Almost 12 million Brits are facing financial meltdown as the nation hurtles into recession, new research has found.
Of these, 3.8 million are failing to cope with mounting credit card bills, while a further million have borrowed too much for their home and are struggling to meet mortgage repayments.
Some 6.1 million people have been forced to spend all their savings while 1.7 million report that their investments have all but disintegrated. Worryingly, around 1.3 million admit that their finances are ‘entirely out of control’, according to AXA.
The financial difficulties have largely been driven by the credit crunch, falling house prices and rapidly rising unemployment.
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Deteriorating standards
“The deterioration in people's standard of living and the effects of the credit crunch on finances are hitting people hard,” says AXA’s Steve Folkard.
“For many people that means running out of savings or struggling to meet repayments but for some it's more serious still and can spell bankruptcy, an IVA or repossession.
“That's why taking control of your finances is so important. People who bury their heads in the sand will find it difficult to avoid financial difficulties during a recession. The more aware you are of your problems and the more in tune to your financial situation you are, the better your chances of coming out the other end in good shape.”
According to Folkard, the average person can make a real and tangible difference to their financial situation by spending just an hour a month taking stock of their finances.
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Sorting out your finances
If your finances have taken a knock, you need to devise a strategy for getting yourself back on track The best place to start is ensuring you fine tune your finances in order to free up as much money as possible to tackle your debt mountain.
Do this by drawing up a detailed budget (read more here), then using this to identify where you can cut costs, remembering to focus on both your essential monthly outlays and luxury purchases.
This done, you need to ensure your existing debt racks up as little interest as possible. Given the sky high APRs on credit cards, this is the most important debt to tackle (along with store cards, of course).
Make use of one of the various 0% balance transfer credit cards on the market, the best of which is currently the Virgin credit card, offering 16 months interest free, with a 2.98% fee charged up front.
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| Problem | Number of people | % |
| No savings left | 6,150,298 | 54% |
| Credit card bills are too high | 3,754,344 | 33% |
| Investments have all but disintegrated | 1,676,940 | 15% |
| Can't meet rising mortgage repayments | 1,021,637 | 9% |
| Been forced to apply for an IVA | 780,448 | 7% |
| Secured a loan against property, at risk of losing home | 707,637 | 6% |
| Been threatened with repossession/ bailiffs | 542,673 | 5% |
| On the brink of bankruptcy/ been declared bankrupt | 430,043 | 4% |
Source: AXA
