Jumping in the deep end !

It sounds so reasonable to those with unsustainable debts and the phone running hot with demands for money.  Simply go to one of those " Debt Agreement " companies, sign on the dotted line and the " Good Fairies " will make the bad guys go away - and all you have to do is make one very reasonable payment each month because all those debts have been consolidated within the agreement.

It seems the best of all worlds.   No more debt collection people banging on the door.   Once the debt problem is resolved you will have money in your pocket again - and the world is your oyster !   This is the course that over ten thousand people took last year - and there are indications that this year will be even bigger.

The problem is that desperate people are not in a position to rationally examine what they are getting into. They take the claims made in promotional advertising and few take the trouble to discuss the options with an accountant or their financial adviser.   It seems a better option than bankruptcy, but in fact they are entering into an agreement that will affect their credit rating for at least seven years - and in many cases bankruptcy might have had fewer long term effects on their lifestyle.

Managing money is not an art that every person acquires.   " Buy now - pay later " is a trap that ensnares the unwary, as are high interest credit cards which the banks showered on the public when " Bankcard " first appeared on the scene.   Today, there are a plethora of credit cards touting for business and the sad thing is that many people find themselves gaining more credit cards to simply keep up with the minimum payment they have racked up on the cards they already own.

In hard times - and these are hard times for many people - the money market responds with the age old remedy of offering " loans " to those who can not provide the security that banks would require.   In today's world, these are termed " Payday loans " - and they usually offer sums up to a limit of five thousand dollars - " until payday comes around ".

That is an obvious misnomer.   Few of these loans simply cover the shortfall to the end of the week and all are longer term - at very high interest rates.  The trap is that people needing them are usually the very people unable to fully  meet the terms offered - and so the balanced owing is " rolled over " into a new extended loan when the payment falls due.

Governments of all political persuasions seem reluctant to clean up the unsavoury mess that out of control debt is delivering to many households.   To do so would probably tip a faltering retail sector over the edge.   In hard times, a degree of debt probably is the difference between putting food on the table in some cases, but it is also the first step on a very slippery slope - and tighter controls would simply make the inevitable happen - sooner !

The best advice for anybody having financial problems - would be to seek the advice of a component financial counsellor - before making any hard and fast decision.

Unfortunately, advice that few heed !