Thursday was the saddest and most shocking day not only for the 30,000 staff of Halifax Bank of Scotland and the Lloyds TSB group in Scotland, who learnt their companies were to merge potentially making thousands jobless, but for consumers everywhere. It will go down in history as a day which changed all our lives.

For such venerable organisations as Scotland's oldest bank and the UK's biggest mortgage lender, with 500 years of tradition of financial prudence between them, to be bailed out so ignominiously would have been unthinkable in any but the most cataclysmic circumstances.

But such are the times we are living in. Friday's rally brought some comfort, though markets are likely to remain volatile for many months. Are we out of the woods? Almost certainly not, and we should brace ourselves for more grief to come.

People will lose their jobs, and new ones will be hard to find. Families struggling hard to meet their repayments on a mountain of debt, will be defeated. Repossessions will rise and house prices continue to plunge.

For the past 10 years we spent everything we earned and borrowed up to the hilt. And now we are going to have to pay the price. Consumers should expect the next couple of years to be ones of at best belt-tightening, at worst, unspeakable trials and hardships.

We will come through all this, as we have before. The majority who keep their jobs will survive relatively unscathed, if considerably more sober. A minority will not be so lucky. Given the times in which we are living, it makes sense to prepare for the worst. So...

SPREAD YOUR SAVINGS AROUND
It is important to remember that no investor has lost money in any UK bank or building society. However, we are living through unprecedented times.

Should you have savings with a bank or building society which did go belly-up, the first £35,000 of this money is protected.

But be careful. Only banks authorised by the Financial Services Authority are covered by the Financial Services Compensation Scheme. Some of the best interest rates are currently offered by banks which are registered elsewhere in the Europe.

Compensation up to £35,000 is payable irrespective of how many accounts you have with an institution. However, spread your money around different groups, as you only get £35,000 per bank provided they are covered by a separate banking licence. It is not always easy to spot which savings brands are part of the same group, so you must specifically ask.

There is further useful guidance at the FSCS website, particularly at www.fscs.org.uk/consumer/faqs/deposit_claims_faqs/

STOP LOOKING AT HOUSE PRICES
House prices will continue to fall at least until the end of next year, but unless you need to move this fact is an irrelevance. There is nothing you can do about it, and constantly poring over depressing house price data is worse that picking at a festering sore.

But having blown away the myth that we have abolished the economic cycle, we can at least hold on to the fact that house prices will rise again. As long as you can go on making your repayments, you will get your money back in time.

It's also worth remembering that Scottish house prices on average doubled over the past 10 years. If they fall even by an apocalyptic 30%, that they will still only be back to their level of four years ago. Long-term Edinburgh property owners have seen values treble over the past 10 years.

PAY OFF YOUR DEBTS
Even before the HBOS Lloyds TSB tie-up was announced, mortgage rates were beginning to edge up again. On Friday, Bank of Ireland and Accord mortgages, part of the Yorkshire Building Society, withdrew their discounted and fixed deals.

Homebuyers should expect no reprieve from eyewatering monthly mortgage bills. In the worst case scenario they might even go up again.

HBOS was partly brought down because it couldn't get the funding it needed, which means credit is in ever-diminishing supply. When a resource is scarce it becomes more expensive.

If you have an option on some competitive fixed-rate money take it now before it disappears. It costs someone with £100,000 mortgage an extra £500 a year, for every 0.5% increase in mortgage rates.

But the removal of the Halifax, which currently lends roughly one in five mortgages, will limit choice and competition. The days of dirt cheap loans have gone if not forever, then at least until the memory of how this mighty giant was felled fades. And that will take a very long time.

If you have serious difficulties paying your mortgage then seek help. There are ways to get through this crisis.

On the plus side, the Government has announced increased support to home owners who lose their jobs, which will kick in at 13 weeks. This should keep repossessions much lower than they might otherwise have been.