Money Saving Tips

Debt driven down Britons have paid off £245m in February, (the first net reduction in the total owed since 1993). Amounts owed by people through unsecured debt such as personal loans, overdrafts and credit cards has fallen for the first time in 16 years. But, in contrast to that, borrowers have taken an extra £2.1bn of credit card and overdraft loans in February last year, as the Bank of England figures show, leaving total consumer debt at £1.45 trillion, including mortgages. According to one personal comment, if people are repaying their debts, obviously the economy is going to slow down. It was the year-on-year increase in these debts which helped fuel the economy and contributed to almost 16 years of growth.( both the economy and debt).This was unsustainable and had to end at some point. The up rising unemployment and widespread pay freezes have been hitting hard on householders. The latest statistics show families tightening their belts to cope with the recession. According to Asda, the average British family had £131 of spare cash a week in February which is now down 9.2% from the same month last year. Last week, figures showed consumer spending over the last three months had dropped by the greatest amount for 30 years. While worried Britons are trying to protect themselves in the financial storm, MPs across the political divide are advocating moves to a ‘saving culture’ in order to shift people from a spending mentality. But, there could be dangerous consequences for a wider economy, if all Britons try to save rather than spend at this time of the crisis. Ben Read, an Economist at the Think-Tank Centre for Economics and Business Research says, on the long run, the structural need to shift people into saving more and borrowing less is important for a good economy, but if everyone tightens their belt quickly, (at this time) it will be hard for them. Meanwhile the property market has risen 19% in new loans for house purchase and some 37,937 mortgages were agreed in February, the highest amount since last May, according to the Bank of England figures. This increase seems to be after 20% collapse in house prices - and a fall in the cost of new mortgages, that would have attracted buyers into the market. But could there be a further reverse in the property market, owing to rising unemployment?!