Dealing with growing utility bills
At a time like this, the fast-rising price of energy is just one of many growing pressures on our finances. Energywatch (the gas and electricity watchdog) have estimated that utility bills have risen by 85% in the past five years, and trade oil prices are currently double what they were a year ago.
If you’re in debt, continually rising costs of living could be more than just a dent in your disposable income – they could mean it’s very difficult to afford both your costs of living and your debt repayments. If that happens, a debt consolidation loan (or maybe another debt solution) could help.
Why are prices rising so quickly?
Fast-rising energy prices are linked to prices of the basic materials needed to produce energy in our homes: oil and natural gas.
Supply and demand
The price of any product or service depends on levels of supply and demand, and energy is no different. There is a constant demand for oil and natural gas, and while this demand continues to grow, prices will continue to rise.
At the same time, global supplies of oil and natural gas are shrinking – and this also pushes up the price.
Oil prices and the weak dollar
The price of oil and the value of the dollar are closely linked – when the dollar goes down in value, the price of oil tends to go up, and vice versa. The dollar has dropped sharply in recent years, which has helped push oil prices to an all-time high.
Uncertain economy
A number of economic and political factors can affect oil and natural gas supply, and many of them are hard to track. Because of this, traders have to act fast to protect themselves against unexpected costs. This often results in traders raising prices ‘just in case’ – and these rises are passed on to the energy companies, and then their customers.
What if I can’t afford my utility bills and my debt payments?
If you find that rising costs of living are preventing you from repaying your debts, it is essential that you take action. A spokesperson for Think Money said: “A lot of people with debt problems are understandably very worried about the growing costs of living. Once costs get so high, they begin to affect people’s ability to pay back their debts.
“An expert debt adviser can give information on a range of debt solutions – for example a debt management plan or an IVA (Individual Voluntary Arrangement). For people with a number of debts, a debt consolidation loan might be the best option.”
A debt consolidation loan could both simplify your finances and help you pay off your debts. It works by replacing your multiple debts with a single loan, meaning you only pay one creditor instead of many.
Often a debt consolidation loan can mean lower monthly payments (although this can increase the amount of time and total amount needed to repay the debt), and the interest rates will often be lower, too.
When increases in the cost of living show no signs of slowing down, this could make all the difference to someone struggling with debt.
If you do have debt problems, it’s essential that you speak to an expert debt adviser before you decide what action to take. They will talk you through what options are available and help you decide which debt solution is best for you. It needn’t be a debt consolidation loan – depending on your situation, a debt management plan, debt consolidation remortgage or IVA (Individual Voluntary Arrangement) may be a better solution.
Tags: utility bills, energy prices