How did we all get here?

meerkat2007

I started to build up debt probably in the early 80s: I was totally naive about personal finance and the implications of debt, which I see as the fundamental issue for me. Add to that a very low salary, the ability to obtain multiple credit cards, and a desire to provide the things for my mother that my father wouldn't/couldn't provide, and it was just a disaster waiting to happen.

Along the way, I went down the consolidation route, the "mortgage the house to pay the debt off" route - and I can vouch for the fact that they don't work! - and what started off with an £800 overdraft culminated in around £91k of debt, including the mortgage.

Other contributing factors were that I went off to work as an IT contractor in 1998 - the idea was to pay off my debts earlier - only to be binned off my first contract early (they got rid of a bunch of us at the same time), and to have difficulty finding contract work up to the end of 1999, so I was living off the contract earnings between contracts, when I might otherwise have used the money for paying off debts.

Then, in 2000, I was unemployed for about 7 months, when I could only really afford to be unemployed for about 3 months. By the time I found full-time permanent employment in 2000, it was on about two-thirds of what I earned while contracting, and in 2001, I ended up with a CCJ.

If I could go back in time to the moment when I signed up for the overdraft, I would slap the younger me silly before I'd let her sign the forms, and I would also be stronger and stand up to my mother and not want to surprise her with the things she wanted - most of which went west a long time ago. And I wouldn't have tried to cheer myself up with a little retail therapy that only added to the problem.

Just about the only thing that's left of all that is the debt.

Shoe_Gal

meerkat2007 wrote: »

Just about the only thing that's left of all that is the debt.

That sums it up for most of us

DPN

I must say this a pretty interesting set of replies....I am trying to check things at the moment to make sure my credit is ok, before I go to university. I am about half-way through. It seems the 'live within your means' path is the safest!

BeautyandtheBeast_3

University is where it all started for me!!
Then i got married and lots of stuff got put on CC, then i realised i needed to clear the CC so i consolidated my CC with a Loan which then escalated the problem as i kept using the cards. I also got sucked in with the ' use your card and you get X amount of loyalty points to spend in store. then i got divorced - cost again!! payout helped clear some CC but then i ignored a huge OD from my student days - then met current husband and decided to get a house - realised needed to clear some of the huge OD so used some savings and some CC money to reduce it by half. However taking cash out on my CC was the most stupidest thing i have ever done!!!

Nargleblast

For me it happened over a long period of time, and I was in that river in Egypt (de Nile).

1. Divorce - legal costs incurred
2. Bought another house - costs incurred
3. legal action over a year to obtain my share of marital property,costs incurred, then accepted reduced settlement on legal advice
4. New relationship - pregnancy - maternity leave - reduced income
5. Student for 3 years on less than half my previous income
6. Bank gave me student account with OD (never had one before)
7. bank gave me credit card, and I took out 2 more credit cards and began to rely on them for items of large expenditure
8. bank converted OD and credit card to Graduate Loan
9. Bank renegotiated loan on 2 occasions so I could pay off credit cards.
10. Stupid me - did not cut up credit cards but kept them just in case, course I won't need them, but they're handy in case of emergency...
11. explosion over past two or three years in costs of living - fuel, utilities, food, evrything has just shot up in price
12. usual expenses of 2 adults and 2 growing children
13. One or two extravagant purchases along the way that with hindsight I would not have made.

All in all, probably the same kind of story as a lot of people. I had my light bulb moment less than a year ago, and now just have a debit card with no OD facility with my new bank. Once the cash has gone from my current account, it's gone. I and my OH are on a joint IVA for the next 5 years or so, it's tough but we'll get there. And what is ironic? When I first left school I worked in a bank, and I used to say to myself "you won't catch me making the mistakes some of our customers make, I'll never be in debt!" Oh how the mighty are fallen!

Ames

It started when I moved out to be a student. I started my tenancy in June but didn't get my loan etc till september, so ran up a big overdraft. It didn't help that my housemates were well off and encouraged me to go for expensive meals etc.

Then I had a bipolar episode, had to leave the house and get a flat on my own. I was totally naive about the benefits and didn't realise I could get grants and interest free loans to furnish it, and got a big loan, even though I wasn't working and had had to quit uni for health reasons. It wouldn't have been too bad, but my benefits took a year to get sorted out, and I had to pay rent and bills on credit. Before I knew it I was £15k in debt with nothing to show for it except a sofa, fridge freezer and washing machine.

So bad planning, naievety, keeping up with other people... And of course not being able to tell the difference between need and want. I needed basic furniture, I didn't need brand new furniture and matching soft furnishings, pictures, ornaments etc.

kpwll

Back in 96 I thought (as a mature woman) that I would be able to manage a CC and never get into a trap. The balances were increased, more offers of cards came along, so was more debt.
Then you realise that the cash you're supposed to have for shopping, bills etc is not there because it's being used to pay for the cards.....................so more credit is used and more cash is used to pay the ever increasing monthly amounts. I hid all this from my husband until things came to a head last year. He couldn't (and still can't) understand where all the money went and why a supposedly intelligent woman could get into such a mess.
I'm on a DMP with Payplan and it's one of the best things I've ever done. I'm still ashamed of what I did but I am doing the best I can (with my family's support) to pay every penny back.
The one thing that makes me smile tho' is being told that if I don't pay properly that I won't be able to apply for any more credit for at least 6 years. I never want credit for anything again for as long as I live.
We all get there for different reasons but we are the lucky ones who get advice, support and a kick up the backside when neccessary from others on this forum.
Good luck to you all.

Ames

I know that it's my fault I'm in debt, but does anyone else think that the banks are in the wrong to some extent? I know when I started to struggle, they put up the balances to absorb their charges, which seems wrong to me. And on here I've read countless times of massive interest rate hikes at the first whiff of trouble. Not to mention bullying into consolidation loans etc. Surely they should be more responsible too?

kpwll

I do think there are 2 sides, irresposible borrowing AND irresponsible lending. Before anyone thinks I am making an excuse I know I wasn't forced into accepting and spending what was offered and it was my fault that I did.
I owe my thanks to M&S who (before I missed any payments) declined me a card due to being over-extended, at least that was 1 extra debt that I didn't have.

Lois_and_CK

andy40 wrote: »

I was wondering how people get into serious debt.

Stupidity, mainly!

I started off by buying a house that was way out of my league at the time when mortgage companies were our bestest friends. Fancy a nice new kitchen to go with your new home? No problem, here's a secured loan for you - that sort of thing.

Credit card companies were also my bestest friend. Holidays, clothes, furniture for the house; all went on credit cards.

It was all manageable until last year when the credit crunch started. In the space of a couple of months my mortgage shot up, as did petrol prices, gas, electric and food prices.

Then I used credit cards to pay bills and for food - I even used credit cards to make my mortgage payments for some months. Of course then it wasn't manageable anymore and it spiralled out of control.

The worse point - swiftly followed by a LBM - was paying for £4 worth of petrol using 10ps and 20ps so CK could get to work the next day. It was so humiliating.

So my debts are half greed + half bills. Result = Huge life lesson learnt!