Every time a rise in the interest rate is announced the increased number of calls we take shows just how little spare income people have to play with now.

So many Scottish households are surviving right on the limit of their finances and even a quarter per cent rise can be enough to push them over the edge.

DEBT FACTS Personal debt in Britain is increasing by �1m every four minutes An estimated two million Britons are 'irretrievably indebted' Average consumer borrowing is �4,550 per adult in the UK Scottish consumers spend the same from a lower income and asset base *Source: www.creditaction.org

A huge problem is that too few people actually understand the real impact of a quarter or half a per cent rise.

To put it in perspective, if you took out an interest-only mortgage in July 2003, when rates were at a low of 3.5%, today's announcement will mean that your mortgage payment is 50% higher than it was four years ago.

Many people simply didn't anticipate that level of increase in their monthly repayments.

First-time buyers have been taking mortgages of up to four times their combined salaries just to get on the property ladder, which doesn't leave much wriggle room.

Homeowners can't bury their heads in the sand and pretend everything will be fine if they ignore it for long enough, because quite the opposite is true.

Anyone who feels they're struggling to balance income and expenditure needs to take urgent stock of their situation and take action.

If people aren't careful, this has the potential to cause chaos in their financial, professional and even personal lives, so it's important that they address any financial concerns they have now.

Many borrowers will now be recalculating their finances

Too many people are irretrievably indebted, in other words all they can ever hope to do is service their debt with minimum repayments without a realistic chance of ever clearing the capital outstanding.

This is a nightmare for thousands of Scots who will always have this burden hanging over them.

Business tends not to feel the impact of the rate rise until a year to 18 months down the line, by which time people have reduced the amount they spend as their disposable income is eroded. That means fewer nights out, fewer trips to the shops, and more modest spending on things like Christmas and birthdays.

There's inevitably a squeeze on smaller businesses and we'd expect to see a rise in business failures a year or so from now.

The key to survival for businesses starting to feel the pinch is to recognise the problem and seek professional advice at an early stage.

A surge in failures makes the banks more nervous about lending to sectors they perceive to be 'at risk'. They tend to tighten their lending criteria and are likely to be far more discerning about who they lend to.