In the United Kingdom, living costs rose dramatically in the last years. The main reason behind it was the move by the government to print cash in order to help bail out the banks. This fuels basically inflation. Unfortunately pay rises could not keep up with this inflation. The government used an official index, called CPI, to measure inflation.
However, this tool does not reflect the real inflation cost. Many people criticized this tool and accused government of hiding the real figures of the inflation by manipulating the index. Other sites tracked the inflation and made public the real cost being up to four times higher than the government’s result. Even in the U.S, some commentators called the government’s result as a lie.
Many families living in larger cities are now into debts due to the housing costs combined to the rising prices. Statistics show that many consumers use their credit card to purchase shopping. This is a sign that their expenses are higher than their incomes are. Since it was easy to get extra credit cards, these debts increased quickly. The debt cycle is always deadly and vicious.
The debts affect all the areas of our life including physical, emotional, mental, and financial area. This vicious cycle begins often with a simple purchase of a luxury that you are not able to pay with your own money. Such purchases are addictive and as you struggle to pay it back, the debts will start to pile. You will have to borrow additional cash for paying back the existing debts. This is how this cycle never ends until you will be unable to deal with your debts.
It is vital to avoid this debt cycle. It is simple to reduce your debts no matter the amount. You have to decrease your expenditure and increase your income. Even though, these steps are simple, it is difficult to follow them. Decreasing your expenses in order to reduce your debt does not mean that you have to abstain from necessities. You have just to spend your money wisely. Instead of using credit cards, use debit cards. Avoid using your credit cards for any purchase and do not make big investments hastily. Do not shop on impulse.
Increase your income by working harder. Start your own business or learn tools about wise investments. Make sure that your income is beyond your aspirations. Set up a reasonable budget with financial boundaries. If your debts are deep and serious, you can hire a professional.