Falling Real Wages May Increase Number Of Trust Deeds
12th August 2013
The Labour Party has commissioned research highlighting the scale of falling real wages in the UK compared to other European nations. “Real wages” are adjusted to take account of the impact that inflation has on purchasing power. Only Greek, Portuguese and Dutch workers have fared worse amongst other European countries.
Average real wages in the UK have fallen by 5.5% since 2010. French and German workers have both experienced real terms wage growth over the same period. However, unemployment has not increased as quickly in the UK as many feared it would. It appears that the preservation of jobs has come at the expense of average real wage falls.
Reduced spending power may create pressure upon consumers to increase their borrowing levels in order to maintain their existing lifestyles. This clearly creates risks that debts will build up to unaffordable levels and result in some households having to turn to debt measures such as trust deeds.
A decline in disposable income will also increase the pressure upon those carrying a legacy of debt from more economically prosperous times. Declining real incomes can only increase the repayment pressure experienced by individuals that are trying to balance their living costs with their personal debt commitments.
The impact of squeezed incomes is also being felt by those that have already addressed debt problems. Repayment arrangements, such as debt management plans or protected trust deeds in Scotland, may come under pressure if the monthly amount pledged to creditors becomes steadily less affordable.
What should you do if you’re getting into further debt because your wages aren’t stretching as far as they used to? It’s very important to write down a budget. Be disciplined about including everything you’ll need to spend money on from time to time. Expenditure such as car repairs, home repairs or clothing can easily be forgotten due to the sporadic need to make such purchases.
Can you manage all of these costs without taking on further debt? If you can it’s important that you stick to this budget to prevent a financial problem from developing.
What if you cannot afford to pay your living costs and debt repayments from your current income? If there’s no obvious way to increase income, or sufficiently cut costs, action of a different sort may be necessary. Debt advisers can help to confirm your budget, whether it’s sustainable as things are, or whether you should consider measures like Scottish trust deeds or debt arrangement schemes (DAS) to prevent the problem escalating into something worse later.
The Trust-Deed.co.uk advice team are happy to assist you with this exercise.
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