Ten per cent of households with debt expect to have difficulty meeting minimum repayments over the next six to 12 months, according to ME's latest biannual Financial Comfort Report. This is a doubling of debt stress since December and the highest level ever reported in the five-year history of the survey.A further 33 per cent reported that they expected to make only minimum payments on loans in the coming year. The proportion of households that reported they could pay more than the minimum in the year ahead fell from 37 per cent in December to 31 per cent in the latest survey.Overall, the ME report shows a marked deterioration in Australian households' confidence in their ability to manage their finances over the next 12 months.More households reported that they were drawing on home equity to pay off debt (up four percentage points to 11 per cent) and to make ends meet (up four points to ten per cent).Single parents were the least comfortable with debt and couples with older children reported the biggest decline in comfort with debt.There was a net increase of nine per cent in the proportion of households that increased their debt over the year to June.The economic background to the survey is that household financial stress indicators, such as housing and other loans in arrears, are low generally. Households are coping reasonably well with debt servicing burdens, thanks to low interest rates. And household net wealth and income have continued to rise, albeit at a slower pace.Despite this, all measures in the index fell in the first half of the year. These include comfort with living expenses, debt, current financial situation, income, net wealth, expected change in financial situation, recent change to financial situation, savings, investments and ability to cope with a financial emergency.Twenty-nine per cent said their household income had decreased - up from 24 per cent in the previous survey.There was heightened concern around the adequacy of income, the cost of necessities, lack of jobs and job security and adequacy of retirement savings. During the six months to June there was a marked decline in household confidence in both job security and availability of jobs.There was also concern about the impact of the Australian government budget. Forty-five per cent of baby boomers said they expected to be worse off after the Budget.The deterioration in sentiment was felt in most household groups and was most marked among retirees and single parents. Middle aged singles and couples with no children, and young singles or couples with no children were the two groups that reported higher comfort levels.On the savings front, there was a fall in the proportion of households that reported spending less than they earned - down from 50 per cent to 48 per cent. The level of comfort with cash savings fell in most household groups.Among the eight per cent of households that spent more than they earned, the level of over-spending increased from $418 a month to $584 a month.Among savers, the average