Latest figures have highlighted how the debt among over-55s has increased by almost 20 per cent in the past year. This goes against previous evidence suggesting that the older generation are actually better off, and it is the younger generation (aged 18-24) most in trouble with debt.
The debt research, which was conducted by Aviva, suggests that Brits over 55 have returned to a culture of high spending. This could be because of the rise in house prices, which has given older people the confidence to over spend incorrectly. This means more meals out, more holidays, and more spending on the family, when in fact the budget may not actually be a strong as you think.
The data showed that spending on credit cards amongst the over 55s has risen by 10 per cent since last year, while others have been using other solutions like short term loans, from companies the Wonga brand in the link above, to overcome finance gaps. Other people are using their overdrafts more on their current accounts. You can resort to overdrafts when you need more capital as many current accounts offer overdraft facilities up to £5,000. Some current accounts also come with a low charge overdraft, forcing some to incorrectly believe they have more money than they do to spend. The figures from the research showed that the average debt among over 55s is £1,680. This compares to £1,420 in 2013. Although this may seem a small figure to many, interest rates can soon soar on such amounts.
A worrying thought?
It is important that over 55s do not wrongly assume they can overspend, as this could backfire on them later down the line when they wish to retire. They could find a shortfall in their pensions, which could be devastating for many.
Reducing over spending
Reducing overspending means cutting back on things which you may not necessarily need. Debt charities will be able to offer some help into how you can cut back on your spending. Simply cutting back by £10 a week on your food shopping, for example, could save you £520 a year.
You may also want to consider your credit card debts. Credit card debts can really stack up, especially if they are on a high interest rate. One of the best tricks for shifting this debt is to move the debt onto a 0% credit card, paying the minimum amount each month until the debt is cleared. You can get some really good ones at the moment, some which have 0% interest for up to 36 months.
In fact, consolidating debt is a wise plan, and many borrowers employ this trick to help them get rid of debt and get themselves back into the black. You can use the services of debt consolidation companies, or you can try and consolidate the debts yourself. Drawing up a timetable of repayments and figuring out when and how much you need to pay back each month means borrowers can get themselves organised and free from debt more quickly.