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

newsgroupmonkey_

Kakiste said:

I think it's a generational thing. Due to the amount of media in all our lives now, people are constantly bombarded with stuff and experiences that they 'must' have and it's really difficult for so many (including myself) to say 'no. I want it, I don't need it' or to save until they can afford it outright.

I'll add another one. I have 2 acquaintances who either have an exhorbitant amount of debt or have some kind of supplementary income that gives them an extraordinary surplus.
Neither of them has a particularly well paying job. Yes, they're one of these couples that live every single minute of their life on FB (and they both clearly have some mental health issues which at some stage or another has had a serious impact on their physical health as well as both catching Covid). Also interspersed with lots of loving posts about how much they love each other (they're both divorcees, but been together for a few years now).

They feel that the way of fixing this is to go on as many diverse holidays, trips, festivals, sporting things and so on as absolutely possible. Quite honestly, if they're not doing something at least twice a week (and often on weekdays), then they get into a proper downer and complain about how terrible their life is.

What I see is, the people around them then feel inadequate and feel like they have to try and keep up. It's a "keeping up with the Joneses" in the modern era. I have a feeling at least one of their friends is in financial difficulty trying to keep up.

fiwen30

This is very interesting thread, I’m always fascinated to hear about people’s experiences and approaches to money & finance.

I’ve only been familiar with 1 person’s debt - an ex-boyfriend - in that case, his downfall was payday loans. He had a full time job, small rented flat, very low outgoings; but paid an exorbitant amount each month trying to repay several, very high interest payday loans. They had been used for things like game consoles, or other electronics, that he just wanted to have Now, rather than saving for a couple of months and then buying outright. To him, the payday loans were very easy to obtain, instant cash, and in his mind he could ‘afford’ the minimum repayments. Trouble was, he wasn’t financially literate enough to see what an awful hole he was digging for himself, and bemoaned how skint he was because he was left with about £40 after bills and debt at the end of each month.

His mum was the same, except for her it was financing things. Her credit was so poor that she wasn’t able to take any finance out in her own name, and so nagged my ex into taking out finance agreements for mobile phones and even for her car(!), which she was meant to pay him each month, but frequently ‘forgot’.

I don’t know about mental psyche and debt, but I think much of it could be improved by proper financial education, from school age. Due to various unfortunate circumstances, I’m only learning the value of money and the importance of budgeting at the grand old age of 29. If I’m honest, it’s only by sheer dumb luck and undeserved privilege that I’m not drowning in debt. If my own mum had been taught how to properly handle money, she might have been able to teach me, and then I’d maybe have taken responsibility for my own finances long before this, and not be scraping along so close to the red each month. Shoulda, woulda, coulda, and all that.

So I think if you want to improve people becoming indebted, then it must start by properly teaching kids. We British don’t often talk about money with our closest, but I really admire people who involve their children in budgeting and saving - it’s so much better than having kids who grow up not knowing the value of money, and having to learn the hard way.

squirrelchops2

newsgroupmonkey_ said:

What I see is, the people around them then feel inadequate and feel like they have to try and keep up. It's a "keeping up with the Joneses" in the modern era. I have a feeling at least one of their friends is in financial difficulty trying to keep up.

This is another relevant part to the original post about psyche....some people want to keep up with the 'Joneses', 'peers', 'social media' whereas others don't give too figs about what other people are doing. I wonder what makes you fall into each camp? It isn't solely a modern thing where we are having advertising or so called celebs pushing the latest thing down our neck as there have always been the Hyacinth Bucket's about.

SWSEGirl

This is so interesting! My only debt at the moment is our mortgage (which is considerable!) but this is a long way from the situation I was in a few years ago. When I moved to London, I earned very little and living costs were high, I think I had around £50 per month left over after all essential bills, not including food. The reason I struggled with debt then, was that I saw it as totally pointless to try and save, it really felt futile at the time.
As soon as I started earning more and moved in with my boyfriend we went out less and I could envisage a future that I could work towards - something which was previously so far out of my reach. Now I find it much harder to spend money - even though I can afford it. 

greensalad

SWSEGirl said:

The reason I struggled with debt then, was that I saw it as totally pointless to try and save, it really felt futile at the time.

I think this is the mindset a lot of young people fall into, especially with youth unemployment so high and wages low. 

I definitely went through a period of "what's the point in trying to save if you can't see a big tangible benefit to it." Therefore you may as well enjoy life in the moment right now, instead of scrimping just to end up with a meagre amount of savings after living a boring, miserly life. 

I escaped that sort of work in my mid twenties but if I hadn't been able to, I can definitely see how "living for the weekend" type spending would've continued forever.

NaughtiusMaximus

My problems with debt started in the late 90s, culminating in me going into a DMP with total debt of 45k in the mid 00s.

In my case there were no specific extravagances such as expensive cars, holidays or clothes, rather I was living for the moment consistently spending around 20% more than I was earning for a period of around 7 years.

I also think when you're in a lot of debt, psychologically it reduces the impact of taking on more, I had the mindset of 'I'm 30k in debt anyway, what difference will an extra few hundred quid make?', which looking back seems utterly moronic.

It's actually something I'm ashamed of, my partner is the only person who knows the full extent of my debt history. 

Aside from a mortgage and a stoozing credit card balance (which is greatly exceeded by my current savings) I'm totally debt free and plan to remain so for the rest of my life.

alt80

@NaughtiusMaximus re psychologically reducing the impact of taking on more - definitely in my case. Also my leverage in business whilst not directly affecting me personally has impacted the mentality of ‘£5K/£10k, that’s nothing’.

andys15

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 have been debt free for a while now except my mortgage. I did have my car on Pcp, which I have done 3 times in the past 10 years. I decided I didn’t want to that anymore and paid of the PCP about 2 years early saving about 1200 in interest. I now own the car outright and will keep it for a long time. 

I never really saw that as debt, although it is, it was just the cost of motoring to me. How many people could spend £35k on a new car and pay for it upfront. 

In terms of mobile phones. Until you said that, I would not have considered it as finance. I know it is, but it has become norm. I wouldn’t dream of paying £900 for a phone, but it is now cleverly marketed as a contract, it feels less daunting getting a phone. When you add it all up though, you are spot on. It’s a debt and there is ultimately interest charged to you. 

It’s quite scary really how mindsets have easily changed. 

I remember when I was young, and people who had to get the TVs on the weekly I assumed were poor. That’s how a lot of society live now and it is normal. 

Is virgin media/sky debt?  I don’t think it is, as I am paying for a service, and I don’t believe you can pay in a oner. That is how I see mobile phone contracts. 

Mitzj7374

I had a friend like this, we went to Audi dealership as she wanted a friend to wait with her, whilst the car was being serviced. 

She is very wealthy, she currently drives an Audi A4 avant. We looked at one amazing car (Audi RS5 Saloon) she was very tempted to buy it then comes out and says she would much rather invest that money into another property. She owns a lovely Rolex but it’s as if she gets excited about a car then the sensible in her kicks in and thinks of deprecation and says stuff like I would enjoy it for few days then novelty would wear off and it becomes just another car. Even though she can afford to buy the car outright 25x etc.  She nearly lost her business in the early days so I think this is why she’s like this. She did have really expensive cars at start on finance it’s like she went through a phase and now she is very sensible. 

 I have another friend who is in 30K of debt and rents and wouldn’t think twice of paying on finance for a ranger rover sport. He’s attitude is “life is for living” not thinking of the consequences. 

NaughtiusMaximus

Mitzj7374 said:

I had a friend like this, we went to Audi dealership as she wanted a friend to wait with her, whilst the car was being serviced. 

She is very wealthy, she currently drives an Audi A4 avant. We looked at one amazing car (Audi RS5 Saloon) she was very tempted to buy it then comes out and says she would much rather invest that money into another property. She owns a lovely Rolex but it’s as if she gets excited about a car then the sensible in her kicks in and thinks of deprecation and says stuff like I would enjoy it for few days then novelty would wear off and it becomes just another car. Even though she can afford to buy the car outright 25x etc.  She nearly lost her business in the early days so I think this is why she’s like this. She did have really expensive cars at start on finance it’s like she went through a phase and now she is very sensible. 

 I have another friend who is in 30K of debt and rents and wouldn’t think twice of paying on finance for a ranger rover sport. He’s attitude is “life is for living” not thinking of the consequences. 

Rather counter intuitively, even if you do have the cash to buy a brand new car outright, it's usually cheaper to take out a dealer supplied finance package and then settle immediately.

The reason is dealers are paid a hefty commission for selling finance and depending on the model will offer significant discounts for cars bought on finance in the form of a deposit contribution. If you settle the finance within 14 days you won't pay a penny of interest and will keep the deposit contribution.