Debt ridden parents raiding children’s savings

A recent report has suggested that many parents in the UK who are bogged down with debt and struggling to make ends meet financially are now having to delve into the savings that they had put aside for their children’s education in order to be able to afford bill payments and essential living costs.

With the cost of living having soared to such a high level and with wages having been frozen for so many people, many households are now finding it increasingly difficult to cope with their financial obligations. The recent energy hikes will have simply tipped many households over the financial edge, which has resulted in many now having to raid money that they had put aside for the future of their children to try and make ends meet.

According to the results of a recent study around 2.7 million people have now been forced to take money from an account that had been created to put money aside for their kids’ education. Around a third of the value of these funds is said to have been withdrawn on average. It has also been revealed that around 1.3 million households are now worse off than they were nine months ago due to soaring bills.

It was also revealed that many people whose kids were in private education or planning to go into private education had been affected by financial issues and had been forced to make some difficult decisions with regards to their kids’ education.

One official said: “The rising cost of living is placing a major strain on household finances. Many of those who are already paying for private education are facing some tough decisions over the summer. Some have decided to reduce the amount spent, while others have had to withdraw children from private education. Our research shows that many people have been unable to save adequately for private education and of those who have, other financial necessities have forced many to raid their educational funds.”

Tags: difficult decisions, Personal finance, private education, financial necessities, tough decisions, debt, financial issues

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Posted in: childrens,parents,raiding,ridden,savings

One fifth of Britons have no savings

Thursday, February 17, 2011, 13:08

Nearly 20% of Britons have no savings whatsoever according to a study carried out by the market research consultancy Mintel.

The research also found that a further 35% of the population have less than £500 put aside for emergencies.

Women are least likely to have any savings stashed away with 22% confessing to having absolutely nothing put by for a rainy day. Men fare little better with 17% admitting to having no savings at all.

The figures make worrying reading at a time when attention has been focused on the likelihood of the economic situation worsening over the coming months and the importance of establishing a financial cushion. Families with little or nothing to fall back on could face serious problems as unemployment and prices continue to rise and wages fail to keep pace with inflation.

The report comes just days after news that the Consumer Prices Index rose to 4% between December and January and that unemployment rose again in the final quarter of last year.

Toby Clark, Head of Finance at Mintel, said: ”With unemployment continuing to rise and concerns about the health of the economy continuing, those without a safety net could find they are financially exposed in the coming months. The accepted wisdom is that low interest rates are stopping people from saving, however we have found that it is only really an issue for the top end of the market and the reality is that meeting everyday costs and expenses is by far the largest savings barrier.”

Some 40% of respondents said they felt their financial situation had worsened throughout 2010 compared to 20% who said they had seen an improvement. Around 21% of those questioned said they were put of saving by low interest rates while 19% said they used any disposable income to pay down debt.

The current rate of inflation means that a basic rate tax payer would need to deposit any savings in an account paying a return of at least 5% to stop the value of their nest egg depreciating. Mervyn King, the governor of the Bank of England said yesterday it is likely inflation will peak at 5% later in the year and might not fall back to the bank’s 2% target until 2012.

Andrew Hagger of Moneynet.co.uk told the Guardian “”There are no traditional types of savings accounts out there paying enough to keep pace with inflation. There are Isas paying a net 4%, but the majority of the 20 cash Isa accounts offering a rate of 4% or more require you to tie your funds up for between four and five years.”

The study found that the economic slowdown is forcing people to draw down any savings they do have to meet rising costs. Some 50% of consumers said they had made a withdrawal from savings accounts over the past year, with lower income groups among the most likely to do so.

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DMT reader conned out of savings by Royal ‘wannabe'

Wednesday 19th January 2011

A nurse and mother of two from Southampton claims she was conned out of more than £4000 by a man who said he had royal ties.

Alina Miron’s problems started when she met a man on a dating site last August. The man, who cannot be named, seemed perfectly nice at first and the pair had regular conversations on the phone and online. During these conversations Mr X told Alina that he was self-employed and living in London. He described his life as ‘lonely’ and said that he had difficulty in finding love because a lot of women were more interested in his wallet than his heart. As time went on, Alina grew more attached to Mr X and they spent many hours talking to each other through webcams. Mr X sent love poems, photos and letters to Alina, where he professed his love to her and portrayed the long and happy future that they would share together. Just six weeks later Mr X told Alina that he had a serious heart condition which required an operation in the U.S. Alina said: “He told me that he urgently needed an operation but that his bank accounts had been temporarily frozen. At first he asked me to give him £11,000. I couldn’t afford that but I said I would give him what I could.... I wanted him to be well.”Alina transferred £3450 to a bank account in the U.S through Western Union and kept regular contact with Mr X. Over the next few months, Mr X made up various excuses to avoid repaying the money. He even told Alina that he was royalty and that she was being put through a test to prove that she was a suitable wife. “He told me that he was putting me through the same tests that Prince William put Kate through and that he had actually paid all my money to a charity. I have only been in this country for two years so he thought I would believe him.” said Alina.But by this point, Alina had stopped believing Mr X’s lies. She demanded her money and saw Mr X angry for the first time. He threatened Alina, saying that he would have her and her children deported back to her country of birth, Romania. Alina has not yet been repaid by her conman and now feels cheated and scared. She has also lost thousands of pounds and finds herself worrying about her finances and legal fees if she chooses to report Mr X or hire a detective to try and locate him. Sadly though there are thousands of women around the country who choose not to report the fraudulent activities of their partners. Women often feel embarrassed by the scam and turn to confidential debt advice as a solution.Vance Parsons, sales director of Eurodebt, said: “We get a lot of calls from women who seek debt advice but don’t want their partners to know. They are very keen that the strictest confidence is kept and therefore debt advisors are the best option because we ensure confidentiality at all times. “He added: “In cases where we feel that a woman has been the victim of fraud, we would advise her to seek legal advice.”
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Brits may need IVA help after failing to put savings aside

More and more British people may need to consider an IVA or Debt Management Plan as Research has revealed that the average person only has about £2,000 saved up.

Reports from ING have claimed that as little as £40 has been put away during 2009 and that the average saving is £2,000.

This is just over one tenth of the £20,000 saved on average of the previous few years. However, the figures may be somewhat skewed due to the wealthiest five percent accounting for over one third of the total UK consumer savings. With this section of the country removed from statistics, the average only rises to £2,205.

The Telegraph was told by ING Group chief economist Mark Cliffe;

“meagre level of readily accessible savings that most people have.

“This leaves them with a very small buffer if they run into trouble,” .

The latest Nielsen-British Retail Consortium consumer confidence survey found that more people are choosing to pay off debts in the current economic environment, compared to those who plan to increase their savings.

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