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.

You’d be forgiven for thinking that, with all of those big money movies, record sales, royalty cheques and sponsorships, celebrities are a relatively safe bunch to lend a few quid to. After all, they can afford it, right? Well, they’re not usually renowned for astute money management. As this list from Debtsolver shows, celebrity spending and debt often go hand in hand.

1. The music business is notoriously fickle but two successful albums and a Grammy would be sure to lull you into a false sense of security. Sadly though, for Toni Braxton this success just couldn’t provide her with the lifestyle to which she aspired and in 1998 she filed for bankruptcy, owing $5million.
2. Staying with musical superstars, remember MC Hammer? Well, although his spending habits are now the stuff of legend, he was able to keep up with it for a while. All good things must come to an end though, the shelf life of Hammertime being one of them. He filed for bankruptcy in 1996, having spent about $20million.
3. Kim Bassinger bought Braselton, a town in Georgia (the US state, not the ex-Soviet country), for a reported $20million. She then signed up to do a film called Boxing Helena, decided against it and dropped out. The film’s producers took her to court for breach of contract. Kim lost and had to sell Braselton and file for bankruptcy.
4. Mike Tyson apparently earned $300million in his fighting career. However, he was bankrupted by $27million worth of debt; $13million of which was due to the US Government in unpaid taxes.
5. Burt Reynolds starred in almost 150 films. However, in spite of this extensive list of credits, Burt managed to build up about $10million worth of outstanding debt and only managed to hold on to his house through some expert legal wrangling and dedicated debt management.
6. Don Johnson’s days on Miami Vice made him one of the most famous small screen actors in the world. However, his life of excess lead him into serious debt problems that even cost him the iconic silver Ferrari Testarossa, a personal gift from Enzo Ferrari, that became such a signature of the programme. He managed to repay over $14million but I’d still think twice before lending him a tenner.
7. Marvin Gaye is about as big a legend as you get. Sadly though, succumbing to well documented personal problems, Marvin’s mounting tax debt lead to bankruptcy in 1979. He returned to form in 1982 with the release of “Sexual Healing” but sadly died in 1984.
8. Cyndi Lauper reminded us all that girls just want to have fun, but at what cost? Critical acclaim came early for Cyndi but this early success never really translated into record sales and in 1980, she filed for bankruptcy. Her career was luckily resurrected and her recovery from bankruptcy remains an inspiration to celebs everywhere.
9. Willie Nelson’s been around for a while. Sadly though, he’s almost as renowned for his massive unpaid tax bill as his inspirational activist anthems. Willie was apparently not great at keeping on top of his finances and was reportedly taken advantage of by his accountant, owing somewhere in the region of $17million in unpaid tax.
10. Meat Loaf hit the late 70’s music scene with a hugely successful album and looked set to be a major player for years to come.  Within a decade though, a pretty major debt beef had got the better of Meat and in 1986 he filed for bankruptcy, owing $1.6million.

In the UK, deductions from your self-assessment tax return can amount to substantial savings. These savings can help you to battle debt problems and can amount to a welcome tax rebate at a time of year when funds are notoriously tight. It can be difficult to know what you can discount as a business expense and what you can’t though. For inspiration, here are some real examples from our cousins across the pond, courtesy of Debtsolver.

Firstly, the top ten successful tax reductions…

1. The owner of a petrol station gave away free beer instead of trading stamps and the Tax Man felt that this is a legitimate business expense.
2. An “exotic dancer” had her chest enlarged to a 56-FF and as a stage prop essential to her act, they were tax deductible.
3. Your babysitter can be a charitable deduction, if you employ her to look after your children while you are off doing charitable works in the community.
4. Necessary business trips are tax deductible but the owners of a dairy business did manage to write off their Safari because a lot of the activities had an animal focus.
5. Pets are considered personal effects so if your job requires a move, transport for your furred, feathered or finned friend is deductible.
6. Hold a business meeting in Bermuda and it can be written off. Same with Barbados, Costa Rica, Dominica, the Dominican Republic, Grenada, Guyana, Honduras, Jamaica, Saint Lucia, Trinidad and Tobago, Canada and Mexico… If you’re from the U.S.
7. If you’re a professional bodybuilder, you can write off all of that essential body oil. Glistening muscles can be a genuine tax write-off.
8. For a couple who rent out a holiday home, having their own jet is a fully deductible expense as they have to go and check on it occasionally.
9. A nightclub promoter hired a few leggy lovelies for a launch and the tax man allowed him to write them off as decoration.
10. When a man was told to get more exercise, he felt swimming was a good option. So, he installed a pool and was able to deduct it from his tax as a necessary medical expense, including its heating, cleaning and general upkeep.

If those passed, what were the unsuccessful claims? Here are the top 5 that weren’t so lucky.

1. A man tried to deduct whiskey as a client gift but the category he chose was client entertainment, it wasn’t allowed and it violated state laws.
2. The owner of a failing furniture business hired someone to burn it down, not only to collect the $500,000 insurance money but also to deduct the $10,000 expense of hiring the arsonist.
3. You can’t deduct expenses of illegal professions. Sounds obvious? Well, tell that to the prostitutes that try to deduct the cost of condoms.
4. If you buy your own prize-winning racehorse, name it after yourself and then take clients to watch it run, it’s not a business expense, it’s a personal expense.
5. Even though we’ve heard that someone deducted a pool as a medical expense, taking dance lessons doesn’t count. So, dancing to relive varicose veins, dancing to cure arthritis and dancing to alleviate nervous disorders just won’t cut it.

When it comes to trading and investment, the focus is very much on the balance between risk and reward. Long shots can pay off big but they can also leave you in serious debt danger. With this slightly ominous sentiment still ringing in your ears, here are some pretty out-there investment options that the debt specialists at Debtsolver would definitely recommend that you treat with real trepidation. In fact, these fringe markets are probably best left well alone.

Freight derivatives are a relatively popular fringe trade. The Baltic Exchange offers trading on Forward Freight Agreements (FFAs). Basically, one trader bets another about how much it’ll cost to transport something in the future. For example, how much it’ll cost to ship crude oil from Shanghai to Rotterdam on the 25^th of February, 2015. You bet, wait until the day arrives and check the daily shipping rates as displayed by the Baltic Exchange. Companies will tend to do this to hedge against rising oil and geopolitical risks to shipping. It’s a risky business.

Betting on the weather is not something to be recommended but so great is its impact on business that there are those who do. We’re not talking about the odds on a sunny weekend either. It’s about the average over time, divided into ranges and packaged up for trade. A warm winter will affect power company revenue by decreasing fuel demand. They’ll often hedge against this by buying a contract that’ll pay out if the temperature averages at five degrees above the historical average for the winter.

European businesses that produce carbon dioxide as a side effect of their business activity are afforded an allowance of carbon credit. Should they go over this allowance, they have to buy more carbon credits to make up for it. North America is beginning to test out similar programmes now but European-based carbon futures can already be traded. The value of carbon credits depend on environmental legislation, geopolitical issues and the price of fossil fuels like crude oil and natural gas.

Think you can pick out the Oscar winners and summer blockbusters? The Commodity Futures Trading Commission (CFTC) is investigating whether investors should be able to buy and sell futures based on how much money a film will take in its first month. It’ll be a bit like the Hollywood Stock Exchange and buying futures will be based on picking surprise hits and selling futures will be based on picking out the unforeseen failures. Big-time financiers, producers and distributors will attempt to hedge the millions they’ve already invested with this kind of future trading.

Investments are a notoriously unpredictable and volatile market to start with and these fringe markets really are only for those traders with huge bankrolls and a keen understanding of the risks. They call for hugely specialised knowledge of the market and substantial investor credentials. They are showing growth though, with vast sums of money passing through them annually. As we said at the beginning, with the potentially huge rewards comes massive risk and it can all turn to crippling debt in no time. Don’t manage your debt with long shots. Talk to a dependable debt specialist like those at Debtsolver and free yourself from the burden of bad debt.