Celebrate debt freedom day

Thursday, 01 February 2007 12:00

It takes 31 days' work just to pay for the interest on our loans and credit cards, new calculations show.

This means - if all the interest was paid up front - the debt would soak up all the wages of the average Briton until today, February 1st, without actually being reduced.

Figures from Unbiased.co.uk, which promotes the benefits of independent financial advice, show the average Briton pays £2,012 interest each year - and this is equivalent to 31 day's salary for someone earning the average wage.

UK residents are better off this year than they were last - with personal debt levels falling seven per cent in the last three years, interest payable on this debt dropping 59 per cent, and average earnings rising.

But despite the improved position, the proportion of income needed to service even these debt levels is still significant.

"Although debt freedom day is of course a hypothetical point in the financial calendar, it does serve a real purpose and should be seen as a wake up call to those who carry personal debt," David Elms, chief executive of Unbiased.co.uk.

"Debt freedom day does fall slightly earlier this year, which is undoubtedly good news, as it means average levels of personal debt continue to fall year on year, but the real headline will come when official figures show people controlling their spending behaviour and increasing their saving power, and this date becomes a non entity."

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