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

squirrelchops2

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).

I will have a look for this book but I do fully understand it - I didn't used to and in fact as I spent a number of years as a child protection social worker and working with people in poverty I would really struggle and in fact be prejudiced in my thinking that people would in my eyes prioritise a greggs over making sure their children had a lunchbox for school. Whilst I am not saying in this scenario that is correct I do have a greater understanding now of what drives human behaviour in this arena.

alt80

squirrelchops2 said:

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.

@squirrelchops2 no worries. The way I live my life is stressful - it's one of the main reasons I'm trying to tackle my issues with mindset, deal with the level of personal debt and use leverage wisely and not as a mechanism to ever bail myself out again. I'm quite aware if I ever became less credit worthy it's game over for me. If I lost my income / ability to pay I'm not even sure I'd make it through. I'm also the only earner but am in business with staff so could operate the business on a reduced hours basis if I had to - would likely affect profits and in turn my level of income though but I feel 'safer' than someone in full time employment without this kind of option.

I had quite a different childhood to yours - parents owned a couple of pubs main one was in the middle of nowhere, affluent area. We settled there when I was 10ish. My mum and dad were always either working or at the horses, sister and I had a great time but basically feral kids looking back haha though lots of encouragement to do well. Parents were both very charismatic behind a bar and dad was a big gambler -  if it moved, rolled or had an engine he'd have a stake in it. I remember him picking my sister and I up in a vintage 1930s Rolls Royce one day - he'd won it in a bet only to lose it three weeks later so you probably get the idea. They actually lost their business and home just after I finished uni (solely due to dad's gambling) and salvaged what they could so for the last 16 years they've lived on a tiny greek island still working in the restaurant / pub trade despite dad now being in his 70s. Never been back to the uk not even to visit grandchildren, we've visited them and they always say they'll come over one day but never have. They own a little flat outright and are now fluent in spoken and written greek but have practically nothing else - corona been very hard on them sister and I had to send money. No idea if this has affected how I am with money tbh maybe, maybe not.

Sharon87

Speaking as someone who has been in some sort of debt since uni 15 years ago I think I can contribute to this topic. My only debt starting uni was my student 0% overdraft. My parents never had much money so I never had the 'best' things in life as a child. Before uni I did work a part time job and I rewarded myself with buying things I liked, but I also learned how to budget to buy clothes and things I needed. I paid all my overdraft off in uni as I worked part time, but within months of graduating and moving to London I used up my entire overdraft again. Most of this was necessity, whilst some of it was on fun things to do.

Most of my debt has been spent on unnecessary things, probably about a quarter or a third was spent on necessities due to an unreliable income and not being able to budget for the big annual spends.

My industry is all about short term contract work, and my mentality was 'I've earned a lot more money than I've ever earned in these few months, I'm going to treat myself', then I find myself unemployed for a month, then I get another job that last 3-4 months (perfectly normal in my industry). But I wasn't budgeting properly. I did have times where I fluctuated from 'save money, ebay things to make money, no spending' to 'I need this, I want that, I need a new laptop, I want to go on holiday.etc'. Having worked hard to move up my career ladder where I started earning more, I also started spending more. Instead of a £400 holiday to Rome in 2010, I saved up as well as used credit cards to spend 2k-3k on long haul holidays because I've never had the means to do that in the past. I never went anywhere long haul as a kid. I did always SAVE most of the money for holidays, but I inevitably get my credit card out when I'm there as I didn't budget/save enough. Never having had big luxuries in life a child has been a factor in wanting those things now I'm earning a decent wage.

2 years ago my debt was almost 16k - which was the highest it's been, but it was all on 0% deals. 3-4 years ago I started using YNAB to budget. First year and a half wasn't successful, but it taught me where I was spending all my money. I don't regret spending money on those 3k holidays, but I did regret spending money on eating out, takeaways and unnecessary taxis. So I stopped or reduced these things. Now 2 years later my debt is around 8.5k (all on 0%) and I have 2k in savings. I still spend on credit cards if needed - I had to buy a new laptop this year as my 5 year old laptop broke and I had already fixed it many times for the same issue. I could have used a work's laptop as I was working from home, but I need one anyway for other uses. I used £500 of my emergency fund and the rest went on a credit card at 4.9% balance transfer deal. I'm confident I can pay off debt if I ever accumulate it now - as long as I stay in work. I have a 1k emergency fund that I can use (I'm trying to get it back to £1500).

My mentality is to enjoy life sensibly. I don't feel I need for the latest phones or laptops, but I want to enjoy life. Debt doesn't stress me out because thanks to websites like this I can manage it and know how to work it to pay as little interest as possible. I would LOVE to be debt free but I don't want to make myself miserable whilst doing it. I could cancel all my entertainment/eating out and holidays and be debt free within 1.5 years, but I don't want that life. I would rather be debt free in 2-3 years whilst still enjoying things. This may mean I never own a house (especially as a single person in London!), but if that's the case then so be it, I would rather travel the world anyway!

Thrugelmir

Mitzj7374 said:

Is there more to it then mental state?

Character trait.  Marketing plays on peoples weaknesses. 

greyrainbow

Some of my debt was due to gambling - online. I would never go into a bookies, but I played online? I think the no physical money thing is a huge 'weakness' because I wouldn't part with the cash. Then when it because too much, I tried to hide it through shame but still spent as normal when no one would find out. Then I thought 'screw it' and spent because I couldn't not get out of the whole. I suffer depression and anxiety, and I just wanted to feel happy and forget about what was going on. I think when you can't fix things, it's easy to sort of rebel against it which makes it worse.

greyrainbow

Thrugelmir said:

Mitzj7374 said:

Is there more to it then mental state?

Character trait.  Marketing plays on peoples weaknesses. 

Yes, this 100%. 
Also feels like there's not much 'danger' to it to start with, for a company to get the hook in you, weather getting something on finance or spending on a CC? Like it looks easy and manageable which makes people think GREAT this is amazing - when reality can be very different.

Retireinten

I find this topic fascinating! What drives some to spend significantly more than they earn, often on what I'd consider rubbish/quick fixes (work lunches, Costalot coffee etc) knowing they will struggle to pay it off. And what drives others to hoard their cash and still feel financially vulnerable when in reality they have a healthy buffer to see them through most things. 

I'm in the latter of this category and the feeling of financially vulnerability has got worse as I've got older. That's not to say we haven't frittered our money away at times but whereas Alt80 never has enough money to spend, I never have enough to save! 

I'm mid 40s now, we have an okay household annual income (close to £100k), a paid for house (that we could downsize from and release £200-250k). A decent chunk in savings and healthy pension savings - we are on track to retire in 10 years time on a net income of £35-40k! We have some 0% debt because it works better for us financially. Logically I know we are in a good position, but all I see is the gaps we have in our savings to fund retirement and some big essential spends.  I also want to help my kids on the property ladder, so more pressure to keep saving.

My issue is planning and having that plan change for the worse. Covid has made me really nervous because it could affect the plan, but we're actually  fortunate that this hasn't affected our finances (though who knows what's round the corner). If anything we're quite a bit better off this year! 

I think we have a decent balance of saving and enjoying ourselves, I have a family so I've had to compromise on my rate of saving!  But I would love to feel more relaxed about money and the future and be able to 'roll with the punches more'.

alt80

@Retireinten I’m not much younger than you mate and I’m sat right now trying to work out how I can pay a load of credit cards off whilst saving an additional £1150/m for the balloon on my Range Rover (in addition to the £1220/m I already pay for it lol) and the best time to remo my res home to get some of the equity back into my other property I took to pay £100k of previous personal debt off. Trust me you aren’t in a financially vulnerable position! I think you probably know that tbf.

Being on here has really opened my eyes to the fact being in constant personal debt isn’t exactly normal (it’s been normal to me practically all my adult life). I can’t imagine getting to the point of paying off the mortgage on my res home before I’m post-retirement age and can’t imagine not working (own business so quite different to being employed). As I said before nothing is enough for me and I think that’s a character flaw tbh.

Mitzj7374

alt80 said:

@Retireinten I’m not much younger than you mate and I’m sat right now trying to work out how I can pay a load of credit cards off whilst saving an additional £1150/m for the balloon on my Range Rover (in addition to the £1220/m I already pay for it lol) and the best time to remo my res home to get some of the equity back into my other property I took to pay £100k of previous personal debt off. Trust me you aren’t in a financially vulnerable position! I think you probably know that tbf.

Being on here has really opened my eyes to the fact being in constant personal debt isn’t exactly normal (it’s been normal to me practically all my adult life). I can’t imagine getting to the point of paying off the mortgage on my res home before I’m post-retirement age and can’t imagine not working (own business so quite different to being employed). As I said before nothing is enough for me and I think that’s a character flaw tbh.

Do you incur your debt from going on very expensive holidays etc?

alt80

@Mitzj7374 Yeah holidays were definitely part of the reason for my card debts.