You wouldn't believe the number of people here in the UK who don't have anything left at the end of the month. We live in a time when people are spending money like it is going out of fashion. Even if it means putting a few hundred pounds each month on a credit card. And millions of Britons are affected.
The web site Uswitch recently teamed with the Office for National Statistics, combining research on 2400 people with official statistics, and came up with some remarkable numbers.
Most UK incomes are stretched
First, the average monthly income was established at £2,607. Sound reasonable? Think you could live comfortably on that? Well, the researchers found that on average we spend £1,229 of that on essentials, some £356 to repay debts, and about £865 on non-essential items. do the maths on that and you are left with a surplus of only £157.
Of course this is just an average. That means there are millions of people with less than the average income each month. Of them , the study found five million (or 10 percent of UK adults) spend more than they earn every month and 10 million more people, another 20 percent of UK adults, have nothing left over on the 30th of each month. So what are these 15 million people going to do when they get a substantial bill through the post?
The problem of a big bill
Actually, what is the average family, which does have some extra as a monthly surplus, going to do? The average surplus that Uswitch found, of £157, wouldn't cover a major bill if it had to be paid suddenly.
And we do get these big bills. Some of them are ugly. Like the bill for a new car to replace the one that some fool rammed into the back of on a frosty morning. Or the price of an urgent medical operation at an expensive private hospital because the public system can't provide a place for another 12 months.
Of course sometime we are happy to get a big bill. For example when the children grew that extra bit and now need another bed room on the back of the house. Or on that happy day when the daughter comes rushing home breathless with the wonderful news that she's going to get married and they've picked the day - just five months away. Yes, all of us know about these unexpected bills. And all of us struggle to pay them.
A common problem
When this happens one can take some comfort in the fact that others are hit in the same way. This is life, now, for most people in the UK. We seem to be living with plenty of excess. After all non-essential spending has gone up by 65 percent in the last 10 years, Uswitch found, and we now spend about £1,000 on holidays each year, up from around £500 in 1997. But as the research shows most of us are living on a tight reign. and we get tripped up when these big, unexpected bills arrive.
But there is some good news for those of us who own a home. A banker, and any sound non-traditional lender, is going to welcome into their office any homeowner with equity in his house who needs a loan. Because that loan can be secured against the value of the property. These are the well-known secure loans that are safe havens for bankers looking for sound investment opportunities and give the borrower the fast cash they need.
A secured loan is secured against something of value. Usually a home. And if the borrower is not able to pay back the loan the lender can, legally, take that house and sell it to retrieve his loan. But for most people on average incomes this is not going to be a problem. Mortgagee sales are uncommon because most of us can afford repayments if we are responsible and keep an eye on our spending.
A broker can find you a better deal
But that is not saying that getting a secured is simple. The conditions and terms around these loans vary widely. You would be wise to engage a good broker when you start looking for the loan that will be most favorable to you. A broker will know where the best deals are, he will be able to quickly answer you questions when you're in the middle of negotiations with a lender. He will save you time and money.
John Bowles writes general finance and loan articles for the UK Loans Only website at http://www.ukloansonly.co.uk