With a range of new tax and benefit changes coming in, many people will be substantially worse off than before, but it would be an unwise move to resp…
With a range of new tax and benefit changes coming in, many people will be substantially worse off than before, but it would be an unwise move to respond to this by borrowing more in a bid to plug the gap.
Managing director of moneymaxim.co.uk, Mark Bower commented: “There will undoubtedly be many who are postponing the pain of tax and price increases by using short term debt, but this is likely to be a recipe for disaster.”
He suggested it is “very unlikely” that the increases in taxation are about to be reversed, which means it is “essential that householders adjust their spending patterns now to take into account their reduced budget”.
Measures wise householders are undertaking include seeking to cut costs by switching their utility and insurance providers.
Such actions may be a positive step forward for those who wish to become debt free and might end up facing repossession or face a choice between bankruptcy and an individual voluntary arrangement if they do not manage to bring their situation under control soon.
Individuals and families will face the impact of changes such as reduced housing benefits and a lower threshold for top rate tax, the second of which could hit some middle-income earners.
One way in which people struggling with debts can help themselves is to switch their mortgage, according to Editor at What Mortgage Magazine Ben Wilkie.
He stated that many people are focusing more on other issues such as credit card debt, when in fact they could make “huge” savings by changing their mortgage to a cheaper deal.
By Joe White