In a disconcerting revelation, a recent study commissioned by talkRADIO, a new speech radio station, sheds light on the financial behavior of 2,000 British adults. The research exposes a concerning lackadaisical approach to borrowing and owing money, as the majority of respondents do not consider themselves ‘in debt’ until their financial burden reaches a staggering £45,000.
The study highlights that an alarming 37 per cent of participants admitted to finding ways of acquiring desired items, even if they couldn’t afford them. These methods include relying on credit cards, taking out loans, or dipping into their overdrafts. Shockingly, four in 10 individuals confessed to depending on their credit cards to sustain themselves throughout the entire month, often accumulating at least £3,000 in debt. Additionally, a third of respondents found themselves in their overdrafts for a significant part of the month.
However, it appears that the realization of the severity of their financial situation only hits when the debt reaches a staggering peak of £45,454.26. It is at this point that people finally start to panic and acknowledge the need to take action to rectify their monetary troubles.
Dennie Morris, Managing Editor of talkRADIO, expressed deep concern about the findings, emphasizing that the days of considering overdrafts as emergency funds and credit cards as last resorts are long gone. Nowadays, it is increasingly acceptable to rely on finance or loans to purchase significant items and depend on overdrafts and credit cards for routine monthly expenses.
The researchers discovered that the average person starts dipping into their overdraft before the halfway point of the month, gradually approaching their £900 limit. Astonishingly, 12 per cent of respondents admitted to living permanently in their overdrafts, unable to escape their persistent debt.
While 34 per cent of participants claimed they would save diligently to afford something they desired, the same percentage seemed perfectly comfortable with borrowing money to purchase costly items outright. Surprisingly, 60 per cent of respondents showed no hesitation in acquiring a car on finance, while others readily borrowed money for home improvements, medical expenses, or furnishings.
Even more surprising, a fifth of Brits exhibited a lack of concern about obtaining loans to settle other outstanding bills or debts from elsewhere.
Despite their accumulated debts, an astonishing 65 per cent of respondents stated that they currently felt relatively relaxed about their financial situation. Two-thirds of participants believed that the era of saving for a long time to acquire something they wanted had come to an end. Additionally, over half of those surveyed deemed it unusual for someone not to possess a credit card to fall back on during challenging times.
In fact, an overwhelming seven in 10 respondents believe that society actively encourages the use of credit cards, store cards, and personal loans, as it aids in establishing a credit profile, beneficial for housing applications and securing further loans.
However, the study reveals a lack of understanding regarding what debts are considered ‘good’ and ‘bad.’ A third of adults confessed to being uncertain about this distinction. Council tax debt, tax debt, and payment-chasing utilities companies were deemed the worst kinds of debt to be in. Conversely, many respondents regarded mortgages, student loans, finance options, and bank loans as ‘good debts.’
Among the participants, 30 per cent had encountered situations where they needed to take immediate action to repay their debts. Of these individuals, 40 per cent opted for a more frugal lifestyle to meet their financial obligations, while 23 per cent consolidated their debts with a loan, streamlining their repayment process. Another 19 per cent sought a second job, and 26 per cent diligently saved every penny they earned.
Dennie Morris concluded that these findings arrive at an opportune time, given the recent announcement of the budget for 2016 by the Chancellor. The British public’s attitude towards debt raises concerns, as some individuals appear content living in perpetual debt while actively encouraging others to borrow more from lenders. Moreover, the confusion surrounding ‘good debt’ versus ‘bad debt’ demands attention for future consideration and education.
As talkRADIO launches today, it pledges to tackle such crucial issues, fearlessly addressing the public’s perspective on debt and finance. With the aim of fostering better financial awareness, the station aims to shed light on these important topics and provide valuable insights for its listeners.
