If you feel like your finances are on a knife edge and that any loss of earnings or any added financial burden would send you over edge, then you need to consolidate the debts before it is too late.

According to Callcredit, one in four people between 35 and 44 years say that a drop of just £300 in monthly income would cause them to default on their mortgage payment. This is simply not enough of a cushion and means millions of Brits are up to their necks in debt.

The research also showed a noticeable reduction in the proportion of people paying off their credit card bills in full each month with one in twenty people who previously paid their bills in full now paying just the minimum or a fixed amount.

Graham Lund, managing director of Callcredit says: “These statistics are extremely alarming. A significant proportion of people, many of who may have families to support, are living on a financial precipice, where just one negative event, such as a reduction in paid overtime or an unexpected expense could have disastrous financial consequences.”

If you are on the edge, talk to a mortgage professional. They can help you find ways to use your home to ease your burden – by consolidating your debts into your home’s equity then you can give yourself some room to pay off credit card and personal loan debt rather than just manage it. You can also give yourself a bigger buffer than £300, so if something does happen, you can be safe in the knowledge that your finances will remain stable.

SOURCE: CallCredit, 12/03/10

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