Do We Need Debt Education?
Today we have a great post for our UK readers about debt education.
Almost everyone has debt, whether it’s a student loan and a mortgage or something more serious such as credit card debt, or even a pay day loan, that we’re struggling to pay back. So, is it time we were enrolled in some debt education here in the UK?
Household debt has soared by two fifths in just six months according to Aviva, and now on average stands at a staggering £13,520. Younger people are also finding themselves in debt as well, and this isn’t just student loans but credit cards and payday loans being used to fund holidays and lavish lifestyles accumulating to thousands of pounds in money they can’t pay back.
These are the individuals in most need of debt education and it should be something the Government and state education implements to ensure young people understand money isn’t something that is simply handed out – in the end you have to pay it all back.
Payday loans, car finance deals and store cards are the most popular causes of debt for many people as, in our current society, we want instant gratification and the newest products readily available – even though we don’t necessarily have the money to fund them.
Surprisingly, student loans account for less than half of the debt in young people, with payday loans and borrowing from family cited as the most common causes of debt. Luckily, payday lenders have had to cut back their appallingly high interest rates which should help rectify some of the problems faced by those paying back these sort of loans.
Education on how to properly manage money is needed, from how to budget for the month and cutting back on luxuries to the importance of having an emergency fund – which, troublingly, very few people have to fall back on in an emergency situation.
And for those already in debt, education is still required so they can get out of debt and not end up in debt again. This is because they might not understand what to do to rectify their predicament and therefore bury their head in the sand. Therefore, education is required for these sort of circumstances that details what is required in terms of solutions and getting finances on track.
Teaching people in debt about solutions such as IVAs and DMPs and the difference between them is important. They must also understand how to improve their credit rating and also the importance of budgeting to ensure they do not live beyond their means each month.
However, there is plenty of free advice out there – PayPlan, National Debtline and Citizens Advice are just a few services that aim to assist those in debt and advise them on their options – but people need to be made aware of it. Debt education is needed, the question is simply how to implement it and engage those who require it.
Do you feel that you are in need of debt education? Are you struggling to pay off any of your debts?
Photo courtesy of: Hans
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