Worrying new figures recently released reveal signs that many of those sinking further into debt – a statistic-busting 7 out of 10 UK adults – aren’t, or can’t, face up to the burden they’ve created for themselves. The reasons they have got there are many, but people are not hearing alarm bells ring until the size of their personal debt has got well into four figures, the survey suggests.
This new syndrome, which often sees victims of a gambling addiction or people who have defaulted on short term loans amongst the numbers, has even been awarded an official four-letter acronym: the DRIP effect.
The research, commissioned by The Co-operative Bank, is as damning a picture of the state of household finances as we’ve yet been painted in an official capacity. Of the 70% who not just have accrued debt but are having problems with it, almost three out of ten (29%) are turning a blind eye to the fact until it reaches a mean average of £1,247 – much more than the average overdraft, even greater than many instant cash loan firms will lend for first time borrowers, even returning customers, in some instances.
Robin Taylor, banking head at the Co-operative, officially coined the phrase in his summary of the study, adding that under current economic hardships faced by many, the reports findings in themselves are not surprising; it is the inability of such a large amount of people struggling with their finances – with seemingly nowhere to turn other than the bookies, loan-sharks or short term loans to help alleviate their dire straits – who are unwilling to face up to the issue until it becomes a major obstacle to overcome.
DRIP syndrome has been attributed to the attitude people have to the circumstances leading up to the milestone £1,247 figure and above: debt, rationalisation, ignorance and postponement being the process identified with troubled borrowers.
In the past, individual household debt has simply been whitewashed with the tag of over indulgent spending as people made hay when the sun was shining, but did little or nothing to put some in store in the event of the harsh wintry financial landscape we’re seeing today. However, the study contests that stereotypical view of the problem, with over fifty percent of the issue now being out of anyone’s hands and the blame laid squarely at the feet of the economic climate and/or the austerity drive that is pushing two thirds of the country into very real poverty. With short term loans and pawnbrokers cashing in, the public are making themselves willing targets just to squeeze their pay packets a little further between paydays.
According to the Co-op report, the rising cost of living accounts for 28% of the debtors woes, a further 28% are suffering due to the astronomical rises in fuel we have seen over the last three-four years whilst 16% cannot cope with the spiralling cost of fuel. In conclusion, exactly half of those surveyed saw 2011 push the household even further into debt, as, even with a poor credit history, no credit check loans are easily come by providing salary proof is provided. Credit cards have also been utilised, many households now maxed out, with the minimum payment barely covering the interest in a debt loop that will take many years to break free from with so little of the actual outstanding amount being whittled down month upon month.