Sam Dunn: Sometimes it has to hurt to make it better

A bitter dose of financial common sense is to be welcomed

Regular readers of this paper's Money articles will be familiar with our "Wealth check" feature, in which a panel of independent financial advisers (IFAs) help individuals with their problems. These range from how best to plan for a pension to what to do with underperforming endowment and with-profits policies.

More often than not, there is an element of unsecured debt clouding the picture - several thousand pounds on average, but sometimes in excess of £10,000, and the person wants to know how best to pay it off. Britons currently owe more than £1.1 trillion (including mortgages), so this type of problem is by no means unusual.

Indeed, it's reassuring to see that people acknowledge the need to pay back what they owe and are prepared to ask for help if this becomes difficult.

After all, it's not easy climbing out of a financial hole. For most of us, spending money is a whole lot easier than the worthy alternatives: saving it, cutting back on fripperies and investing for the future.

Government figures have recently shown that a growing number of consumers are losing the battle with debt, and seeing their finances flounder.

Personal insolvencies - bankruptcies and the less stringent alternative, individual voluntary arrangements (IVAs) - were at a record 26,021 for 1 April to June this year, up by two-thirds on the same period last year.

A Department of Trade and Industry annual report into over-indebtedness, published last week, estimates that, by 2009, as many as 28,000 people will declare themselves bankrupt every three months - not far off double today's average of roughly 16,000. Many charities, consumer groups and accountants reckon that Britain is on course for 100,000 personal insolvencies this year.

Those who come forward to sort out their debts with an Independent on Sunday Wealth check (see page 16 this week) will always be welcome, but some of them can expect a harsh grilling from our IFAs. For while there will always be bouquets for those who take action to whittle away what they owe, advisers are prepared to wield brickbats in the case of those who drop deeper into debt without appearing to appreciate the wider - often grave - implications of their actions.

This week, Roddy Kohn of IFA Kohn Cougar takes a firm line with our 22-year-old Wealth-check volunteer and chastises her for having an eye on a house while already being saddled with £21,000 of unsecured debt, including a recent loan for a car.

It's right, of course, to aspire to owning property. But given our subject's personal circumstances, that's a somewhat unrealistic goal, as Mr Kohn points out.

To take on a home loan in the near future would likely prove an onerous burden and add to her pressing money management concerns. Mr Kohn urges the young woman to turn her focus elsewhere, and it's hard not to agree.

In the past few months, other IFAs have offered similar unpalatable medicine in these pages. When financial ambitions are built on shaky foundations, a dose of common sense is to be welcomed - no matter how bitter the taste.

s.dunn@independent.co.uk