I was in debt from age 18 until age 29, here is how that happened.
In our house there wasn’t much pocket-money to go around, the deal was we had a free taxi service, food & board as long as we needed. We got good presents and extra support when needed. Any fancy clothes, cars or entertainment were all paid for by a part-time job. These jobs taught me so many life lessons, more than secondhand advice ever could. Does that mean I’m middle class? I suppose so, we were neither dirt poor nor filthy rich just somewhere between, maybe towards the lower end of that spectrum. We had a lot of the things money can’t buy, and that is priceless.
Yes earning money has never been a problem, but spending was even easier.
I started off so well but it soon went downhill at age 18, the legal age for a person to take on debt.
I remember when it happened, I was in an electrical goods shop, fed up at not having a fancy stereo (the Iphone of my day folks). This stereo had flashing lights, subwoofers, the full works and I wanted it! After a chat with the salesperson I made it clear I had no money to pay the high price tag. I was told not a problem, to step into the office and see what they could do. Wow!! My stereo dream could come true by signing up to a credit agreement, something like £20 a week for 3 years. I asked family for advice, my next memory was at the Credit Union signing up for a 12% loan, it was a better deal than the shop agreement, right?
I was in ‘consumer debt’ for the next 11 years until age 29. This low-level debt didn’t cause too many struggles, I was never evicted, or had to go without eating, or had to live in a car. I suppose that’s how the gradual choke crept in, I was too busy being a normal teen and 20 something, not paying attention to boring money matters. I thought everyone has debt and it’s easy to pay back, I’d pay it back eventually with my earnings in work, yes later it will be easier just not now.
My debts got much worse when I left home to go to University, then I borrowed for ‘sensible’ things between paydays like rent, food, bills, travel to / from work and household items. This is when the debt got a lot worse but still pretty normal, no Faberge eggs or diamond encrusted watches. If I ran out of credit I just applied for more, piling it up as I went through, always paying the minimum dues and just trying to get through my degree. I have a supportive family but not anyone to help me with the mountain of costs that piled on once I had to pay rent, fees, bills, living costs on my own, no trust fund was there unfortunately.
Somewhere along the line I got the message from MoneySavingExpert that paying interest on debt is silly and I should shop around for 0% deals. I did, I moved all my borrowing to 0% credit cards. I carried on bridging the money gap with cheap debt. Each term that passed I slipped further into debt. I was jealous of all the people around me that had these things paid for them, someone topping up their bank account each time they ran out of money or the start of each month. I spent every break and weekend working, taking as many shifts as I could to pay back some of the pile gathered against my name. The hardest part was when I had to go back each semester and carrying on adding to the debt cycle all over again.
I now know everyone does not live in debt, people fall into these camps:
In debt (more debt than savings)
Cash buyers (spend what you earn, no savings)
Savers (spend what you earn and save the leftover money)
Financially Independent (money provides an income so you don’t have to work to earn)
People can move between the camps at different stages of their life, please see ***
Back to my story, 0% offers kept rolling in, the banks offered me £1000s in credit with a 0% overdraft. I got an overdraft account with 3 different banks. That kept me going, when that ran out there were plenty of 0% credit cards and my student loan was rolling in 3 times a year. Without debt someone like me could not have gone to University (unless grants were brought back), so I suppose it’s a double-edged sword.
I worked hard in my job(s) and felt I deserved to treat myself at times too. The invisible, not so obvious part of when I went shopping or out with friends, this spending was mostly on my credit card with money I didn’t have. I just wanted to keep up and thought buying these things would make me happy. The truth is real happiness can’t be bought, I just hadn’t admitted that yet. Instead it just brought more money stress, of course, don’t get me wrong, I did have a good time doing these things.
Fast forward, I graduated and had a full-time professional job but my 0% introductory rate overdrafts were expiring. I was back living with my parents and bought a 2nd hand car to get to work. I soon figured it was the same price commuting as renting a place in the city, so I signed a lease on a house share with a friend. I kept the financed car, I had become accustomed to it. I also needed a whole new professional wardrobe for the office + more outfits for all the nights out, ‘networking’ was a big part of my new job.
I think my flatmate was struggling with money too, I remember we both found it difficult to put even £5 on the electric or gas card. We didn’t speak about money, it is not the done thing, we were successful business people after all!
I was finding it increasingly difficult to find 0% deals to move my existing debt, not to mention the increasing minimum payments coming out of my pay packet. I realised I was in too deep, the car had to go, it was my only asset but it was a massive drain on my finances. I sold the car for less than I paid and got serious about paying big chunks of debt down each month, determined not to pay interest. I still was out and about spending, just not as extreme as before.
Next few years I kept renting and house sharing, I could not afford this expense but what was the alternative? Moving back with my parents was costing the same in rent as petrol or public transport, and anyway I had sold my car.
I guess it took me about 3 or 4 years to get out of the debt ‘danger zone’. Getting into debt was gradual and so was getting out of debt. I reduced it with each payday and year that passed. I didn’t keep track of exact figures.
After leaving the ‘danger zone’ I was in my late 20s and had smaller amounts of debt, small in comparison to the whoppers of my past. As well as general living costs there were holidays, trips away and fun in these later years. I couldn’t shake it, I was still in a debt cycle, not able to make it until the next payday without borrowing, always trying to pay it off but not quite making it. I was always stretching my finances to keep up with those around me. These last debts and spending habits were the hardest to shake.
I spoke to my friend who loved shopping and spending, asking how she could afford to buy things AND be an adult with a house and living costs? “Easy” she said “my rule is to only spend money I have in the bank”.
This BLEW. MY. MIND.
It makes me laugh now how I did not know this money rule until I was nearly 30. I had to stop using credit altogether, it was the only way. My house share lease was up so I had to figure out my next move. My friend agreed to keep my credit cards safe for when I needed them – I didn’t. I stopped borrowing and only spent what I had paying down the rest of my debt as each payday passed, it was an adjustment but one I had to make for my future.
Next up I found an amazing house share closer to work for less money, it even had an en suite bedroom. The person renting had taken on a massive lease and couldn’t afford to pay it all alone. It was win/win. I stayed in this house for years.
I can’t remember when I paid down my last debts. I wish it was a big moment and I could tell you how amazing it was but I honestly don’t remember. It didn’t make me feel much different, but it was a milestone and I appreciate it now looking back how much I have achieved to get to where I am now. I realise now all my nights out and trips away were good way to ignore the debts, growing up can be hard. I had to become creative with my socialising and I still do things that make me happy, surprisingly life is still fun even without all the ridiculous spending.
Eventually when I’d been in the black for a while it was a new chapter in my life, I felt more at peace without the burdens of debts. I spent 11 years in debt, that is how long it was to get back to zero from that first debt agreement. I laugh now at the some of the ridiculous choices I made over these years, but paying back debt was not funny, it was hard work. I learned a lot of lessons from those times and suppose it is why I am so interested in personal finance.
We should start talking about money it is not shameful or distasteful. The person you are trying to keep up with could have their own invisible debt burden, remember that next time you admire their house, car, clothes, trip to Dubai, Instagram pics or *insert material item here* – you get the point.
I hope this inspires you or helps you feel a bit more normal if you have debt. We all use money everyday, we can enjoy our lives without getting into debt, trust me it is possible.
*** The Money Camps ***
I mentioned people can move between the camps? Well I am again back in debt. I have no consumer debt – no credit cards, loans, overdrafts or store cards. I still have a student loan and now a mortgage, everything else I own is paid for with money I’ve already earned. I have a plan, I’ll maybe tell you about that someday.
Maybe most would not view Mortgages & Student Loans as ‘real’ debts, but believe me they are just as much of a noose, I hate debt and you should too.
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