subject: Keeping on the personal finance tightrope [print this page] Keeping on the personal finance tightrope
Personal finance isn't always a tightrope and for the very rich perhaps it isn't ever but for most of us, at one time or the other, there's a feeling of a tightrope walker in a circus.
There you are high above an expectant crowd amongst which, generally, you can just make out the faces of friends, family and judgemental bank clerks. You're holding one of those balancing poles as you try to walk across: on one end of the pole are your incomings and on the other end are your outgoings.
The implication is clear: put too much pressure on either side and you'll topple down into that crowd.
The way that many deal with the pressure - the circus example isn't incidental - is to bury their heads in the sand. However, this can lead to debts which are much more difficult to escape from in the long term.
Many personal finance writers at this point recommend that people walking a delicate tightrope compare credit cards or compare savings accounts to make the most of those precious few incomings (in the case of that latter) and more outgoings (in the case of the former).
Both can be good options but generally only when the current deals that you're using as a tightrope walker are particularly bad.
For example, it wouldn't be worth going to the trouble to compare current accounts unless the one that was being used was particularly bad.
A normal current account doing no harm isn't worth changing in an already-stressful situation since moving direct debits can create more problems than it seems about to solve.
On the other hand, if you're on a tightrope and paying out money every month for an expensive overdraft, that's one balance that it's well worth making.
Keeping on the tightrope is about putting one foot in front of the other, then, before it is about anything else.
You wouldn't start running in your first circus act and you shouldn't in this case either. Instead, deal with the problems at hand first - those first few steps across the ring - until you find you can do better with practice.
Keeping on any tightrope is difficult and staying on isn't necessarily about finding the best deal, it's about keeping everything balanced enough to help you to speed up with a long-term solution.
That solution could be to reduce outgoings drastically or to increase income: either way, you won't know you're at the safe side of your tightrope act until that sinking feeling disappears.
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