When inflation overtakes pay rises… 

Debt management company Gregory Pennington advises workers dealing with squeezed finances and lower pay rises than expected to consider ways of reducing their outgoings.

by Melanie Taylor Monday, November 28, 2011
Debt management company Gregory Pennington has advised anyone who finds their pay isn't keeping up with rising living costs to consider ways of 'freeing up' some of their finances to help them keep on top of their debts.

The comments follow data released from Mercer's TRS Quarterly Pulse Survey, which reveals that companies in the UK are anticipating employee base pay rises of 3% in 2012.

Although this increase in employee salaries is slightly higher than the average expected across Western Europe in the same period - which, at 2.7%, represents the lowest increase across the whole of Europe, the Middle East and Africa - it still remains on the low side.

With inflation in the UK currently standing at 5.2% - much higher than the Government's target of 2% - it's likely that such a small pay rise will have a limited effect on improving people's incomes, with the high cost of petrol, food, travel and utility bills still putting many people's budgets under pressure.

An expert at Gregory Pennington commented:

"With inflation already being so high, it'll come as disappointing news to many in the UK that their expected pay rises aren't keeping up with rising living costs.

"Higher energy bills, the rising cost of fuel, and falling disposable incomes are hitting many people's budgets hard. People who have borrowed money on credit cards, overdrafts and other forms of credit - confident that a pay rise would give their disposable income a healthy boost - may see a further blow to their finances as a result.

"However, for those people repaying debts on a squeezed budget, there are some practical ways of improving their monthly finances, which could make keeping on top of monthly payments easier - and help prevent debt problems.

"Firstly, look at ways of giving your monthly income an added boost. If you have any items in good condition which you no longer use, think about selling them over the internet or at car boot sales. Similarly, are there any benefits you're entitled to but aren't currently claiming?

"Furthermore, it could really pay to reduce your outgoings - which could give you an extra bit of cash to put towards your debts and other monthly costs. Making even small cutbacks, such as switching to a cheaper utilities provider or joining a loyalty scheme at your local supermarket, could have a big difference in the long term. If you feel it's necessary, larger cutbacks, such as 'downsizing' your car to a more efficient model, could be worth it.

"For people repaying their debts relatively well, taking out a debt consolidation loan could also help to reduce monthly outgoings. Agreeing to repay the loan over a longer period - for example, over five years rather than three - will mean your monthly repayments towards the loan will be smaller, which could take some pressure off your finances. Bear in mind that making smaller monthly payments could cost you more overall though, as the interest you'll have to repay will accrue for longer."

"However, debt consolidation is only suitable for people who can commit to repaying the loan every month until the total amount is paid off. For people struggling with their debts, getting advice as soon as possible from a professional debt management company should be a high priority."


0    submitted by Melanie Taylor
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