Should people save or pay off debts?

Recently-published figures revealing a 20 per cent drop in the amount of money spent on mortgage repayments each month between 2008 and 2009 has prompted one industry expert to ask whether people should be saving this extra cash or settling debts.

David Kuo, director of The Motley Fool – a firm dedicated to changing attitudes about and interaction with money – noted that the statistics from Woolwich of Barclays means that homeowners are now £110 better off every month.

He observed that some are using this extra money to pay off debts, which is “quite laudable”, but for those that are happy with their expenditure, investing the cash could be a good idea.

Opting for a “stock market tracker” or similar could mean that, after 25 years, the average Briton “would be £150,000 better off”, Mr Kuo continued.

The figures from Woolwich also revealed that the average monthly mortgage repayment stands at £497, compared to £607 recorded in December 2008.

By Sarah Adie