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Why are people so in debt?

It could be argued that many people are ignoring the advice of people such as Matt Barrett. He is the chief executive of Barclays, (which owns Barclaycard), who admitted in 2003 that he did not use his or anyone else's credit cards to borrow money, because of the cost. He also revealed he has urged his four children not to rack up debts on their cards either.

Fancy a holiday? Slap it on the plastic - who cares about the consequences? Copyright: Dirk Herrmann, from stock.xchng.

Clearly people are spending money they haven't got. The UK economy has been growing partly as a result of the strength of consumer expenditure. Some observers point to this as evidence of consumerism acting as 'medicine' for a sick society. But whatever the truth of these claims, it is true that mortgage lending has spiraled in recent years, as people borrow ever-higher sums in order to fund the dream of home ownership.

Combine these factors and you have a dangerous mix. An afternoon spent watching TV reveals the number of adverts for 'debt consolidation'. You know the sort of thing: 'Up to your limits on your credit cards? Unable to get credit to afford that family wedding or special holiday? Call us for a secured loan. We'll consolidate all your debts in one place and pay off all your credit cards, so you'll know where you stand. With one low monthly payment, you'll have the money you need and the freedom you want to plan the rest of your life, without worry.'

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