Struggling Business Warning To Consumers
An increase in the number of businesses going insolvent should sound warning signals for consumers to address their debts, one personal finance company has asserted.
The Motley Fool has warned workers against dismissing a recent rise in businesses having difficulties as a drop in the ocean, stating that it could be a herald of challenging times ahead, with the spectre of job losses also looming ever larger. With such a threat becoming increasingly real, the Motley Fool is urging individuals to look at their own personal finance situation and establish whether they will be able to weather the storm.
Those worried about borrowing accrued through personal loans and on credit cards might like to seek advice on taking out a debt condsolidation loan to put them on a more stable financial footing.
David Kuo, head of personal finance at The Motley Fool, says: “Consumers should not dismiss the four per cent rise in company insolvencies as a blip. 3,210 companies went bust between January and March this year, taking the 12-month running total to over 12,500 businesses. [The Motley Fool] urges all employees to ensure they are prepared for the worst, should their employer become insolvent. Businesses can go bust for a number of reasons, though it invariably boils down to a shortage of cash.”
The company provides a number of tips on ways to encourage financial stability. These include delaying the purchase of large items, such as cars or furniture suites, especially if they intend to rely on credit. Practising a lifestyle based on 30 per cent less pay can soften the blow should a significant change in earnings occur, while taking out income protection insurance might be advisable for those with unavoidable costs to take into account. Crucially, the firm advises that workers make efforts to reduce debts now - something which a debt consolidation programme could help them to achieve.
Furthermore, it suggests storing away three months’ wages as an emergency fund to be used in the event of redundancy. While this might seem like an unachievable aim to those with significant owings, a consolidation loan might set them on the right path to a more tenable financial situation.
Mr Kuo adds: “As the credit crunch continues to unfold, it is not unreasonable to assume that not only consumers but businesses also will find it increasingly difficult to obtain credit. The days when both businesses and consumers can borrow a tenner to repay the fiver they owe are over. Lenders will now want their fiver back because they need the money too.”
Meanwhile, parents who are concerned about their children’s ability to address their debts might be interested in recent research by Abbey. It found that parents are keen to hand on their knowledge about mortgages and spending habits, with almost two-thirds stating that they had spoken to their children about debt and around the same number saying they had provided advice on saving for the future. Such parents might consider investigating debt consolidation on their children’s behalf in order to arm them with useful information for beating the credit crunch.
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