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09.01.2019

What can you do to avoid the financial fears in 2019?

As far as 2019 is looking, it’s not looking like it will be a great year. In actual fact, in some respect, it could be said it’s beginning to look like it could be what the Queen called the year 1992, her “Annus Horribilis”, or otherwise known as her horrible year.

There is certainly a lot of uncertainty around, and after another festive period of spending, many would be justified in having the financial fears for 2019.

Brexit: the uncertainty

First, we have Brexit, which although it has divided the UK, at least now appears to have united both Brexiteers and Remainers in one regard, and that neither appears to believe the negotiations have gone well.

It’s also looking increasingly likely, that unless Theresa May can get Parliament to accept her exit deal with the EU (which in itself is looking increasingly unlikely) the UK may be on a path towards a hard Brexit.  This would mean crashing out the European Union without any trade deals and barriers being erected overnight, preventing and obstructing not only the free movement of people but also services and goods.

For UK consumers, in the short term, that means higher prices in the supermarkets and also means businesses, fearful of the future and their trade with customers, are likely to take a bunker approach towards investment and employment.  All of which is likely to hit consumers and businesses where it hurts most, in the pocket.

Rising debt levels

 However, if that is not enough, the Trades Union Congress (The TUC) has released more evidence that bad things come in pairs.

In a new report, they have revealed that levels of personal, unsecured debt (which doesn’t include mortgages), is now at an all-time high, surpassing even the dizzying heights that were reached on the eve of the Credit Crunch.

It now appears UK households are crippled with £15,385 of personal debt, which is almost 400% what it was in 1992, and also 38% higher than it was in 2008, the year of the Credit Crunch.

They have also revealed, however, to give some sense of the scale of the problem, that as a percentage of annual income, debt levels are now at 30.4%, which is higher than the 27.5% that it was in 2008. This illustrates that even allowing for inflation, the burden of personal debt on UK households is increasing.

So what can you do to avoid the financial fears in 2019?

Its clear no-one can be complacent, regardless of whether they are someone who is managing to keep on top of their bills, or whether they are someone that is beginning to struggle with problem debts.

There are a number of things you can practically do, however.

Reduce your debt to income ratio

First, get down the level of your monthly debt payments. There is no easy way to do this, and the most effective way is to reduce your overall level of debt; however, that is not to say you cannot be strategic in your planning and thinking.

If you are still making your contractual payments and have not missed any yet, concentrate your payments on those debts that have the highest levels of interest rates.  This will not only reduce your overall level of debt as a percentage of your income but also help keep the contractual payments to credit cards down if you have them. This means you then have the option of being able to pay more each month or, if you have other demands on your finances, you can hopefully afford them without having to make additional borrowing.

Secondly, have a look through those bank statements and direct debits. It’s time to begin pruning away the unnecessary bills you don’t need to be paying. We all accrue unnecessary monthly expenditure when we can afford it, but with so much financial uncertainty ahead of us, it’s now time to begin running a leaner ship.

Get Advice

Where you have already reached that point where you need to borrow to make ends meet or you cannot meet your monthly debt payments, you now need to seek advice. You are possibly already at the stealing from Peter to pay Paul stage, or likely to be there soon and unless you are expecting a financial windfall, it is not likely things will improve.

That is not to say you cannot increase your financial ability to absorb shocks, it just means it is unlikely to come from paying down your debts, as you lack the ability. You now need a different type of intervention to help you with your difficulties.

This could mean an IVA in England, Wales or Northern Ireland; or if you are in Scotland, it could mean a Protected Trust Deed or Debt Payment Programme under the Debt Arrangement Scheme.

If you are in that situation and need help with your debts, speak with a Creditfix adviser on 0808 2234 102 for free, confidential advice.

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