The Euro Debt Is Big But Personal Debt Can Feel Bigger

Friday, February 3, 2012, AM | Leave Comment

Whole nations are bringing in austerity measures following the financial crisis and the Euro debt crisis, but how does this relate to the man on the street?

Many people are in a dire situation with their finances – wage increases aren’t keeping up with the rate of inflation, which peaked at 5.2% last year in the UK, and hasn’t returned to the Bank of England target of 2% yet. Unemployment is high, utility and fuel prices increased sharply at the end of last year – add personal debt responsibilities to that and the burden on family finances becomes greater.

Many people have less money in their pocket than when the financial crisis struck, or are finding things more difficult. While borrowers have every intention of repaying their personal debt, in an age of austerity it can become more difficult to do so without help. In fact, personal debt is more likely to weigh on people’s minds than the Euro debt crisis – which most individuals are powerless to do anything about anyway.

Using your bank account to stop debt

Hundreds of thousands of people in the UK are already using a managed bank account to help them budget for their financial obligations, which may include debt repayments.

Some people manage their budgeting with multiple bank accounts for different areas of their finances – one or more for savings, one for bills, perhaps a joint account with their partner and one for debt repayments.

Another option is a managed bank account with budgeting help, which separates ‘spare’ income from regular financial obligations like the mortgage/rent and bills and debt obligations.

Finally, bank accounts with overdrafts come with an additional temptation to borrow money, especially for those who are struggling with their finances already. Choosing a current account without an overdraft, or a basic bank account (normally overdraft-free) is another personal ‘austerity measure’ that can help consumers to avoid the temptation to borrow.

The Euro debt crisis is unresolved and the man on the street may feel powerless to do anything about it. However, if you’re having a debt crisis of your own, changing the way you manage your banking is something anyone can do to take control of their financial situation.

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