Debt; Its one of those words that leaves you feeling slightly sick when you hear it.It's bad enough that some of the Money Hospital staff are sick in bed with a rasping cough and nasty chest infection; and before you ask it's not because they have all had to give up the fags due to the smoking ban...
Now, we hear news about debt that leaves us all feeling even more ill: the burden of paying off our household debts has reached record levels!!
Those accountancy boffins at PricewaterhouseCoopers have sadly informed us that repaying money we have borrowed and the interest we pay on it, now takes up 19% of our disposable income!!
That's right; nearly a fifth of what we earn goes on paying off our debt...
Did you know that is now higher than when the last big debt problem was around in late 1990 when we were paying around 18% of our income on debt? (and I bet some of you thought it was bad then!)
With the Bank of England raising interest rates to 5.75% yesterday, PwC says consumer spending will slow down.
John Hawksworth, head of macroeconomics at PwC said: "Many households have faced a squeeze on their finances due to a combination of modest earnings growth, rising utility bills, higher petrol prices and increased debt repayment costs and looking ahead, we expect rising debt service costs to contribute to slower consumer spending growth over the next 2-3 years".
PwC calculates that the average income we had left after we paid off debts and household bills, rose by just 3.1% a year between 2004 and 2006; bear in mind that this was less than the rise in our gross incomes of 5.2% per annum!
And with interest rates expected to reach 6% by the end of this year, there seems to be no let up for any of us with the squeeze on our personal spending.
"The relatively rapid growth of debt service costs throughout the whole period and of utility bills during the past three years are major factors tending to squeeze household discretionary spending power," said Mr Hawksworth.
To sum all of this up, we are being paid less and being asked to pay more! Nothing new there then eh?
Is it any wonder our debt no makes up so much of our everyday lives?