Millions of Brits are losing sleep because they have taken on multiple forms of debt with no idea as to how they will pay it back, according to statistics released on Wednesday.
A survey of over 2,000 people by comparison website KnowYourMoney has revealed over three fifths of UK adults have some form of debt, with credit cards (35%), mortgages (24%) and student loans (11%) the most common.
A third (33%) of respondents said they buy items on their credit card without first thinking about how they will pay it off later. UK credit card debt hit a record high in 2018 – £44.8bn ($60bn) by the end of the year.
What’s more, nearly a third (29%) said they do not feel on control of their debt and have no idea how they will pay it off.
According to the research, two thirds (67%) of Brits who are in debt have no money in savings to pay off debt if required, with men (73%) more likely than women (62%) to lack a financial safety net.
This is a source of anxiety for many Brits, the survey found. Almost a quarter (24%) said they often lose sleep worrying about debt, while two in five (41%) said they do not feel comfortable speaking to friends or family about the subject.
To make matters worse, almost half of UK adults (48%) are worried about the impact of Brexit on their personal finances.
Elsewhere, the study uncovered that 44% of UK adults do not know what their debt-to-income ratio is, with 39% admitting to not understanding the term.
A person’s debt-to-income ratio (DTI) is their monthly debt payments divided by their gross monthly income. Lenders commonly use the calculation to assess someone’s viability for credit.
John Ellmore, director of KnowYourMoney, said: “Despite the negative connotations that sometimes surround it, debt should not be frowned upon. If handled responsibly, debt is a valuable financial instrument that can help enable life’s purchases.
“ However, today’s research demonstrates that there are millions of people across the UK who are taking on debt without a plan of how to repay it, which is unadvisable. It’s vital consumers understand what their debt-to-income ratio is and manage their finances accordingly – this will help them sleep easier at night and avoid serious financial repercussions further down the line.”