Shropshire Star

Star comment: Too much debt is too dangerous

Personal debt is a ticking time bomb.

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Credit cards, car loans, mortgages and other borrowings far outstrip people’s ability to pay. The nation has gorged on cheap credit for several years and put itself in a position where it will be unable to repay those sums if circumstances change.

Interest rates are historically low and it is not surprising some have made hay while the sun has been shining. Yet all must be aware that such rates will not last forever and, at some point, will start to rise.

When they do, many people will find themselves in trouble. The spiral of rising interest rates will be undermined by incomes that do not keep pace. People will find themselves spending more than they earn and will either have to generate additional income or cut back to survive. In the worst cases, people will simply be unable to cope and will have to liquidise their assets, losing cars and homes along the way. Some will suffer the ignominy of bankruptcy, a fate that has psychological as well as practical effects.

There is no need for people to be under such weight, of course. The solution to debt is simple: only spend when you can afford to pay. Finances must be sustainable in order for people to thrive. Those who borrow too much come to a sticky end. Just as the Government cannot afford to live beyond its means – even Labour’s biggest promoter of public services, Jeremy Corbyn, has admitted defeat in his quest to write off the £100 billion student debt bill – so must families adopt similar principles.

And while it is not possible for the vast majority to acquire property and other large items of expenditure without mortgages and loans, they must be realistic. People should not take a chance and borrow too much. They must be realistic and pragmatic. They must have a plan in place for when circumstances change, when interest rates go up or when things simply go wrong.

We have been here before, of course. The issue of consumer debt has previously been problematic for many people and given the sluggish nature of our economy it could become a major issue once more.

Brexit, low levels of growth and other economic factors mean boom times won’t return soon. People need to keep tighter controls on their household finances.