Alexander has been in a vicious financial cycle since he left his £80,000-a-year job in hospitality management early in the pandemic to change career and become a police officer.
“I wanted more purpose,” the 35-year-old Londoner says. “Until I joined the police, I’ve never had to worry much about my spending, but during the period of unemployment, followed by a house move and relatively low-paid retraining, my savings got wiped out.”
By the end of 2020, Alexander had accrued thousands of pounds of credit card debt.
His gross base salary is £40,000, rising to about £47,000 with overtime. He lives in a flatshare with three others and has no dependants, but says just his rent and utilities are about £1,000 a month. On top of his overdraft, he is repaying a credit card debt of £4,500.
“Over the past 18 months I have not managed to escape my overdraft,” he says. “After tax and pension contributions, my payday puts me barely within touching distance of zero – some months I’m still hundreds in the red after I get paid.
“I’m unable to pay more than the £150 minimum repayment most months, with some months seeing me add to the total amount [of debt]. Thankfully my credit card debt is on a 0% interest offer, but I’m concerned about being unable to keep up with payments.
“Should there be an unexpected outgoing, I would struggle to be able to afford it without help from family.”
Alexander is among various Britons who have shared with the Guardian why they have had to borrow more money recently than they used to. This week the campaign group Debt Justice said its research had suggested a record 6.7 million people in Britain were now in financial difficulty, as the cost of living crisis pushed more households into debt.
Borrowing through loan facilities such as credit cards and overdrafts will rise by £5,000 per household in the next five years, according to a recent analysis by the Labour party, which raised concerns over millions of people spending too much of their income to service debt.
“Leaving London and moving somewhere that’s more financially viable is always in the back of my head, but it’s not easy to relocate,” Alexander says. “I think about moving north, but while your expenses are lower there, you’d also earn significantly less. It’s really tricky.”
The reasons people gave for their finances becoming unmanageable were various. On top of the pressures of the cost of living crisis, there were unexpected events such as car breakdowns, job losses and unplanned pregnancies that had thrown monthly budgets into the red.
Father-of-two John, 52, from Northampton, works in sales and has been struggling to pay off credit card debt for a long time.
“It’s always been there, almost like background noise,” he says. “I did get it down to under £10,000, but over the past year or so it has gone up and up again, because of car repairs totalling about £6,000 plus petrol costs, after school and holiday clubs, and to a degree to keep up appearances and buy the kids new shoes, get them things for Christmas.
“I can make the payments but don’t make any inroads into my debts, as I can only afford the minimum payments each month.”
John now owes around £25,000 across three credit cards, and while he pays off about £600 a month, he still regularly borrows more to make ends meet.
“I tend to pay for petrol with a credit card, about £200 a month, so I’m still adding to my debt. I have a well paid job and so does my wife, but my share of the costs mean I don’t have any spare at the end of the month and cannot save.
“I look at this mountain and don’t see a time where I will repay the total amount, unless I win the lottery.”
Charl, 34, a quality manager at a UK university, says she has around £21,000 of debt on two credit cards. While she got her first credit card 10 years ago after being encouraged to take one out to build a healthy credit score, her debts began piling up in 2020.
“The cost of living crisis has just meant cash isn’t stretching as far as it used to,” she says. “I was financing day-to-day stuff really, rather than holidays – clothes, bills. I got used to putting stuff on my credit card. In June 2022, it started becoming uncomfortable because I was made redundant, and [the cost of] everything was going up.”
Charl, who shares a rental flat with her mother in London, found a new job with a £35,000 salary, but had to opt out of her employer’s generous pension scheme in April 2023, because she could not afford to pay into it.
After agreeing a financial difficulty plan with her bank to bring her debt down, Charl was initially glad to no longer have access to a credit card and to be unable to borrow more, although it was a “harsh reality” because her credit card had been her main source of spending.
Now, however, her repayment plan and financial future are in jeopardy again, because her fixed-term work contract has not been renewed.
“My contract ends this April, as the university has implemented a hiring freeze,” Charl says. “This leaves me in freefall.
“If I miss a monthly payment, my financial repayment plan will be cancelled and I will have to repay at a higher interest rate, meaning the monthly payments will look more like £800 instead of the £400 I’m paying at the moment. I’ll be crippled by these interest charges.
“I won’t be able to pay rent, and I won’t be able to buy much food.”
Matthew, 50, a site manager in the construction industry from St Neots, Cambridgeshire, was one of multiple people who said they struggled managing their debts despite earning relatively well.
His consumer borrowing was under control, he says, until November 2022, when his and his wife’s mortgage repayments went up from £1,106 to £1,440 a month, while prices for just about everything else soared simultaneously.
“It wasn’t just the mortgage, it was also utilities, fuel, car insurance and so on. Just like everyone else we had to get on with it and pay,” he says.
Despite being on a gross annual salary of £73,000, Matthew had racked up £30,000 in personal debt until four months ago, when he was able to bring the balance down to £20,000 because he inherited some money.
“In total, I have four credit cards, and a £10,000 loan from Santander, which I took out to pay off one of the cards,” he says. “I pay off as much as I can every month, currently £593, but the last couple of days before payday I’m finding myself buying my lunch with a credit card.”
Monthly overheads add up, including £110 for property service charges, £550 for petrol, £240 for council tax, £300 for electricity, £200 for car insurance, £370 for dog day care, £170 for special diet dog food, £90 for mobile phone bills, and £200 for life insurance. After all these costs there is little left to enjoy life, says Matthew, whose daughter currently still lives at home.
“I’ve cancelled the gym membership, and we’re lucky if we’re going out once a month. It’s increasingly difficult to make ends meet and repay this debt.”
