I increased my borrowings (secured or unsecured, they were still debts) in an attempt to keep the business afloat. By the time I decided that would not work, closed the business and concentrated 100% on solving the debt problem, my total borrowings were several times my income. Not eighteen times, but a lot.
How I solved the problem is told in my book “Back the Black: how to become debt-free and stay that way.” (Amazon: paperback and Kindle eBook)
WANT TO KNOW MORE?
For a copy of the report by StepChange:
http://www.stepchange.org/Portals/0/Documents/media/reports/cebr%20q3%202012.pdf