Yoyo debts

MrsTinks

This is in no way a thread to judge anyone (I'm certainly not going to be throwing rocks in a glass house!) - but I've observed a lot of people who have with the help of MSE or entirely on their own dealt with huge debts (doesn't matter how) and been debt free, only to fall back into debt a few or several years later.

I'm trying to work out in my head for my own sake how to try and avoid that... We always preach habits of frugality and penny pinching, but in reality once the debt is gone how many people fall back into debt again? I guess a few will statistically always go back into a negative spending spiral again, some will end up there due to circumstances, but could anything be done to help those debt free people STAY on the straight and narrow?

This is just my pondering and trying to work out if we could come up with something to help support those who have had a long battle and don't want to end up back here with us other than to say hi and wave

enthusiasticsaver

Sometimes I think when people are in debt and have managed to clear it there can be a tendency to relax the rules they have followed and then get back into bad spending habits and abandon the tight budgets which have helped them clear the debt.

It is a sense of over optimism in many cases that yes they got out of debt and can do the same again so it is not a problem to take out a new credit card or a loan to buy something they have gone without while clearing debt. Obviously in some cases they can but if a catastrophic life event like sickness, divorce or redundancy occurs this can be enough to tip them over again. Only answer is for people to manage their finances as if they were about to lose their job tomorrow and be able to plan for the worst to happen again.

sourcrates

I liken it a bit to alcoholism, you know it's bad for you, but you just need the one drink, but one leads to another, and so on.

My relationship with money has always been like that, to me it was a means to an end, when I was younger it was fast cars and bikes, I like to gamble occasionally too, I could go on a complete weekend bender, then not gamble again for years, but my personality is like that.

You ask what can be done, to keep people on the straight and narrow, and I don't have an answer for you, some people naturally fall back into trouble again, some never get into trouble again.

LMG1305

I think it's probably where people budget the money each month to pay the debts but then when the debt has been paid they see the money as 'spare money', rather than budgeting it to new things like emergency fund, entertainment etc. So because they don't have a budget they just spend the money that would have originally gone to debt repayments and before you know it they get caught again with needing a replacement boiler, or a job loss or something and don't have the money aside because they've not budgeted it properly. Budgeting is definitely a skill and one that doesn't just come naturally to people, I certainly never budgeted until I started reading this site.


Some people while repaying debts also learn to budget properly at the same time, which helps keep them out of debt, but others just see it as a temporary situation, pay off the debt and the cycle starts again.


I know the debt charities are stretched because of funding etc but it would be good idea if they could offer budgeting classes when people go to them for advice.

Naomim

I am one of these who cleared a big amount of debt and now find myself back here owing more than I originally did. It's like dieting. I lost a few stones of weight then stopped following the rules and now weigh what I did when I started.

For me personally, it's habit. If I'm posting on here, checking my bank account daily, keeping a note of spending - like I'd keep a food diary, I am far more in control and therefore can manage my debt better.

Sadly I don't think there is a way to stop people repeating the same mistakes over. Either it clicks or it doesn't.

EssexHebridean

To me, it comes down to a couple of things. Those who really have their "light bulb moment" when they get on here rarely seem to be the ones who "reoffend" for want of a better word. The people who arrive literally in a mess - with NO idea how to sort it, but take on board the usual things "Do your SOA" "Cut back here. here and here" "Meal Plan" "Don't waste food" "Switch to cheaper brands" without demur, and even start to come on board with ideas of their own as to how they can make savings. Those people usually stay clean - for the most part at least, and so long as circumstances don't trip them up through no fault of their own. Also those who really understand that their behaviour and even thought patterns have to change. A key thing often seems to be knuckling down and paying it off on your own too - no assistance from parents, lucky windfalls etc. Bottom line - if you scare yourself enough, you will do ANYTHING to avoid getting back into that position again (Ask me how I know! )

We generally speaking KNOW that consolidation loans are a bad idea. Used correctly, they can be great, but all too often they['re seen as a vehicle for freeing up further credit, and that way lies trouble. I'd put money on a high percentage of those we see back here again, and again, being those who consolidated previously. The more time, effort and pain that goes into paying back, the less likely people are to risk getting back there.

Naomin said:

Sadly I don't think there is a way to stop people repeating the same mistakes over. Either it clicks or it doesn't.

It might surprise people to know that those of us who've been here for a while - usually we know after your first few posts on the subject of clearing your debt, whether it's going to click, or whether we'll be seeing you back again in a few years, in a worse mess. When it DOES click though, and you can see someone really "getting it" - that's a brilliant feeling, knowing someone is turning their life - and their future - around.

MrsTinks

The statistician in me is dying to know if there is a correlation in how long it takes to become DF and your success % in remaining DF for 5/10/20 years

Occupational hazard of working with a lot of data analysis I guess

A4445

I had a serious debt and spending problem, I was given ridiculous amounts of credit and I spent everything I was given and didn't even consider how I would pay it back. Ended up bankrupt, not a pleasant time.

Fast forward many years, I'm totally dept free I work to a budget each month that's works and I save a few hundred each month. I was young and stupid and won't ever make the same mistakes again. If I cant afford it I don't buy it!

Ilona

I think a lot of people fall into a lifestyle without properly thinking it through. There are a lot of influences around to encourage spending, we are bombarded by advertising. It's not so much the product they are selling, but the expected happiness boost once the item is picked up from the shop, or delivered in a van. The anticipation that this new treat whatever it is, will greatly enhance their lives.

Advertising is programmed to appeal to anyone who has a low self esteem, or feels entitled to have anything they want. Other people are buying this car, holiday, eating out, etc, so why shouldn't I. Psychologically they want to be one of the crowd, need to keep up with their their mates.

If people are brought up in the environment of having anything they want, it is a learned condition, and the longer it goes on, the harder it is to change. Those of us brought up in the fifties and sixties in working class families mostly learnt from our families, I did, my mother ran her household on very little money.

Times change, the emphasis now is on I see it, I want it, I will have it, and if I don't have the money to pay for it, I will borrow. And so the debt spiral begins.

Once that mindset is embedded it is difficult to get out of. Some of those who do manage to pull themselves out of the mire will find a new meaning to their life, and never go back.

Changing a habit of a lifetime is hugely difficult. Like any bad habit it takes over, same with over eating, smoking, and drinking, spending is the same. People have different levels of strength of character, different personalities, there will always be winners and losers.

So, what I am trying to say is that being in debt is down to outside influences, up bringing and family life, peer pressure, the circles we move in, and our own personality. Those who follow will always follow, those who strike out on their own, will carve their own path in life.

Age might have something to do with it. I find as I get older, I am more contented with my life. I have no need to prove anything, or impress anyone. I put that down to the knowledge I have gained in my 67 years.

Mrs T, I can't answer your question, what makes people who become debt free, slip back down the ladder and do it all again? I sometimes feel frustrated when people say they have had their light bulb moment, but when you read further into their story, they haven't because they are not willing to make any changes in their budget. £30,000 in debt but won't dump the Sky TV. You can take a horse to water, blah blah.

We can but try, Mrs T, and hope that some get it.
Ilona

heartbreak_star

I have become terrified of having any debt I had to live off my credit card for a couple of weeks and I could have cried! Paid it straight off with first wage from job!

HBS x

tori.k

I know my issue up to now has been lack of foresight while paying down debt, I had tunnel vision never giving thought to the foreward planning of the unavoidable expenses still to come like when your reliable car decide's to retire and all bit's including ourselves that fall to bits as they get older. I've now accounted for this within my budget means it taking a little longer than I would like to pay off the debt, but with a little luck shouldn't get caught with my pants round my ankles again.