The mental physchee that gets you into debt in first place?

strawb_shortcake

I'm not in debt other than the mortgage but I'm starting to realise I have an unhealthy relationship with money. So I think the psyche works both ways, and although it's different ends of the spectrum I can see some similarities between those at either end of the spectrum.
I have nearly 6 figures in savings despite earning just a bit more than average. I'm the sole breadwinner and have a husband and 3 children. 
Out of our income I save around £600 per month (some of which is earmarked for Birthday/Christmas and holidays) 
I generally build on my buffer in my current account this but this month I've already used £100 more than I was paid (again some of that is savings so not really spent) payday is Wednesday but need to fill my car with fuel today.
But I have a real issue with spending money, I have had to spend about £400 this month on school related things some as a one off some school uniform so I know where the money has gone. I can see in the grand scheme of things that I'm doing pretty well, we joke that I'm tight fisted but I know there's more to it than that. 
But I've no idea what the answer is and more importantly it don't know how I should be. 
I've got a nice lump sum that's purely mine to do what I want with, and I'd really like a perfume that's around £200, I can easily afford it but it does cause me some anxiety thinking about buying it which just seems ridiculous.

alt80

@annabanana82 sounds like we need to trade mindsets haha. Seriously, I can see it goes both ways - what are you saving for? 6 figures sat not doing a lot is not working for you either - there's all kinds of investments you could make with that sum.

strawb_shortcake

alt80 said:

@annabanana82 sounds like we need to trade mindsets haha. Seriously, I can see it goes both ways - what are you saving for? 6 figures sat not doing a lot is not working for you either - there's all kinds of investments you could make with that sum.

Well the majority of it came from a critical illness payout following my Husband's HA last year. We've paid some off the mortgage and we have £50k set aside in case we choose to pay off the mortgage when out fixed rate ends in two years. Depending what's going on with interest rates and the economy.
So we are holding off any major decisions until we get to that point. 
We have discussed investing, but we have very different outlooks on the how. I don't think that property is the way to go being new to it already established then I can see the benefits. I certainly can't afford to maintain two houses. I think the Vanguard platform is a good idea my Husband wants individual shares of his pick, including games workshop. 
It causes almost as many arguments as trying to choose colour schemes for the house :-)
The rest of the savings are not earmarked for any thing so makes spending harder. 
Mine around £15k will pay for some work to the house, Christmas all being well a holiday next year. 
But yes we do need to figure out how to make it work better.

Exodi

I personally think it's crazy that it's now generally accepted as normal to have a car on finance, a phone on finance, laptop on finance, furniture on finance, tv on finance, etc.

I think attitudes need to change (and the ease of obtaining credit).

strawb_shortcake

Exodi said:

I personally think it's crazy that it's now generally accepted as normal to have a car on finance, a phone on finance, laptop on finance, furniture on finance, tv on finance, etc.

I think attitudes need to change (and the ease of obtaining credit).

I agree, when I first spoke to my bank about a mortgage, they asked me three times if I had unsecured debt, each time I said no. They then went on to give me a list of what might be considered unsecured det, still no.
They dis say I was the first person in a long time to have no debt that they'd seen. 
We've tried really hard to instill to the children that if you want something you need to save for it.

enthusiasticsaver

I am debt averse  as I saw as a debt counsellor for 10 years the misery it can cause and my dad drummed it in to me as a teenager that saving for things was good and anticipating income and borrowing was bad and expensive. We have had a mortgage and have had interest free credit for furniture and a few car loans over our lifetime but never paid credit card interest. 

I think the main reason people get into debt (apart from extraordinary circumstances like redundancy or sickness) is because they have bought into the advertising messages that they need this car or that gadget and they are unwilling to wait until they have saved. Instant gratification and an assumption that all things will remain the same. There are also many who have an ostrich attitude that things will all work out without people having to change their spending behaviour until they reach a crunch point. Add to that the people who measure their worth in monetary and possession terms rather than happiness,  job and life balance satisfaction. 

There is really no surprise that unsecured debt figures are high when we get constant upgrades on iPhones, other electronic gadgets and  financial education is so poor. Car finance is particularly bad when so many get sucked into paying affordable monthly payments for a car they never own and they are locked into the cycle of replacing them every three or four years. As soon as you drive it off the forecourt it depreciates. 

squirrelchops2

I am absolutely fascinated by people's attitudes to money, something my friend and I were just discussing at the weekend. 
I am rather like you annabanana82 in that I sometimes find it hard to spend money despite owning my own home outright, I have no unsecured debt, I own another rental property and have a substantial cash amount in stocks and shares and am on the verge of a receiving over 500k on some other assets I am selling.

Unlike you alt80 (and no criticism intended when i say this but I am comparing our lifestyles), I drive a 10 year old car and OH has just sold his which was 11 years old. I have no desire for the latest phone or other tech with the exception of a good sound system as I love music so we splashed out on a B &O sound system last year.  

I know my thing of not spending and being frugal comes from my childhood and seeing my Mum really poor when I was very young. I hate being cold because I remember she couldn't afford to start the fire until I got home from school and, with no central heating it would always be bitter in winter when I got in. I literally am petrified of dying in poverty but I do also recognise I need to spend a bit now and not worry so much. That said my OH did manage to shoe horn some money off me to go halves on a brand new motorhome 2 years ago as travel is a big pleasure for me.

Back to the question of if it is your mental state that drives one's attitude to money/debt I would say yes, that and often the lived experience from childhood. Our views are often formed during primary socialisation ie during childhood from our family but then secondary socialisation eg peers, friends, colleagues comes later. I was never really one for wanting to keep up with my friends and have the latest x,y or z mainly because I knew from a young age we couldn't afford it. Plus I am the type of person who likes to be individual and I genuingly don't want to be like everyone else.  It was also drummed into me to be a saver - although not well off at all, my Mum managed what she had and was never in debt. Also I get great pleasure out of saving for something I really want and just don't feel the same if it is instant gratification by putting it on a credit card.

My friend manages a food donation service for people on low incomes, the vulnerable etc. She has many volunteers but they are also generally on low household incomes yet, she always says she then finds it bewildering that they come in with a greggs, costa coffee etc and yet they are saying they are skint but have just spent £5 on takeout items. Therein lies the difference for me, even though I have no money worries I couldn't justify £3 on a takeout coffee for example! Hence yes, it is definitely mental attitude I would say. 

NB: I continued to think about this post this afternoon and the one thing financial stability has given me, more important than anything is not material goods but freedom. When I had a terrible time with work that led to me having PTSD having some financial stability meant i could have a period of not working and to get myself well. Honestly, if I had have had to have stayed in that job I don't think I would be here today so I am forever thankful for having the freedom that I do.

ceremony

@squirrelchops2 the attitude poor people have to money is explained really well in a book called Scarcity (I think the full title is Scarcity: When Having Too Little Means So Much).

Basically, it's a psychological trap. They have nothing, and they can't do the 'big things' to brighten their day so that cup of coffee or that takeaway is the only thing they have to look forward to. They might try to save for a while and then get high by a huge, unexpected bill and it wipes their savings out, sometimes throwing them into debt anyway. This happens to them so many times, for things that they feel are beyond their control, that they end up with a mentality of "£3 is nothing and I may as well spend it before its gone".
A combination of a lack of financial literacy and desperation reinforce that. If you're a young person who grew up in that environment, you might end up with a similar attitude to money when you're on a low income.

As someone who has had incomes at both ends of the spectrum (I had a great job when I was younger, then health issues took it away and I spent a long time on benefits and am only just getting back on my feet) I've found that I can empathise. At my lowest, that Costa vending machine coffee made the bus ride home bearable. Now I'm more likely to not bother "because I have a better machine at home and it's a waste of money".

RyanHello

ceremony said:

@squirrelchops2 the attitude poor people have to money is explained really well in a book called Scarcity (I think the full title is Scarcity: When Having Too Little Means So Much).

Basically, it's a psychological trap. They have nothing, and they can't do the 'big things' to brighten their day so that cup of coffee or that takeaway is the only thing they have to look forward to. They might try to save for a while and then get high by a huge, unexpected bill and it wipes their savings out, sometimes throwing them into debt anyway. This happens to them so many times, for things that they feel are beyond their control, that they end up with a mentality of "£3 is nothing and I may as well spend it before its gone".
A combination of a lack of financial literacy and desperation reinforce that. If you're a young person who grew up in that environment, you might end up with a similar attitude to money when you're on a low income.

As someone who has had incomes at both ends of the spectrum (I had a great job when I was younger, then health issues took it away and I spent a long time on benefits and am only just getting back on my feet) I've found that I can empathise. At my lowest, that Costa vending machine coffee made the bus ride home bearable. Now I'm more likely to not bother "because I have a better machine at home and it's a waste of money".

This has saved me LOADS in the long run. Machine itself cost a few hundred, but it's just like the coffee out of the shops.

RyanHello

Exodi said:

I personally think it's crazy that it's now generally accepted as normal to have a car on finance, a phone on finance, laptop on finance, furniture on finance, tv on finance, etc.

I think attitudes need to change (and the ease of obtaining credit).

I agree. Society needs to change it's way of thinking. 
Those things on finance like laptops, TVs, etc can easily be purchased if money is saved over a few months.
People want instant gratification. The sad thing about it is, if those people who use credit for everything just saved for 6 months (and keep topping it up), they could easily afford those items without paying the high interest rate.

Patience is the key to everything. Money, investments, fitness, health. 
Focus on the long term rather than the short term.