Debt is a common struggle for many people in the UK and across the world, so if you’re feeling overwhelmed by it, you’re not alone. With the rising cost of living, unexpected expenses, and financial pressures piling up, more and more of us are finding it difficult to stay afloat.
In fact, millions of people across the country are dealing with some form of debt, whether it's from credit cards, loans, or unpaid bills. However, while the problem is widespread, it's important to remember that there is hope and help available.
In this article, we’ll explain the UK debt crisis and give some ideas on how to regain control of your finances. Once you have a better understanding of the root causes of debt, we hope it will be easier to deal with debt stress.
Understanding the UK's Debt Landscape
The UK’s debt landscape is a complicated and growing issue affecting millions of people. Because of high living costs, stagnant wages, and near-static interest rates, many people are struggling to manage their finances.
Debt also comes in various forms, including credit card debt, personal loans, mortgages, and unpaid bills. According to recent statistics, household debt levels are still climbing, leaving many feeling overwhelmed and unsure where to turn.
As of January 2025, the UK's public sector net debt was provisionally estimated at 95.3% of GDP, a level not seen since the early 1960s. Net borrowing of mortgage debt also increased to £4.2 billion, with the annual growth rate for net mortgage lending rising to 1.8%. So what does that all mean? In short, as individuals and a nation, the UK has more debt than it has in a long time.
Learning about the UK debt crisis will help to understand how widespread the problem is and why it’s happening. You’ll also notice that debt doesn’t discriminate - people from all walks of life can find themselves in financial trouble.
With a better understanding of the bigger picture, you can take the first steps towards a solution.?
Causes of Rising Personal Debt
Rising personal debt in the UK is caused by many factors, many of which are beyond people's control. One major reason is the high cost of living, with essentials like food, housing, and energy bills becoming more expensive over time, especially since Covid.
Stagnant wages also make it difficult for people to keep up, forcing them to rely on credit cards or loans to cover everyday expenses. While the 2025 minimum wage rise in April should hopefully make it slightly easier for low-paid workers to get by, it’ll likely still not be enough to catch up with increasing costs.
Unexpected events like job loss, illness, emergencies, or changes in the family can also push people into debt. Additionally, having easy access to credit and tempting buy-now-pay-later schemes can lead to overspending.
All these factors combined create a cycle of debt that’s hard to break. Understanding these causes is essential if you’re hoping to manage and reduce your personal debt effectively.
The Impact of Debt on Individuals and Families
Debt can have a serious impact on individuals and families, affecting financial stability and mental health, as well as relationships. In 2023, more than half of surveyed breakups reported financial stress as a contributing factor to the separation.
Unfortunately, if you are constantly worried about unpaid bills and growing debt it’s likely to cause stress and anxiety, and can even lead to depression. For families, financial struggles can cause tension and arguments, making it harder to maintain healthy relationships.
This mental strain can make it difficult to focus, decreasing productivity and efficiency at work. People struggling with debt also tend to take more sick days due to stress-related health issues, and may be trying to juggle multiple jobs to pay off debt, which can lead to physical and mental exhaustion.
People facing financial issues may also avoid social gatherings to save money or because they feel embarrassed about their situation. They may withdraw from their support networks, which can exacerbate their feelings of loneliness and make it even harder to cope.
Debt can also limit opportunities, making it difficult to save for the future, buy a home, or even cover basic needs. Children in debt-affected households may feel the impact, too, as they’ll likely have limited access to essentials.
Overall, you need to know how debt can affect your life and find an effective way forward. The good news is that with the right help and guidance, it’s possible to regain control.
Recognising You're Not Alone
If you’re struggling with debt, it’s important to remember that you’re not alone. Millions of people across the UK are facing similar challenges, trying to make ends meet while feeling trapped by their financial situation.
It’s easy to feel isolated or ashamed, but debt is a common issue that many millions of others are working to overcome. Recognising that others are in the same boat as you can be comforting and encouraging.
More importantly, if you’re wondering how to get help with debt, from debt charities and financial advisors to online resources, there are many ways to get the support you need.
In fact, over 1.7 million people receive debt advice in the UK each year. This goes to show that debt isn’t a rare issue, in fact it’s very common and affects a large portion of the population.
Admitting you don’t know how to deal with debt stress is the first step toward finding a solution. ?
Steps to Address and Manage Debt
Taking control of your debt may feel overwhelming, but when you break it down into steps, you’ll find it is much more manageable.
First, you’ll need to list all your debts, including amounts owed, interest rates, and payment deadlines. This will give you a clear picture of your financial situation.
Then, you can create a realistic budget that prioritises essentials and highlights areas where you can cut back. You could also contact your creditors to discuss affordable repayment plans if needed.
It’s also helpful to seek advice from free debt charities or financial advisors who can guide you through your options. As long as you stay consistent with your plan, you can enjoy the small victories along the way.
Managing debt isn’t easy and it can take time, but with patience and the right approach, you can build a debt-free future.
Resources and Support Available
Need support to handle your debt? There are many free resources and support services that can guide you on how to recover financially.
Charities like StepChange, National Debtline, and Citizens Advice all offer free advice, budgeting tools, and debt management plans tailored to your situation. They can help you understand your options and negotiate with creditors, as well as teach you how to create a realistic plan to reduce your debt.
Additionally, online resources, government programmes, and community support groups are there to assist you.
Preventative Measures for the Future
To prevent debt into the future, you’ll want to build better financial habits and plan carefully. For instance, if you create and stick to a realistic budget, you’ll find it easier to track your spending and avoid unnecessary expenses.
Additionally, building an emergency fund, even if it’s small, can give you a safety net for unexpected costs. It’s also important to be cautious with credit cards and buy-now-pay-later schemes - that means only borrowing what you can afford to repay.
Regularly reviewing your finances and adjusting your budget as needed can also keep you on the right track. Plus, it’s good to ask for financial advice if you’re struggling.
If you stay aware of your spending and make mindful choices, you can avoid falling into debt and work toward a secure financial future.
For Short-Term Financial Support, Think Salad
Now that you understand the UK debt problem better and know that you’re not dealing with it alone, do you need short-term financial assistance?
At Salad Money, we offer affordable loan options available for employed UK citizens, regardless of their credit score history. As one of the UK’s leading online lenders, we understand that the credit score system isn’t always fair. That’s why we use an open-banking-based assessment to evaluate the financial situation of every applicant.
We’re an FCA-regulated and authorised organisation, so you can trust us to keep your financial data safe. With our ‘More Than Your Score’ loans, we provide affordable loan options for working people, regardless of their credit score.
To learn more about our personal loans, click here, and to read more blogs like this one, visit our blog page now.
