Money problems are becoming an increasingly common worry within the current economic climate. Many people are finding it increasingly difficult to survive on their available funds, are becoming confused about their finances, are spending excessively and using one form of credit to pay off another.
The symptoms of “money sickness syndrome” can lead to real life physical and psychological symptoms such as sleepless nights, anger and poor concentration. Ensure you check your bank balance regularly so you know exactly what money is in the account (what’s coming in and what’s going out) and are not simply working on assumptions.
The following articles aim to ensure you understand that you are not alone in worrying about your finances and that there is help and advice available, for free, to help you through your troubles.
Debt
Moving away from home is the first time that most young people will have encountered debt, and it is only the start of debt becoming a part of everyday life. Utility bills and mortgage repayments will have to be paid, as will student loan debt which will be debited from your account monthly. Debt is not always a problem. It is only when you cannot afford the repayments that it becomes an issue. Debt occurs for many people not just young people, due to a wide variety of reasons – easy availability, sudden change of circumstances, lack of access to money or losing track of spending.
For the majority of the time, these debts will be deducted from your current account each month without consideration. It is only when the debt begins to spiral out of control that it can become bad. If you find yourself frequently using money set aside for one debt to pay for another (robbing Peter to pay Paul), each time incurring different consequences, then your debt may have begun to become problematic. It is worth noting that debt doesn’t just mean the obvious debt - credit cards and loans, any financial commitment can become a debt.
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Credit Crunch
A credit crunch is a sudden reduction in the availability of loans and other forms of lending from banks and building societies. Banks are less willing to lend out their money, and the terms and conditions for loans, mortgages and credit cards are becoming much tougher.
This took hold in 2008 due to a number of factors. One of the most prominent was the state of the housing market in the US. Increasingly US mortgage holders have been unable to keep up with their repayments, and US banks have suffered as a consequence. This has affected the UK because many high street banks invested in the American banking system, by buying these loans. These are now worth less than the bank invested – hence the banks have not profited from their investment. Add this scenario to the problems faced by the fallout of Northern Rock in 2007, the collapse of the Icelandic financial markets, and the problem becomes evident.
Impact of the Credit Crunch
Borrowing is becoming more difficult with the rates increasing drastically in relation to credit cards, mortgages and loans. It is particularly tough to get a mortgage as banks don’t want to take any customers with a poor credit rating.
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