Debt - Families Feeling The Squeeze

As we see rises in taxes and the crippling credit crunch, family finances are being stretched to their limits. And a recent report has shown that families have been feeling the squeeze due to a range of factors, including stealth taxes.

A report carried out by a government think tank revealed that the average household is now paying £7,800 more tax than when Labour took power.

The report – entitled ‘Why Do We Feel So Broke?’ also revealed that as household bills and interest on mortgages increases, families are struggling with their debt management.

The report showed that, whilst the average family had been able to cope with tax increases - partly through rising salaries and increasing levels of personal debt – there had been changes in levels of disposable income, leaving many turning to debt consolidation in order to make ends meet.

According to the findings of the report, disposable income has seen a dip in percentage since 1997 – falling from 71% to 67% in the present day.

Whilst levels of credit card debt have seen a gradual fall since 2005, it is suggested that many families have used mortgage advances as part of their debt management.

And with more of us turning to other financial means – including easily available credit deals, which in turn contribute to the strain on the market - in order to control our debts, many households are now more susceptible to any economic downturn.

Average-earning families have been hit hardest by the fall in disposable income, which has fallen by around £950 since 2002.