Surviving the Credit Crunch

The credit crunch has been with us for a while now, and its effects are becoming ever-more evident - fewer cheap mortgages, less competitive loans, debt problems - and general belt-tightening all round.

The credit crunch basically means that there's a lessening of available credit, for both consumers and businesses. This has a huge impact on the economy, as financial institutions become nervous about lending, and ultimately this can lead to greater unemployment and possible recession. We're also currently experiencing rocketing inflation - for example, with oil prices, which means we have less disposable income, and this adds to the general feeling of economic uncertainty.

As signs suggest that this uncertainty may persist for some time, it makes sense to work out your own personal strategies for dealing with it!

A useful first step is to get a clear picture of your personal finances. This means doing a simple budget - income, fixed expenses - and resulting disposable income (which is what's left over after your bills and living expenses have been paid.) At the same time, it's wise to work out exactly how many debts you have - tot up the different sources, and be brave! It's a difficult step coming to terms with debt and being honest about it - but by getting a clear picture of what you're paying, to whom, and at what interest rate - you can then begin to work out your options.

If your outgoings are greater than your income - or you have large debts which you are having difficulty paying, you may wish to speak to a financial expert. This is all the more valuable if your financial situation is causing you worry, stress or sleepless nights! Don't be scared or nervous about seeing a financial advisor or debt management company - they have valuable skills and experience to help you - and will offer impartial, sympathetic advice to help you find the right solution for your situation. There really are different options and products available to you regardless of how complicated your financial situation seems - for example, a large number of expensive credit card balances might be worth replacing with a single low cost loan. By speaking to an expert, they can give you the advice you need, in terms you'll understand! No more being baffled by confusing jargon!

Remember that alongside debt solution strategies, it's vital to find ways to live within your means in day to day life! Again, not so hard! Try keeping a daily spend diary and faithfully recording everything in it - you may find clear areas where you can reduce spend - for example, cooking at home rather than eating out, canceling a gym subscription and heading out for a walk - or using public libraries rather than buying books and CD's. Speak to friends and family for ideas too - they may suggest things you've not heard of. And see if you're entitled to any grants or government support - these are available for low income families and vulnerable groups. It doesn't do any harm to at least do your research!

These are just some ideas to get started. Take your financial future into your own hands, and make the important first step!