Double Trouble

Thursday 2nd August, 2007 

Recent research from market research company, Mintel, shows that we Brits don't know how much debt we have. But burying our heads in the sand does not make it go away. If someone asked you how much unsecured debt you have (personal loans, credit cards, overdrafts and other non-mortgage loans) - would you have a clue?

Ask the average Brit, like Mintel did, and the answer was an average of £5,251 of debt. That's a lot, right? Well, according to Bank of England figures the actual average amount of unsecured debt is £10,300. Double what we think we owe!

So what does this mean for us all? With nearly 21 million adults (42% of the adult population) having unsecured debt, that makes approximately £100 billion pounds worth of debt that we don't even know we have. Are we bovvered? No! Mintel's research shows that only one in five of us is concerned about the amount of unsecured debt we have.

So this means that we are not very good at either adding up or estimating, right? Wrong! When we were asked about the amount still outstanding on our mortgage our guess was £92,200 compared to the Bank of England figure of £95,000 - not far off the mark. So why do we pay a lot of attention to secured debt and so little to unsecured debt?

Mintel's senior finance analyst, Toby Clark, believes that the results of the survey show that we are better at looking after one specific financial matter, our mortgage, than we are at coping with various debts spread out over a few credit cards, personal loans and overdrafts. He blames a lack of financial education for our lack of understanding.

This worrying research highlights a problem with which this website is dedicated to help - Head In The Sand Syndrome. Do we bury our heads in the sand because we do not understand our financial situation? Are we just enjoying the good times and dealing with the fallout later? Or is it because we can't afford to live according to our means? One thing is for certain though; if we don't address our debt problems and find ways to deal with them - we can pack our bags for Bankrupt City and wave good-bye to the good times.