DMP, IVA or Consolidation Loan?

Debt repayments are totalling at a rate of £3,000 per second, it has been claimed, although it could be said there may be light at the end of the debt management tunnel.

According to the Liberal Democrat leader Nick Clegg, young people need to start being taught how to organise their finances effectively to avoid the economic trap that the UK has sunk into.

Total personal debt owed has risen by £1 trillion since Labour came into power in 1997, he claims, a figure that may urge some households into putting their financial future on to a more stable footing.

Commenting on the credit crunch and spiralling debt, Mr Clegg told a Youth Parliament event: "One of the reasons why the economy's in such a state at the moment is because of all this debt. It is our young who will inherit this legacy of debt. "

He added that the nation has been addicted to debt, although parents who do not want their children to inherit a poor financial future may want to consider a consolidation loan, which could merge money owed into one monthly payment.

It was recently reported by The Children's Mutual, that three-quarters of mums and dads have initiated their kids' bank accounts.

Britons may find they have to enforce stricter debt management upon their household budget after it has been claimed that employers are set to get pickier about who they choose to hire.

According to one sector commentator, the job market is going to become increasingly competitive, which could mean that for people entering the work place, finding the cash to pay for outgoings could become a problem.

Commenting on the issue, Steven Kirkpatrick, managing director of Adecco Retail, says: "That doesn’t necessarily mean that firms aren’t looking for people, just that they are being that much more selective over who they bring on board."

However, he does add that managers may not be looking for people as freely as they once were, although such financial concerns may be aided by the help of a debt consolidation loan.

A Trades Union Congress analysis discovered that there has been an increase in long-term unemployment, although employment levels have reached a high of 75 per cent.

But for those worried about their income and how they will cope with bills, a debt consolidation loan could merge money owed into one monthly payment, which may take pressure off individuals while the job market remains uncertain.

Despite the credit crunch highlighting the importance of efficient debt management, 21 per cent of people do not save any money, it is claimed.

According to a study by Nationwide, two-thirds of those questioned think that they are not putting to one side as much as they should be doing.

Furthermore, 40 per cent of Britons think now is a bad time to save because of the economic downturn, although by merging debts into one monthly payment via a consolidation loan, households may find cash is freed up.

"The fact that half of consumers are still failing to save or are only saving occasionally is a concern, especially with the expensive festive season approaching," states Matthew Carter, director of savings at Nationwide.

It was previously noted by Fool.co.uk that people who rely on store cards to pay for Christmas presents, rather than using savings, will be in for a shock.

However, financial fears could be banished by a debt consolidation loan, which may be spread over a longer period than other loans.

Redundancies should be the last option for businesses to take when looking at ways to cut back during the economic downturn, it has been advised.

According to the Chartered Institute of Personnel and Development (CIPD), the average cost of making someone redundant is £10,000 and means that when the financial situation picks up, firms will have to pay extra to hire more staff.

Speaking for the CIPD, Gerwin Davies, public policy adviser, says: "We've seen a vast array of companies from all sectors suffering from big profit drops and in some cases losses and the risk is that they will be looking to make redundancies."

The comments may be important for the debt management of firms who may want to consider a debt consolidation loan, which could merge money owed into one monthly payment, potentially freeing up cash.

A report by the CIPD published in autumn 2008 states that 75 per cent of organisations claim they are going to hire within the next three months.

People with small businesses in particular, where staff losses are even more difficult, may want to avoid redundancies and take out a debt consolidation loan to ensure the workforce is in place when the market recovers.

In what could be seen as the most unoriginal debt management, people are looking to tackle their money troubles by recycling old gifts to give as presents this Christmas, a report says.

According to CreditExpert, 18 million UK adults intend to give unwanted presents such as CDs and toiletries to their family and friends, after 53 per cent of people claimed that they were struggling financially.

"How much we spend this year on Christmas is a concern for many of us and recycling presents might seem like an attractive option," says Jim Hodgkins, managing director of CreditExpert.co.uk.

Furthermore, he adds that people should keep track of who has previously given them what to avoid any awkward situations, although a debt consolidation loan may help individuals avoid any negative consequences.

Retail analyst Verdict Research states that 38 per cent of shoppers' Christmas spending will be on food and other groceries.

But for people who do not want this holiday season to be totally frugal, a consolidation loan could leave spare cash for some Britons to spend on new presents by merging debt into one monthly payment.