UK households are worse off than five years ago, as the average disposable income per family has fallen “dramatically”. This can be blamed on the increase in cost of living seen by the rise of the price of petrol, as research by Ernst & Young show that we are 15% worse off.

Typically, the average family can expect less than 20% of its gross income remaining after they factored in their monthly outgoings with items such as tax, mortgage, pension contributions, petrol and utility bills. This figure has dropped from 28% in 2003.

Director of retail at Ernst & Young, Jason Gordon comments that: “Many UK consumer segments are clearly feeling the pinch as big rises in household costs are far outstripping relatively modest wage inflation.” UK households can expect £772.79 in their pocket each month after their total fixed monthly outgoings, this figure has significantly dropped from £909.84 which was report in 2003/04.

disposable income falls as debt repayments rise

Gordon adds that: “The worst could be yet to come. If, as predicted, utility prices rise by as much as 40% later this year and interest rates are increased to control rising inflation, consumers and consumer facing businesses will face even bleaker times.”

Other findings from the report include:

  • 110% rise in energy bills.
  • 78% rise in monthly mortgage payments.
  • 45% rise in household costs.
  • 44% increase in debt repayments.
  • 29% rise in petrol costs.
  • 25% rise in council tax (for a band D property)

These figures show a rise since the corresponding Annual Discretionary Income Study of 2003/04.

Debt Repayments Soar by 44% – Are you Struggling with Debt?

As figures from Ernst & Jones show, more and more people are struggling with their finances as they feel the pinch of the credit crunch. They report that debt repayments, such as loans, overdrafts and credit cards have soared by 44%.

If you are struggling with debt, One Advice are on hand to help you. We have access to a number of debt solutions which could help you lower the amount that you pay to your debt on a monthly basis, these include:

Debt Management Plans: A Debt Management Plan is an informal agreement between the debtor and their creditors. You make one affordable payment to us, which we distribute to your creditors (the companies you owe money to). There are many debt management advantages as it will make your debts more affordable as you are paying one lower monthly amount and some creditors are even willing to freeze interest and charges on your debt. A Debt Management Plan is best suited to those with debts under £15,000, if you have debt over this amount then you might want to consider an IVA.

IVA (Individual Voluntary Arrangement): An IVA is similar to a debt management plan as it allows you to make reduced payments to your creditors. However there are distinct IVA advantages which are not available with a debt management plan. An IVA is a debt solution which will allow you to write off any debt that you cannot afford, interest and charges are automatically frozen and it is legally binding between the debtor and their creditors.