How did we all get here?

andy40

Hi All,

I was wondering how people get into serious debt. If we can understand how we got here then it might help us stop doing those things and get out.

For myself I spent far too too much time and money trying to keep up my (mostly better paid) friends. Not splashing out frequently in a big way, but month after month spending more than I earned and making the difference with credit cards.
I find that although people are happy to talk about what they are spending, very few talk about how they save, which for the financially naive (like me, or is it stupidity) is a poor example.

Now I have had my LBM and have started to pay off those debts I find I dont have much contact with those friends. Im rather disappointed to find that if I cant keep up with their spending then we dont really have much in common.

andy

Shoe_Gal

andy40 wrote: »

Hi All,

I was wondering how people get into serious debt. If we can understand how we got here then it might help us stop doing those things and get out.

For myself I spent far too too much time and money trying to keep up my (mostly better paid) friends. Not splashing out frequently in a big way, but month after month spending more than I earned and making the difference with credit cards.
I find that although people are happy to talk about what they are spending, very few talk about how they save, which for the financially naive (like me, or is it stupidity) is a poor example.

Now I have had my LBM and have started to pay off those debts I find I dont have much contact with those friends. Im rather disappointed to find that if I cant keep up with their spending then we dont really have much in common.

andy

Good question!

I would say something along the lines of thinking that 'things' would make me happy, rather that actually working out what was missing from my life

Still haven't quite worked it out - but am just about managing to understand that 'things' and debt! - aren't the answer

1yr2go

For me it was definitely living beyond my means as a student - that was the start of it. I managed to run up £16k debts on credit cards while at univeristy and I should never have been allowed that much credit. Although saying that it was my own fault. The worst part is not having anything to show for it. Spent money on clothes, holidays, going out etc. When I graduated I had to get a loan to cover it so I could manage the repayments. I then got a graduate job in London and so moved down from Glasgow. The starting salary wasn't great so I ended up getting into more debt to subsidise my living costs incl the deposit for a flat and pratically all food shopping went on my credit card so the debts were spiralling. I then had a LBM and got a 2nd loan to cover the credit card (another £10k had built up). Over the past 5 yrs I have been lucky with pay reviews so have been able to afford the loan repayments and almost have some disposable income so that I could afford food but once again the credit card bill crept up to £7k this time! Another LBM but this time I cut the cycle by getting rid of the card. I now have three loans and no credit cards, the first of which will be paid off in March. I'm then using the snowball method to pay of the other two by July next year. Can't wait!!! I have totally learned my lesson. Once this is paid off the only debt I'll have is a mortgage.

I think if you can identify the root cause like you and I have, that's the only way we can break the cycle.

Stay motivated! and well done for breaking the cycle!

slig

Living beyond my means as a student too. Not keeping to a budget, not checking my bank balance, consolidating a CC to a loan (how stupid) then spending on the CC again, etc. I wasn't hugely reckless with money, but I spent more than I could afford. I also had the attitude 'soon I'll be working full time, and I can pay it off then'. Which has actually worked for me luckily, I have now paid almost all of it off, but it could have so easily gone the other way.

In fact, who knows where I'd be if I hadn't found this site? I probably would be slowly paying off my debts and not building up any more, but there's no way I could have paid off nearly £5k in 8 months without MSE.

Shoe_Gal

slig wrote: »

Living beyond my means as a student too. Not keeping to a budget, not checking my bank balance, consolidating a CC to a loan (how stupid) then spending on the CC again, etc. I wasn't hugely reckless with money, but I spent more than I could afford. I also had the attitude 'soon I'll be working full time, and I can pay it off then'. Which has actually worked for me luckily, I have now paid almost all of it off, but it could have so easily gone the other way.

In fact, who knows where I'd be if I hadn't found this site? I probably would be slowly paying off my debts and not building up any more, but there's no way I could have paid off nearly £5k in 8 months without MSE.

Well done you :j:j:j

andy40

Shoe_Gal wrote: »

Good question!

I would say something along the lines of thinking that 'things' would make me happy, rather that actually working out what was missing from my life

Still haven't quite worked it out - but am just about managing to understand that 'things' and debt! - aren't the answer

Yes I quiet agree, another pair of jeans or meal out was never going to make me happy.
Im still searching as well, but I know spending does not make me happy.

*Vikki*

Shoe_Gal wrote: »

Good question!

I would say something along the lines of thinking that 'things' would make me happy, rather that actually working out what was missing from my life

Still haven't quite worked it out - but am just about managing to understand that 'things' and debt! - aren't the answer

So true!

For me I think it was not waiting to see if I actually wanted something, instead just buying it there and then. Impulse buys as they are called. I realize if I just wait and think do I really want/need this most times I decide I don't want the item and consider something else, or not at all. Also a big part was buying things to keep up with the jones. Buying things to keep me happy, to which they would for a bit then I would forget the item I even bought. Then feel down for having the debt.

andy40

1yr2go wrote: »

For me it was definitely living beyond my means as a student - that was the start of it. I managed to run up £16k debts on credit cards while at univeristy and I should never have been allowed that much credit.
...

16k as a student! WOW, that is bad. As you say they should never have allowed that.
I am fortunate that when I was at uni it was before the great credit card liberalisation.
Offering so much credit to people is fine if they always behave in a rational way, and dont take on more than they can afford, but people are human and are not rational and frequently dont think long term enough.

jaynemaria

for me it was using credit cards to pay for treats for our son and things for the house and for car maintainance when I was able to work. never used to pay the full amount off but always paid more than the minimum payment and then suddenly becoming ill with a long term chronic illness and going from having my take home pay of £1200 a month on top of my OH wages to just Oh wages and £360 a month incapacity benefit,and then OH being made redundent , so income cut by three quarters.

My lesson, always live within your means

Shoe_Gal

jaynemaria wrote: »

for me it was using credit cards to pay for treats for our son and things for the house and for car maintainance when I was able to work. never used to pay the full amount off but always paid more than the minimum payment and then suddenly becoming ill with a long term chronic illness and going from having my take home pay of £1200 a month on top of my OH wages to just Oh wages and £360 a month incapacity benefit,and then OH being made redundent , so income cut by three quarters.

My lesson, always live within your means

Very true - but always soooooooooo hard to do! I just about keep my head above water with an Ok salary but have already had a redundancy scare this year :eek: and it was very sobering in terms of rash spending :rolleyes:

dizzybuff

Me it was having a child . Amazing how much you need. Then going too far into mat leave .. As a student I got into debt but the overdrafts are long paid up , just Student loans are outstanding now. One of which will probably have to be repaid next year.

I dont regret having my ds and will have more but we will be more prepared for this one . Along with remorgageing at a rubbish time loosing 560 a month to childcare ..