Debt addiction is a serious problem

To the vast majority of us the thought of spending money which we cannot afford might be alien but the truth is that there are millions of people in the UK with an addiction to debt. This is a serious and a growing problem which needs to be addressed sooner rather than later before more and more people literally ruin their financial futures and put themselves under, sometimes, insurmountable pressure.

What is debt addiction?

Debt addiction is simply an inability to comprehend what you can afford to spend against what you actually spend, i.e. overspending. There are many reasons why people will overspend and pile up the debt on their credit cards and their overdrafts and the truth is that some people do not even realise they are doing it. The “head in the sand” phenomenon seems to kick in and they spend, spend, spend not even contemplating how they will pay back their debts.

This is the reason why we see so many people having enormous debts compared to their relatively small incomes and why many people blame the financial institutions for this terrible phenomenon.

Living a life beyond your means

There are many times when each of us will spend something which we know we cannot afford in the short term but it feels good and it feels right. Whether this is buying a new couch, new car or even a holiday, at the time it does feel right and in many ways we do kid ourselves that we deserve it. However, while there is not necessarily anything wrong with treating yourself once in a while it is when these “treats” become more common and cost more money that a containable problem is let out of the box.

Not reacting to a change in circumstances

Especially in the current economic environment, one issue which seems to be mentioned more and more is the fact that some people find it difficult to react to a change in their circumstances and their finances. This is the scenario whereby perhaps income has dropped significantly, employment has been lost or perhaps a large debt has been repaid leading to a shortfall between your current standard of living and your income.

Whether it is a case of “keeping up with the Joneses” or indeed kidding yourself that the situation will rectify itself in the short to medium term, the number of people who’ve got themselves into financial debt because they have not reacted to a change in their income and their finances will amaze you. You also need to bear in mind that if you go to court to apply for some kind of debt repayment plan or trust deed in Scotland you will have to justify why your debt increased when your income obviously could not cover your ongoing expenditure.

The property market

While more and more people in the UK are struggling to even get on the first rung of the property ladder there are some people who are literally clawing themselves to the top of the ladder on incomes which leave very little in the way of flexibility. It is all good and well having a big house, numerous bedrooms and ensuite bathrooms but sometimes we need to think about what might happen if the property market turned against us.

The chances are that if the property market was in freefall there would be serious economic issues within the country and unemployment would grow. These factors can come together and causes serious financial problem for many people with a rise in the cost of living, a reduction in income and a fall in the value of your property. In more traditional recessions and difficult economic times these situations can rectify themselves fairly quickly but as we have seen over the last few years this is not always the case.

Wake up and smell the coffee

The vast majority of people who have some form of addiction to debt will in the back of their minds realise that what they are doing does not make sense. It is only when this addiction to debt and this addition to spending is overtaken by a fear of their financial situation and how this may pan out that anything will be done. For many people this situation will occur far too far down the line to stand any chance of rectifying it without some form of professional financial advice.

Depending upon where you live in the UK you can apply for some form of debt management, debt counselling, trust deed in Scotland or even bankruptcy. These are options which for many people over the next few years will be a reality and will certainly force them to wake up and smell the coffee.

Learn from history

History show the UK is littered with millions upon millions of people who have overextended their finances in the hope that they will pay off tomorrow what they have spent today. However, very often these growing debts can grow out of control and before you know where you are the vast majority of your monthly income is being spent on financing your debt without even paying off the capital. These are situations which not only affect your financial well-being but can have a terrible physical and mental impact upon your everyday life.

What to do if you have an addiction to debt

The first thing you need to do if you have an addiction to debt is to admit to yourself that you have a problem and immediately seek professional financial advice. If you sit down by yourself and look at your expenditure, your income and your assets there is every chance that you will be astounded and shocked by your financial situation. Depending upon how quickly you wake up and smell the coffee there are a number of different routes to consider which will reduce the immediate financial pressure and go some way towards sorting out your long-term problems.

Once you have admitted to yourself that you have a problem with debt there is every chance that you will resolve the issue but this will be the major turning point and for many people the most difficult realisation.

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