Stress

October 12, 2007 on 3:12 pm | In Debt Management

Credit card debt, personal debt, bank debt, mortgage debt, car finance, loans, consolidation loans … debts, debts, debts …. it’s all you hear and even moreso over recent years as society becomes more indebted to meet individual wants.

Never in the history of our country has there been so many people in debt or more to the point, unmanageable debt. What does debt cause? STRESS! Even Northern Rock’s key man, Keith Currie is off with stress, the Telegraph tells us today. If Northern Rock’s treasurer is off with stress what is the average man in street suffering?

The problem with stress is most of the time you don’t know you are suffering from it and that’s why it’s a killer.

Debt or financial worry is probably the biggest cause of stress and quite honestly facing up to a problem by getting sound advice is the first step.

 

How did Northern Rock get into trouble?

October 3, 2007 on 1:29 pm | In Debt Management

Banks lend more money than they keep in their vaults. If everyone decided to empty their bank accounts, (a ‘run on the bank’) then this would create problems.

Put simply, most banks get money to lend out by attracting savings. You give the bank money as a saver and it lends that money to someone to buy, say, a house. It gets more back in interest on the loan than it pays you in interest to get you to save.

Northern Rock’s problem was that it got its money from international money markets (other banks) at a cheaper rate than it lent it out. Following the hit the banks took when the USA’s housing market collapsed, they put up the rates they lend to other banks.

Your money is only safe with Northern Rock because the Bank of England stepped in to support it. They probably wouldn’t have done so if Northern Rock’s assets covered their risk.

Your money is safe with them for now but their problems mean that lending money in future will be not be as easy and definitely more expensive. So if you are looking to consolidate your debts think about your options.

Remember a prime golden rule ……… ‘Don’t borrow money to pay off existing debts without getting advice first’.

 

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