New online research from Equifax has revealed nearly one third (31%) of people believe they won’t be able to pay off debt within their lifetime, and over one in 10 (12%) say they won’t even be able to reduce their debt levels.
The survey, conducted with Gorkana, indicates those aged 18-24 are the most pessimistic about debt, just half (50%) believe they will pay back their debt in full within their lifetime, compared to 78% of 55-64-year-olds. Males are more confident they’ll manage to clear their debts in their lifetime (73%) than females (65%).
People from the East Midlands (59%) were the least likely to think they will repay all their debt over their lifetime, with those from the North East (16%) and London (16%) most likely to believe they won’t pay off any debt over this period.
The top methods people have found helpful to manage or reduce debt were buying own brand food or shopping at budget supermarkets (61%), decreasing expenditure on items such as clothes, holidays and gym memberships (52%), and cutting back on going out for dinner, drinks and other social activities (51%).
Those aged 25-34 are the most willing to make these lifestyle sacrifices to manage outgoings, with 78% buying own brand foods or shopping at budget supermarkets compared to just 58% of those 65 or over. Similarly, almost three quarters (72%) of 25-44-year-olds have reduced their spending on items such as clothes, holidays and gym memberships in an attempt to reduce spending, compared to just 45% of those aged over 65.
Richard Haymes, Head of Financial Difficulties at TDX Group, an Equifax company said “There’s a clear generational divide when it comes to the perception and treatment of debt, with younger people feeling less confident of ever being debt-free. This may be down to factors such as increasing levels of student loans and exponentially higher property costs, as well as a prolonged period of low-interest rates, which means credit for those who can afford is relatively cheap to access.”
“With inflation hitting a six-month high in August (2.7%), a recent interest rate rise and limited wage growth, it’s disconcerting that a large proportion of people are taking on debt without a realistic expectation of being able to pay it back.
“According to our analysis, personal insolvencies are set to grow by 17% this year, and the main contributing factor is record levels of consumer borrowing. We encourage individuals who feel their debt levels have become unmanageable to inform their creditors as soon as possible and to seek impartial advice and support through resources such as Stepchange and Citizens Advice.”