During a recession, it’s not just the economy that’s depressed. The stress of debt problems can have a significant effect on your health, both mental and physical. Whether you have lost your job or someone close to you has been laid-off; you find that you’re unable to afford life’s little luxuries for yourself or your family; scraping the money together to pay for those mundane, everyday expenses has become an unending source of stress and the constant financial doom and gloom being forecast by the media has started to get the better of you.

Naturally, in such difficult times, you can find yourself feeling pretty fed up. However, without making light of a situation that is unquestionably painful for a lot of people, you need to keep your morale up if you are going to maintain the motivation to tackle the debt problem. Here’s how to stay upbeat in a financial downturn.

1. Come to terms with your financial situation quickly. Accepting the situation that you’re in needn’t mean complacency though. You can’t bury your head in the sand and pretend it’s not happening; neither should you try to hide the problem from those close to you. Keeping a secret like this can be extremely stressful and have a marked impact on your health. Don’t delude yourself into being blindly positive though. It doesn’t work and the pretence will wear you down. The real respite comes from knowing that you’re actually on the case.
2. Don’t beat yourself up about your financial situation. The majority of debt problems are not the result of irresponsible spending but rather a troubled economy, so don’t lay the blame solely at your own feet. Try to turn the stress of the situation to your advantage and use it to fuel your determination to safeguard your financial future. Be confident in your ability; steel yourself for a hard-fought battle to keep providing for your family.
3. The downturn will not last forever. Although it might seem like a long way off, there is light at the end of the tunnel and you just have to stay afloat until then. After all, there was life before the recession and there will be life after the recession. That doesn’t mean that you should lose focus on the present; be prepared to make sacrifices and tough choices now that will get you and those you care about through hard times.
4. Don’t isolate yourself from a potentially supportive community. In a national downturn, the odds are that you’re not the only one who’s been affected. So, band together and help each other out. It can do wonders for morale to talk to people in a similar situation. Getting a caring, sharing community vibe going can also save you money. If you band together, you can share resources; maybe not necessarily in terms of money but do consider helping out with a bit of DIY, childcare or carpooling.
5. Be proactive in actually making your situation better too. Get debt help, bring your budget back under control and start to manage your financial recovery. If you’ve lost your job, don’t wallow, get out there and look for another one. Look at your food budget and cut back on those unhealthy options. Keep fit and active if you find yourself with extra time on your hands. Remember the days when keeping fit didn’t demand a gym membership? Stay sharp, stay healthy and stay positive.

First of all, shopping around for the bank account, or any other financial product, which offers you the best rates and benefits is a must. Sometimes the best deals are to be found in unlikely places. Supermarkets can offer accounts with competitive rates of interest as well as other benefits that probably aren’t available from your high street bank. The in-store reward points are just one of these additional benefits.

At one popular British supermarket, you have the option of paying into your savings account at the checkout. So, if the discounts in your weekly shop add up to a fiver, you have the option to transfer that fiver right into your savings. OK, it’s not going to change your life right away but little and often is the best way to do it.

If you like that idea, you’ll love this one. A high street bank is making it even easier to add to your savings little and often, by rounding up purchases to the nearest pound whenever you use your debit card. Naturally, this relies on you having both your current account and savings account with the same bank, which means you probably won’t get the most competitive rate on the market.

When it comes to getting your bank to work for you, setting up a ‘sweeping’ facility is a particularly good way to effortlessly add to your savings. The process of sweeping takes any spare funds that are left in your account each month and ‘sweeps’ it into your savings account. The crux of the issue is finding a savings account with as high a rate of interest as possible.

This is all very good for those with the funds to move around but what if you want your bank to help you to earn a bit of extra cash? We’re not just talking about interest on any savings you might have. A cash-back credit card will reward you for settling your outstanding balance at the end of each month. There are a few credit cards on the market that offer this service so shop around for the best deal.

If you’re dubious about signing up for a cash-back credit card, £100 cash in your hand will no-doubt be a more attractive prospect. There are a couple of current accounts on the market that will reward you with £100 when you open an account. Well, in order to qualify for the cash reward, there will be a minimum deposit amount when you open the account. This will vary from bank to bank so, as ever, it will pay to shop around. You can then take this free money and pay it into your savings account.

1. Do you always go back to the dealer to have your car serviced? Smaller, independent garages will do the work a lot cheaper. It’s always a good idea to choose somewhere on the basis of a referral though. A good, reliable garage that has experience with your car is a great way to beat high dealer servicing costs but they can be hard to find.
2. When you do take your car in for its service, whether to your dealer or to an independent, don’t let them talk you into buying things that you don’t need. New wiper blades, air filters or high-performance, synthetic motor oil are all expensive extras that can, if needed, be bought cheaper elsewhere.
3. When it does come to wiper blades and that kind of thing, buy them and fit them yourself. It’s an easy job, takes no time at all and is the sort of added extra that you’ll often pay through the nose for if you leave it up to the garage to stick them on.
4. Although we’ve warned you about the inflated cost of dealer servicing, beware the false economy of dodgy garages. As we’ve said, the best way to find one is through a recommendation. When you check it out, look for a busy but well-kept garage and a mechanic that is happy to discuss the job and answer your questions. Get an estimate and make sure you sign off on costs before any work goes ahead.
5. If you find yourself replacing tires suspiciously often, or they’re wearing down unevenly, you could just be treating a symptom, rather than the real problem. Chances are you’re wasting money on tyres when you need to getting your tracking fixed, a wheel balancing, alignment or even suspension
6. Putting off problems with your car because you’re trying to save money will often just make for bigger bills later. For example, that squeak from your brakes might just be a source of aggravation right now but rather than just buying new pads, you could do damage to your disks. Of course, there is always the safety concern with your brakes too. Staying on top of thing like that will help to ensure that you’re not wasting money on costs that could be averted.
7. Keeping a record of the repairs that have been carried out on your car can help you monitor problems, like replacing tyres and brake pads too often, helping you to decide if something’s seriously wrong. Keeping the receipts can help you if the repairs go wrong too.
8. When it comes to insurance, liability is not an area you want to cut back. However, if you’ve got an old car that’s not worth very much, comprehensive insurance can effectively be a waste of money. Take the cost of a year’s insurance premium, add the excess that you’d be liable for and take it away from the value of your car. When you see the bottom line, is it worthwhile?
9. In terms of general upkeep of your car, tyres at the wrong pressure can be a huge waste of money. Improperly inflated tyres can cost you more in petrol, wear out more quickly and put you at risk of an accident.
10. Taking your car to the car wash can be a relatively expensive proposition these days. Rather than allow your dirty car to show you up though, why not wash it yourself? Take some pride in your pride and joy and get out there with the sponge and chamois. The brushes at the carwash can be quite abrasive too, so hand washing will keep the paintwork looking its best.

British Prime Minister David Cameron outlined his plans to solve the country’s debt problem but has emphasised the difficult decisions that are yet to be made with regard to state pensions and benefits. In short, the Great British public are to expect widespread, deep and difficult cuts to public spending.

Cameron has described the task of tackling the UK’s debt problem in no uncertain terms and is obviously looking to instil the severity of the situation. However, he also emphasised that these cuts in public spending would not damage those at greatest risk and in greatest need of support at such a difficult time. That being said, the budget announcement cannot afford to be too divisive with respect to wage bands across the country. This alludes to a very difficult balancing act in curing the country’s financial ill health.

Up to this point, the Conservative-Lib Dem coalition have tabled a budget for the 22^nd of June, in which they are expected to build on the cuts of £6.2billion that have already been announced. Apparently, the state of the country’s finances was even worse than the new Prime Minister had imagined when taking office. In his own words, the UK is in “Debt Crisis” and he laid the blame for this situation squarely at the feet of the Labour government.

Solely in terms of interest payments on the national debt, the UK is set to spending £70billion within five years. For any of us that have been paying an interest only deal on a mortgage or been going on paying the minimum repayment amount to our credit card, the sheer waste of money will be immediately apparent. As we at Debtsolver have always reiterated, dealing with your debt as quickly and efficiently as possible will help to save you money. As ever, the sooner you face up to the problems, the easier they are to solve.

There are then the knock-on effects to consider, like increased interest rates and the general drop in the level of public services on offer, as taxes are diverted to pay the interest on our national debt. Of course, as promised in the Conservative manifesto, NHS spending and international aid will be protected for the cuts. Whether this remains viable in the long-term is yet to be seen.

In the past 5 years, we’ve seen the loss of 100,000 civil service jobs and the union Unison have viewed these public sector spending cuts as specifically targeting those on a lower income, dependent on these public service, like healthcare and financial support. Unison viewed the debt as a problem that was essentially caused by the wealthy banking and financial sectors but was set to be paid for by those that were most vulnerable.

The now notorious high street bank, Northern Rock, nationalised to safeguard its customers and itself against the crippling effect of the credit crunch, is now offering to buy back bad debt. In a move that it hopes will generate an estimated £700million, Northern Rock intends to buy back the junk debt at a fraction of the original value and begin to chase the payments.

On one hand, it is hoped that this activity will reduce the overall cost to the taxpayer. At present, an estimated £1.6billion of tax payers’ money is ready to be moved into the bank to counterbalance any losses associated with bad mortgage debt. However, after making a loss in the region of £140million during the second half of 2009, things are looking up in 2010, with Northern Rock back in the black for the first quarter. This has been facilitated by an average increase of 10% in house prices and the low rate of interest.

A significant proportion of Northern Rock is performing well, with about £10billion worth of stable mortgages and £20billion worth of deposits but the banks Channel Island operation on Guernsey is going to be closed. This will leave about 6000 customers looking for a new home for savings worth nearly a billion pounds and with just under 3 months to close their accounts.

To be clear, junk debt is essentially a debt that has past the debt collection statute of limitations, which makes it much cheaper to buy. So, for the original owner of the debt, it’s been settled; most often through bankruptcy. Once upon a time though, very few creditors would ever bother to try and collect a junk debt because it wasn’t deemed to be worth the effort or expense. However, in this recession inspired environment of fiscal belt-tightening and penny pinching, the thought that there could actually be money to be made from these old, out of statute debts has sparked a bad credit gold rush.

So, even after you have successfully completed the terms of your debt solution, it‘s still possible that you could be contacted by someone chasing the debt. Remember, the statute of limitations on the debt has expired. You need to talk to a specialist debt advisor who can let you know where you stand. Don’t give any information or sign up to any payment plan until you know exactly what’s expected of you. Talking to a debt advisor can help you to get this straight.

Northern Rock obviously feels there is a significant amount of money to be made from buying back this debt but for the vast majority of people, the situation will already seem resolved and the debts settled.