The Guardian newspaper published an article on Thursday with the headline “A quarter struggle to pay bills”.

“Around 25% of people claim they can no longer afford all of their essential outgoings, including mortgage repayments and food, according to insurance specialist Bright Grey.

A further 14% of people admitted their finances were so stretched that they would run into problems if their outgoings rose by just £50 a month, while 16% did not think they would be able to cope if they had to find an extra £100.”

This reinforces my belief that a huge proportion of the country is heading for financial meltdown in the not too distant future. Tens of thousands of families are less than a week away from ruin, if the Bright Grey report is accurate. Around 25% are already spending more than they are earning if they cannot make their existing monthly commitments.

“The frightening truth is that most Britons are already struggling to afford their monthly bills – and all it would take is a small increase in bills or drop in income for people to find themselves in trouble.”

We as a nation need to wake up to the fact that those small increases in bills will be coming. Energy companies have united together to say there will be no reduction in costs this winter, and that means your energy bills will be higher than last winter. Petrol has recently gone up at the pumps again. A new 50p broadband ‘tax’ will be applied to all fixed telephone lines in the new year. VAT is returning to 17.5% in January.

The cost of living in this country will be going up and up. Interest rates are expected to rise to around 2% next year from their current rate of 0.5%, how will that affect your mortgage? If you or your partner are made redundant, could you survive on one income instead of two?

Now is the time to be taking action. Reduce your outgoings, find out what you owe, and begin working your way out of debt. A little pain now could save a lot of pain down the road.

• Dig Yourself Out of Debt: Spend Less Than You Earn
• Personal Recessions
• The Credit Crunch Has Positives
• The SCRAM Plan
• Could You Live on Half Your Income?

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