Relationship with money, psychology of debt

djj201

Hi!

I want to start this thread to get an understanding, possibly of my own relationship with money, and other people's.

I am on a debt free wannabe journey at the moment which I have started a blog about. In starting it I have sort of uncovered a lot about my psychology around credit cards and loans, and the feeling of 'false wealth' they give you!

I have found that in trying to get out of debt, just knowing I have credit cards and some access to credit is a massive temptation to spend as I feel sometimes it's my way of just getting what I want to buy!

I know a lot of us here have experienced this, hence the debt free wannabe threads etc, but I am interested in what you feel about credit cards and the damage they can do to your relationship with money!

Thanks

David

cryptokit

Many people here will refer to their (or the) "LBM" or light bulb moment. Its that point where you realise that this is a cycle with varying levels of severity, most of which generally enrich some companies and when you actually look at it in the cold light of day, don't do much else.

There is advice, support, humour, facts, the whole works here on this board, but none of that can change whether you choose to spend what you don't have or not.

There is a place for credit cards, but to people who haven't made the major change in thinking and lifestyle yet, they will always be the easy option and temptation. I have specifically *never* taken a 0% card despite knowing full well I could have, because I wanted the interest charge (I do have a low % rate, but its not 0) as a strong incentive to think about what I was doing. If its 0% its easy to slip back into bad habits. We decided to keep a card, mostly for emergencies, but it would have a cost associated with using it, and that would make us think is this really an emergency....

Kit

Savvy_Money

Credit cards are ok if used wisely. You have to say to yourself it is not your money but you are borrowing money that at some stage will have to be paid back. What I try to do is have a savings fund which I treat as a credit card. If I borrow from my savings I aim to pay back what I owe within a certain time frame. I even add interest but with the knowledge that it goes to me and not the bank. Any credit cards I use I pay the balance in full every month. Credit cards not used wisely are a nightmare one which I endured once and I will never go back to those dark days!

DD265

Interesting thread!

For me, the first credit card I got - well I must've been 18 - was a store card. I thought it was a discount card, got talked into it at the till, did think it was slightly odd when I didn't have to pay at the till point but thought nothing more of it. Cue missing the first repayment of the card because I just didn't understand what it was! Once I realised what the situation was, I paid it off and closed the account.

My second credit card, I got through the bank with my student account as an "emergency backup". Again I was talked into this one, but this card actually stayed with my parents for a couple of years. I don't remember the first time I used it, but at least this time I did always meet the payments.

My third credit card I took out in October 2012. This was a 0% balance transfer card to swallow up the balance from the student credit card. I'm now paying that off and although I have used the student credit card a couple of times since, it's been in a controlled way and I've not let the balance build up again.

I think that my biggest problem is actually my overdraft! Even though it is the banks money and I do know that it's the banks money, it feels like my money. It was only in January that my mindset really shifted into "I owe a reasonable sum and if I work hard and control my spending, I can get it all paid off in just over a year, then I can spend what I want as long as I can afford it".

What doesn't help is how easily it has been to get money - for example I took out a loan to consolidate my OD and CC, bad move because I just built them back up again.

I feel that in my case, if my parents had been more open about money and I'd understood the consequences of credit cards, loans and overdrafts, I would've been much more careful. It's made me very aware that when I have my own children, they will be taught early on so that they know exactly what they are getting themselves into. I also think that it is something which should be taught in schools, kind of a useful-stuff-to-know class. This is how to budget, this is how different kinds of finance work, when buying a car/going on holiday you should check xyz etc.

On the other hand, I'm glad that I made the mistakes now whilst I'm still living at home and in a position to do something about it. I think that sometimes you do need to make the mistakes yourselves to learn from them but I might've learnt quicker if I'd known!

YORKSHIRELASS

Its a really interesting question isnt it - why did you get into debt in the first place? When I see people asking for help I sometimes wonder if they have really addressed the underlying problem.

For me I grew up in a household without much spare cash. When I eventually got a good job and left home I was just desperate to have the clothes, shoes, make-up and eventually the car and flat that other people had. I didnt care about the credit I was racking up - it didnt feel like real money. I worked hard and thought I "deserved" that stuff. For a long time I didnt really see the relationship between my income and my spending.

I also didnt have a lot of confidence in my younger days and was convinced that having "stuff" somehow made me more likeable. I still struggle with this now sometimes.

Finding this site changed me and even after having my lightbulb moment it took a long time to really make changes. I am now trying really hard to pay the debts off and I am obsessed with money saving, spreadsheets and checking my online banking.

I dont think I will ever have a completely healthy attitude to money. I now feel guilty about buying anything so in a way I have gone from one extreme to the other!

My biggest worry is my kids, I dont want them to end up like me but I want them to understand money too - and I think thats quite a difficult one to balance.

idristhedragon

I totally understand this feeling. I almost feel uneasy if I have cash available and feel pressure until I spned it and theres nothing left. I am currenty looking after some family savings in my savings account and I have already "borrowed" £300 of it that I need to replace. Its not mine to spend, but because its there I feel I am able to be a bit more reckless and "play" with it. The thrill I guess.
I feel awful admitting that and like a real idiot! I earn a decent wage yet am still skint and relying on my credit card to see me through to payday which should NOT be happening. I actually just logged into this section of the forum to restart my diary with a firm plan in place to sort my financial life out once and for all!

Lagoon

OH and I seem to have had different opinions on this in the past. Credit cards have always given him that 'false wealth', and it's been a battle for him to get to the position he's in now, where he's in control of his own spending (for the most part).

I've only used my CC to get into debt when necessary. Paying it off is a thrill, and the feeling of not being in debt is, for me, worth more than anything I could buy. That feeling is enough to deter me from using my card except in emergencies.

lindsloo

Spare cash burns a hole in my pocket, I neeeeeeeed to spend it, on anything. The same goes for available credit, as I pay it off I close it down. I have a very unhealthy relationship with money and I probably always will. I grew up in a one parent family on benefits, I work 3 jobs desperate not to be like my mum.

djj201

Wow, thanks for all of your replies so far!

I find it really interesting that our childhood has such an effect on what we do when we become adults and leave home for the first time.

I know that this is when my money 'issues' first started. I came from a home where money was definitely thin on the ground, when I left I felt it was my turn to have the things that all my friends had had. Hence the credit card and overdrafts kicked in when I was a student. I definitely did not live as though I was a student, more like I had a very well paid full time job!! (this was 10 years ago now)

I'm changing my thinking now, after realising that last year I really had nowhere left to run from my debts, they were all around me!

I now love money saving, using credit cards to my advantage (Four square offers), and paying off my debts is now an achievable target.

I am getting a little obsessed I would say, and need to stop myself from going the other way completely, I don't want to stop having fun altogether.

If you want to see how I'm doing with my journey, and contribute/share any thoughts on this topic please feel free to, my blog is bythepenny.com and I want it to be a resource for people to find ideas to save money and pay off debts but not feel like they're on austerity measures!

thanks

David

idristhedragon

Hi DJJ201 I just had a look at your blog its great! I will definitely be following your journey and using your advice to help with mine! Even better you are located very near to me so it feels more familiar being in the same city!

djj201

Thanks idristhedragon, I appreciate that!

It's been a good chance for me to have a bit of an 'introspective' with my financial approach to life. It's a good incentive as well to keep my debt fighting at the forefront of my mind, and also think of new fun things I can do and share which don't cost the earth!

Check out the Pizza Hut bargain I got, I was just as excited at the amount I saved as I was going out for meal!! :rotfl: