The future of debt. The nation is in a ‘lot of debt.’

Consumer debt is at ‘doomsday levels.’  This is a headline that has grabbed the attention of many newspapers and media outlets in recent weeks.

We are as a nation, say the experts ‘a lot of debt.’  The levels of debt facing consumers mean “the economy will come crashing down,” say some economists.

Young people are in five times more debt than over-55s.

It is not just young people who are struggling under the burden of debt.

More people are using credit cards for everyday spending such as rent and food since wages have stagnated (and in some cases dropped in real terms) for over a decade.

The debt held by the government, known as Sovereign debt is approaching an all-time record high.

It is unsecured debt that is the real worry. This has seen the biggest jump over the last ten years. Credit card debt and overdrafts have seen the biggest rises.

Some debt is seen as ‘good,’ such as mortgages and student loans.

What will consumer debt look like in the future?  What does the future hold for our young people?

Experts have widely predicted ‘catastrophic consequences’ of this debt pile.

In the USA, The Aspen Institute, which is an international non-profit think tank founded in , describes the situation as a crisis.

It claims that unprecedented levels of debts (and defaults) in the US will ‘impact at every level.  Individual, family, community, and for the nation as a whole’.  It believes that the bubble will burst and when it does, prison numbers will rise, healthcare will be unaffordable and governments will be ‘forced’ to bail out banks and individuals without the means to support themselves.

According to Howard Dvorkin, chairman of Debt.com:-

The future of debt is a ‘doomsday scenario’ future generations will have to deal with. ‘I have no clue when it will come crashing down. I just know it will.’

He told Metro.co.uk. He believes that, although finance industry tech advances will be significant, they won’t solve debt and we’ll “borrow more because we can” rather than having long-term goals in mind.

‘Short-term thinking hasn’t yet been bred out of our evolutionary thinking,’ he says. “We’re a species still focused on our next meal, not dinner 20 years from now. We borrow now for the same reason we don’t save for retirement, because it’s now. The three deadliest letters in the English language are N-O-W.”

Dvorkin claims that, as a result of how much we’re all in, the way we look at debt will change, with shame around a ‘life for rent’ no longer applying.

‘Lifetime loans’ becoming normal. 

In the future, Dvorkin expects to see what he calls ‘lifetime loans’ becoming normal. 

“Student loan programs already extend your payment terms out decades. Auto loans are already at an all-time high of 65 months, and I wouldn’t be surprised if that eventually approaches mortgage-like spans. I’ve seen 97-month auto loans out there.”

 The only way he believes we can stop lifetimes of debt from blighting future generations is by ending demand.

In a recent research paper, political economist Johnna Montgomerie called household debt “one of the biggest problems facing the United Kingdom’s economy and society.”

She said that levels are ‘historically unprecedented’.

What does all this mean for future generations?

No one can predict exactly how the future will unfold, but we can use the knowledge and information out there to make an informed opinion.  This is what experts and economists do.

They say consequences from lower levels of disposable income (we’ve already seen lower levels of homeownership among young people as they don’t have enough for deposits), problems with saving for retirement, and even widespread health problems caused by the stress of unmanageable debt. ‘Low interest rates and longer mortgage durations are the two key factors that pushed consumers to borrow more.’

John Wilson, professor of banking and finance at the University of St Andrews, said: –

“But low paid, gig economy jobs, in-work poverty and changes to the benefits system are also likely to be factors causing consumers to increase debt.”

The solution, Prof Wilson believes, is financial literacy and ‘transparency in the consumer credit market’. Over 80% of 15 to 18-year-olds in the UK want more financial education, and 69% regularly worry about money and their personal finances. A pilot scheme from the Money Advice Service found that parents and children who attended financial courses were more open about money, and there was a 15% reduction in debt among the families who took part.

But this would battle against the constant advertising asking us to consume more, whatever the cost.

The complacency around debt tabled by Dvorkin can be seen in the fact that one in five millennials believe they will die with debt. They don’t trust traditional finance and are looking elsewhere for solutions to their stagnated wages.

A key difference between people’s ability to cope with increasing debt is seen as the education they are given when young.

“Differences in financial knowledge will impact on income and wealth prospects during an individual’s lifetime,” Prof Wilson says. “Fintech will play a key role going forward as providers will use “big data” to know their clients better and price risk more accurately.”

If you are struggling with debt problems, Ramsey Lomax can help. contact Ramsey Lomax.

Ramsey Lomax.

“over 12 years of dedicated advice.”

“People struggling with debt should seek help as early as possible.”

This is good advice from a leading charity.  Taking the first step is always difficult but it is vital.  There is help out there and solutions that can help, but you need to take the first step towards getting good debt advice.  We have listened to the stories of 1000s of people and are constantly striving to help them.  It is our mission to explore all their options and find a solution to help them become debt free. And what’s more, we have helped 1000s to achieve their goals since 2007, over 12 years of dedicated advice.

Find out how Ramsey Lomax can help you and if you qualify to write off up to 80% of your debts.

RAMSEY LOMAX – helping 1000s of people since 2007

Getting help with debt problems is ‘vital.’

Finding a good debt advisor is often a relief.  At Ramsey Lomax, we have years of experience in helping people.  One thing to remember is that your chat with our advisors is completely confidential, free and without obligation. For many of our clients just getting it off their chests and having a sympathetic ear to talk to can make all the difference. At Ramsey Lomax, we understand ‘financial fear’.  We have helped 1000’s of people to find a lasting solution to their debt.

Ramsey Lomax – fully authorised and regulated by the FCA, the Financial Conduct Authority. We also have a 5 star Trustpilot rating.

Taking that first step is not always easy but is a crucial step towards helping you to find financial freedom.

Who we are – RAMSEY LOMAX

Contact Ramsey Lomax here.

• See if you qualify for an Individual Voluntary Arrangement. An IVA is a government-backed solution that could write of up to 80% of your debts.  Please read below for more information about other solutions that may be available to you.