2. I Can Just Afford It

Taking-on a credit commitment requires fairly detailed financial planning to ensure you have sufficient funding to meet:

· The credit payment it’s self for three years

·Your living costs – over three years (to include inflation, and possible salary increase)

·Any future ‘necessary’ credit needs – a cooker, TV, washing machine may need replacing)

· All contingencies – new car to get to work, new roof,

It makes sense to look at these areas before committing yourself, but of course no one does. We make a quick assessment of immediate affordability, and as long as we come close to the figure we need, we go for it! We want that hi-fi, so cutting back on a few existing expenses will have to be the way to get it.

Finally it hits you! You cannot pay your creditors with your income. It is at this point that you decide whom you will pay and who will have to wait. However, the creditor that you decided not to pay is the one that has issued the court papers….

3. One Day at a Time

When we were children we all said to ourselves, "when I get older I am going to buy…" and do we! 

If only we stuck to our then dreams: biscuits, pop, toys (my pledge to myself was a bunch of ‘bananas’, sad, but true).

This article is not about psychology or how you were brought up, but there is obviously a link between them and what we want, what we can have and our action to totally ignore the affordability of ‘it’. Buying nice things, and not necessarily for ourselves, cheers us up. We can have things that would otherwise be a dream – like a new car, or even just a decent holiday.

Who’s to Blame

In a world where a diamond can cost £20 million, a footballer gets £60,000 per week and satellite television subscription can be as much as 20% of an average wage in some areas, the urge to get your little bit of something is strong.

If lenders make it possible for you to have something today that you could not buy outright, and you subsequently fail to maintain repayment for whatever reason the ‘blame’ lays... NOWHERE.

As a borrower, you should not undertake a commitment that you know you cannot afford. This does not mean that you have to know that you will always be able to pay what is due: you do not know what is round the ‘corner of life’ and if it turns out that you cannot make the repayment the lender has a responsibility to act in a human (and not business-like) way. It is not 'human' to take a consumer to court in a bid to remove their house contents by a sheriff or bailiff. Admittedly, many large lenders will not pursue such measures, but, if they then sell those debts to third party debt collectors, they will use any means available.