Millions of UK Households Are Going Deeper Into Debt This Year — Here's the Number That's Causing It

[00:00:01]This is going to be one of the most important videos I make this year.

[00:00:04]This is probably going to be one of the most important videos of mine that you want to watch this year.

[00:00:08]Because millions and millions and millions of UK households are going to spiral further and further into debt this year because of one number that most households are not paying attention to. And I won't go into talk about the number. I'm going to talk about why this number means that people are going to go into debt and it's insidious.

[00:00:25]It's insidious. It's insidious because we've been here before many times. It's insidious because there is a cycle and a pattern to this that most people do not recognize. And my fear is because people are not paying attention the impact of what the consequences of this number means and the impact it has on your finances means that for most people who are feeling behind right now, you're never going to get ahead because you're not paying attention to this. So, let's just get to the number. And by the way, this is not scripted. I'm not necessarily optimizing this video for maximum retention. But for those of you who do stay, for those of you who are interested in this, I'm just going to talk to you like you're my mate. I have these conversations with my close mates all the all the time. I'm going to have this conversation with you like you are my close mate because despite what a lot of people will think, I [ __ ] care about my work here on YouTube and trying to give people the wider picture so they can make informed decisions. So, what is the number?

[00:01:35]The number is inflation.

[00:01:37]So, today if you're paying attention to the news, there is it's articles going around that inflation has fallen to 2.8% in April.

[00:01:45]Which on the surface is fantastic news.

[00:01:47]It's down from 3.3 in March.

[00:01:50]Now, whilst people might say that's good news and it is, it is a false flag.

[00:01:58]Is designed to Is designed the right word? Probably not. It's It's there to to lure you into a false sense of security that things are getting better. Newsflash, things are not [ __ ] getting better. Things are not going to get better. And I think it's very important that we have a really honest discussion about this.

[00:02:16]Now, I'm looking at an article right here where I'm looking at the price of regular unleaded fuel at £1.84 a liter and regular diesel at £2.05 a liter.

[00:02:29]So, bearing in mind we've seen fuel prices, food prices sneak up in the past month since the war with Iran started in March.

[00:02:41]When you hear a headline of inflation's down to 2.8%, hurrah, I bet it doesn't feel like that in your pocket. I mean, you tell me Tell me in the comment section whether or not it feels like inflation has come down in your pocket. I will hardly to guess no one is going to say, "Yeah, Pete, I feel better off, right?" And that right there is the problem.

[00:03:02]Now, the reason that they've given for the fact that inflation has come down from 3.3 to 2.8 is because, according to the ONS, regulators have reduced annual household energy bills by £117 a year.

[00:03:19]Apparently.

[00:03:20]Now, we've spoken a little bit about inflation and energy costs and the fact that energy costs going up, yes, it's an increase in your goods and services, which inflation is. I've spoken on the podcast about how the conflict in the Middle East is going to have a direct impact on energy costs. So, if you have not already fixed your tariff, you need to be thinking about doing that literally right now.

[00:03:45]If you're not on a fixed deal for your energy, I'm going to repeat this, you need to go and fix it right now because at the moment you've got a window between now and I think July before the price cap gets re-looked at again. So, go get yourself locked in.

[00:04:03]Now, the reason why this is so important is because I've been doing this for 6 years. I have interactions. I pay attention to the comment section all of the time. I don't respond to all of the comments that I get, but I use the comment section as kind of like a gauge for how people are feeling.

[00:04:21]I've also been running a lot of webinars over the past 3 to 4 weeks and I'm seeing the sentiment of of how people are feeling. People are feeling under under pressure. People are feeling pretty squeezed. People are feeling pretty demoralized.

[00:04:36]And that's completely understandable.

[00:04:38]Because unfortunately now, we've covered this in a load of other videos, even if you are earning 55, 60, 70,000 pounds a year, you're feeling as though the pain is on, the squeeze is on. Whereas, you know, 10 years ago this wasn't even a point of contention.

[00:04:56]Yeah, we had like cycles and, you know, the financial crash and all these other events that put a bit of a squeeze, but it feels like since 2020, we've had a sustained squeeze on household incomes. I did a webinar. I drew up a visual to look at what's happened between the year 2000 and 2026. We've had nine major events that have squeezed household incomes. We've had three of those in the last 6 years. Three. So, it feels like it's sustained, right? This is why people are feeling the pain. This is why we have an air of, I guess, discontent and people being really riled up and angry in in the UK right now, right? I get that. I completely get that. But here's the thing and this is what I really want to talk to you about.

[00:05:41]The reason why I said that this is insidious because we've been here before. I said that there are cycles and there is a pattern to things. We've been here before. And for the past 60 years on this channel, certainly over the last 3 years, one of the phrases that I've used is what do we learn now so that we're better off next time? That phrase applies to this conversation right here as well. Because lo and behold, we find ourselves in another situation where we have external factors putting pressure on our on our internal financial situations.

[00:06:13]Yet, we still find ourselves in a position where we're going to have millions of households in the UK because of this inflation number and fuel prices, energy prices, food prices. And by the way, food prices can get a whole lot worse in the next few months going up.

[00:06:31]The The one thing that is guaranteed to happen and happens every freaking time is credit card usage, personal loan usage, payday loan usage.

[00:06:43]Overdraft usage, all of that goes up.

[00:06:48]All of it goes up.

[00:06:50]And whilst this has already been happening, it is going to get worse this year. As long as the Strait of Hormuz keeps and remains closed. If you're not following the podcast, go listen to the podcast. I've given a lot of detail there. I've not spoken about it on the channel because of YouTube [ __ ] algorithm. But, that's another thing I might just talk about this more on the channel anyway.

[00:07:15]Now, why are we getting into debt?

[00:07:20]This is going to be the uncomfortable portion of our conversation, okay?

[00:07:24]And again, I'm talking to you like I would talk to my mate. If you were my mate sat in front of me and you were struggling financially, I'd be saying these things to you. I'd be asking these questions to you. And look, please don't take this as an offense as though I'm trying to be on my own high horse. I'm not.

[00:07:41]I genuinely care about what happens to my mates.

[00:07:44]Genuinely.

[00:07:45]I ask my mates difficult questions all the time. I give them raw raw reaction uh 100% of the time. And that's what I want to give to you without any filter here on the channel.

[00:07:58]So, please don't feel as though I'm trying to preach from my high horse.

[00:08:01]I'm not.

[00:08:03]But, I feel like this is really important as a conversation. Now, why do people end up using credit cards, overdrafts, personal loans, God forbid payday loans, buy now, pay later in situations like this?

[00:08:16]It's because fundamentally a lot of people lack financial control.

[00:08:21]They may be earning really, really well.

[00:08:23]It's the stuff we've been speaking about on the channel. They may be earning really, really well, but the money disappears. They don't know where it goes.

[00:08:31]They find themselves without really much of a safety net.

[00:08:35]Now, I know it makes sense and it's logical you should have a safety net.

[00:08:41]I understand that. I understand that people have, you know, families and costs and [clears throat] and and all of this compiles. Some people just aren't simply earning enough to be able to make ends meet.

[00:08:54]But, this is where the phrase that I've kept repeating for the past 3 years very much of, you know, what do we learn now so we're better off for the next, you know, iteration of things being difficult comes in.

[00:09:08]I know that it makes sense to have an emergency fund. I know that it makes sense to have control of your finances.

[00:09:14]And many people already have done this.

[00:09:16]So, if you've already done this, you've already locked down your budget and you're like, okay, look, there's nothing else, Pete. I'm not necessarily speaking to you here, okay? But, if you have not [ __ ] sat down with your budget just yet, and you know for a fact that you're being squeezed, but you still don't know where your money's going, you're not tracking it, you need to track it today.

[00:09:37]Start today, now. Please.

[00:09:41]Please start today.

[00:09:44]Because it's insidious in the fact that a lot of people are going to find themselves opening up credit cards.

[00:09:51]So, like if you haven't already, in the next week, in the next few months, opening up a credit card.

[00:09:57]And And the crazy thing is, most people when they do that are not going to have a plan on how they're going to pay down that credit card. And therefore, it means that you could end up spending years paying off this freaking card.

[00:10:10]Doing 0% balance transfers, having no strategy whatsoever, because it's something that needs to be done right now in order to survive. And I completely understand. I'm not saying don't. I'm just saying, please have a plan.

[00:10:25]Please be thinking about, okay, right.

[00:10:28]This is something I'm going to go into.

[00:10:30]I need to strategize on how I'm going to do this. And you cannot strategize if you're not going to have a really good control over your finances. And let's start with the basic stuff, okay?

[00:10:38]I was having a conversation with my friend about this day before yesterday.

[00:10:42]Most people will have at least one takeaway a week.

[00:10:47]If you're the kind of person who's sat there saying, "Oh, you know, [ __ ] money's tight and oh, you haven't got enough money to do anything and, you know, I can't save for a a a a deposit or I can't save for an emergency fund." You need to start looking at your your your savings.

[00:11:01]Because if you're spending one takeaway a week. What's the average cost of a takeaway now in the UK?

[00:11:08]Depending on where you are, it could be up to 35 quid.

[00:11:12]Depending on where you are.

[00:11:14]But let's just be be generous and say, your weekly takeaway costs you 20 pounds.

[00:11:20]A month, that's 80 quid.

[00:11:23]Over the course of a year, that's almost a grand.

[00:11:26]Now, I am not saying don't have a takeaway.

[00:11:30]But what I'm saying is, if you have a nonchalant attitude towards a takeaway, for example, it is very, very likely you've got a nonchalant attitude to other things that you're also spending money on, that when you combine all of them together, add up to a pretty hefty amount, I would argue, on a monthly basis. And again, I'm not saying you go cold turkey and not have takeaways or Costa Coffees or whatever it is it might be that you're spending your money on on a monthly basis.

[00:11:57]I'm not saying go cold turkey, but what I am saying is, in the aid of you not going into debt, not having to open up uh you know, a credit card or you go deep into your overdraft or, God forbid, use freaking um payday loans, sit down and do the exercise. Where's your money going?

[00:12:18]Are you spending on takeaway? Are you paying for a gym membership right now that you've not been to for months?

[00:12:24]Have you got a subscription for Amazon or Apple or one of those things that you barely watch, that you barely use?

[00:12:29]There'll be tons of things that you can go and look at.

[00:12:32]Do the exercise.

[00:12:34]Find out where your money's actually going, what you're wasting money on, things that you're not using. I guarantee if you do that, and you actually look at it honestly and think, "Okay, cool. How can I streamline this?"

[00:12:46]You'll walk away with a decent chunk that you're like, "Okay, cool. I could probably pull that set aside." And again, some of you might have already done this, okay? If you've already done this, fantastic.

[00:12:57]Don't listen to me. But if you haven't, please do it.

[00:13:02]And what I want you to do is, once you've done that, add it all up, then times it by 12, and tell me if you haven't got like a grand at least, perhaps, maybe even more, to save.

[00:13:13]Now, if someone's taken out a credit card for an extra grand just to tide them over, you don't need that credit card anymore cuz you've done something very, very simple. This is rudimentary stuff. It really, really is. I feel like I'm I'm I'm teaching to suck eggs here, but I can already see and feel the eye rolls in the audience.

[00:13:32]We've heard this before, people.

[00:13:35]This is basic [ __ ] I'm sorry, it is.

[00:13:39]But please do the exercise.

[00:13:42]What I want to get you to realize is by doing small things, it can prevent you from having to open up a credit card.

[00:13:48]People will say I'm talking from my high horse, but I'm not.

[00:13:53]I am talking from experience because I dealt with debt for 10 [ __ ] years.

[00:13:59]It's stressful. It's a nightmare to get out of.

[00:14:02]If you're watching this right now and you currently have no credit card debt whatsoever, but you're at that cusp where hopefully I'm catching you at that right moment where it's like, I might have to take out a credit card and you're listening to this, please, please [ __ ] take action. Please, I beg of you. Please.

[00:14:20]This is going to save you a world of [ __ ] pain.

[00:14:24]Because if you go into a credit card and you only make the minimum payments like most people do because it's easy on credit cards, you can end up paying a credit card for a lifetime. I ran a webinar a couple of weeks ago where we talked about debt specifically and I gave the example of someone on a credit card with £5,000 for example on an interest rate of 24.9%. Pretty high, but someone who may may not necessarily have a decent credit score, right? If they only made the minimum payments, it would take almost 20 years. I think it was 19.2 uh 19 years, 2 months to pay off the credit card and they would have paid an extra £8,888 in interest.

[00:15:05]For a £5,000 credit card, making minimum payments. People don't often realize this.

[00:15:11]If you're using things like buy now, pay later or you're using payday loans for example, buy now, pay later is quite insidious because hey, there's no upfront cost, but if you you payments, you're get in absolutely smashed.

[00:15:24]That exacerbates it, makes it even worse. It is like freaking It's like a snowball.

[00:15:30]Once it starts gaining momentum, it's so hard to get out of, and I know because I've been there.

[00:15:36]I'm lucky enough that I practice everything that I preach that I'm not in that space anymore, which is why I'm so passionate about this stuff.

[00:15:45]I know what it's like when you've got that round your neck.

[00:15:48]It's a noose. You don't feel free. You can't make clear decisions.

[00:15:54]You have to constantly be thinking about the things that you have to do to pay down the debt.

[00:15:58]You in a 9-5 job that you freaking hate, but oh God, I've got to pay I've got credit card debt. I've got to pay the rent. I've got to pay the mortgage. [ __ ] off.

[00:16:06]I understand it. I do.

[00:16:08]This is very, very fundamental stuff, but it's very freaking important right now. And by the way, what's going on in the Middle East right now, the Strait of Hormuz has been closed far beyond the deadline. A lot of the renowned economists globally have said would lead to a pretty severe global economic consequence. We're far We're weeks beyond that right now. And at the moment, there is no sight that that strait is going to get open at this point in time.

[00:16:44]And it's not just about liquid natural gas and energy being supplied through the Strait of Hormuz. It's fertilizer. A lot part of the global fertilizer comes through that strait. So, with the strait being closed as it currently is right now, the cost of food People aren't ready for this. People are not ready for the impact this is going to bring later on this year. It's not about now.

[00:17:09]2.8% in the headlines today. Oh, great news, fantastic. As I've already said, it is a false flag. 2, 3, 4 months from now, that's when the pain is going to start. The Bank of England is already forecasting that interest rates could go up to 6% in the UK.

[00:17:26]They're trying desperately not to raise rates, and I think they will continue to hold on for dear life because if they raise rates, they know what that means for mortgages.

[00:17:41]We have a [snorts] large number of people coming off interest rates that were 1, 2% in 2021 this year, going on to rates that at the moment are probably in the fours, four and a half.

[00:17:55]Maybe beginning at the five percent rates.

[00:17:59]If interest rates move up, that's going to absolutely destroy most households. And then, if you are a regular household with a mortgage like that coming off its fixed term, the average increase based on where rates are currently is somewhere between 4 and 500 pounds a month.

[00:18:20]You add that to your fuel bill, your food bill, if you've not already locked in, your energy bill.

[00:18:27]Most houses could be seeing 6, 7, 800 pound increase.

[00:18:32]Why? All because of stuff that you didn't have any influence over it happening in the first place.

[00:18:39]So, when I talk about the basic [ __ ] like the like the really like basic stuff, again, I'm talking to you like I'm talking to my mate. This is the stuff that I've said to all of my friends, mate. Make sure you've got this locked down now.

[00:18:55]And look, if you have to go and use debt, that's completely fine because not everyone has an emergency fund.

[00:19:00]Please, please, please be thinking ahead of what does the repayment strategy actually look like?

[00:19:07]How are you going to prepare yourself for the fact that this thing has to be paid off.

[00:19:14]If you can.

[00:19:17]The biggest lesson you can learn here is get your spending under control, figure out a way to build yourself a financial buffer. Because look, in I don't know when next occurrence the event is going to be when everyone feels squeezed financially.

[00:19:32]But, you better be in a better place than than you are now.

[00:19:38]Thanks for listening. I appreciate you.

[00:19:40]Catch you later.