Extreme Overspending issues

Johnfarraway

Hi, 

I would appreciate any sort of feedback in regards to the following;

I have never been good with money from the outset, I have never valued it and have always had the YOLO attitude, that money is something evil and I won't be a prisoner to it, so ironically have spent it like a man with eight arms. 

I first got myself into trouble with credit cards and loans etc etc in about 2000, I was 22, my mum and dad had to step in to help to guarantee approx 10k with my bank, although I paid it back to them this was my first warning sign. It was nothing in particular I bought, just a complete disregard for the value of money, I would plug the gaps of my overspending with credit cards, it would get worse, I would consolidate with a loan and then start the process again always thinking I would genuinly pay it back, but it would rack up over time.

I did learn and I was shaken a little, but it happened again about 10 years later, I was overspending on hobbies and holidays and going out etc I'd put it on credit cards, loans again.

I got married a couple of years later and my wife then found out about the debt and paid my cards off, I cut them up. We then had our first child and I had a loan my wife knew about i was paying off that was coming out of the joint account, I was still spending, I extended the loan by 10 thousand, my wife found out, I absolutely had no malice in it, I just didn't think, I thought I could pay it off no problem. I had a good job earning good money, it almost split us up as you can imagine, very shameful. We didn't split we split finances and had a joint account for bills only. 
3 years later I got a once in a lifetime payment from my pension, a lot of it went on paying debts off.

2 and half years later, I had racked up approx 26 thousand pounds worth of debt, again overspending, plugging gaps, consolidating and then going again. On just holidays, some of a car and "stuff"!!!

It's an absolute shambles, and I've had enough, not to mention my wife who is currently trying to decide on her future with me after this latest debt, absolutely understandable and I don't deserve her in regards to this.

I have sold my car and bought lesser car, I have sold my bikes and have other stuff to sell. this has brought the debt down to 14500, I have nothing on credit cards anymore and have closed the three accounts, not just the empty promise of cutting them up,  and have my loan of 14500 to pay back.  I'm not in trouble paying it,  I can overpay but also need to save as we have 2 kids. I feel disgusted as it's hit me I've justified it by saying I'll pay it back and thought this was OK,  but have been taking away from our and our kids present/future.

 I'm really sick of it,  can anyone offer any advice,  or where to go as I don't want this spiral anymore. I don't think debt advice is what I need as I'm not in trouble with debt but in trouble with overspending. Is this an addiction, is it something I can fix with the right help? Any advice would be appreciated,  please non judgmental as trust me,  I have put myself in the hurt locker over the past few months thinking about this. 

Thanks for reading

Graham1982

Hi @Johnfarraway:

I have only been posting on here a couple of years and have no formal qualifications in debt/spending, only my own personal experience. I cannot say if spending money in this way is a condition or illness, I can just say that I have been there with the justification of spending and the "I can pay it back" mentality. 

The first thing I would think is that you are roughly my age in 2000 I was 16/17 so to say you are five years ahead of me would make you about 43, right?

I had the realisation about four years ago that I couldn't sustain my portfolio of debt - I could service all of my debts with minimum payments and could get loans with subprime lenders that offer rates of 40 odd percent but as you can imagine, this wasn't sensible. I was oscillating between "Oh I will never pay this circa 10k debt off, will never be able to buy a house etc, so why pay it off?" and real depression about the whole situation.

I eventually managed to get a consolidation loan with Barclays and have not got into further debt but this is now because I save. It sounds stupid or perhaps like a truism but if you can gain satisfaction from continually saving money and thereby not getting into debt as opposed to gaining satisfaction from buying things, you are onto a winner.

I now have to really think about my purchases and either only take small amounts of cash out, or only go to shops for particular reasons. For example, if I say I am going out to buy food at Aldi, I don't then buy a tig welder from the aisle full of weird and wonderful items. If I had gone out to buy said welder then there was obviously an identifiable need but if there wasn't then I don't.

The reason I asked about your age is for this reason:

Let's say you work until 65, this means you have just over 20 years to help secure your financial future for the rest of your life. Will you be able to carry on spending in this way when you are 65+? The answer is probably no.

Hope this helps a bit, sorry if it states the obvious.

Thanks
Graham

Johnfarraway

Brilliant, that makes a lot of sense and the part about saving is a great bit of advice! I've actually managed to start saving for the first time in a while and actually got a little excited when I seen my savings account balance, it wasn't a huge amount but there was definitely and small shoot of something within me getting excited so hopefully I can concentrate on this and see where it goes. 

Did you see anyone reference your spending or just do it all yourself? 

I am 43 and yes your example really rings true, its actually scary, especially with 2 kids. 

Also with your consolidated loan, did you over pay to get it over quickly or did you let it run its course and save more?

Thanks mate, you've been a great help.

Graham1982

Hi:

I did it myself as I don't think I had an issue that was that serious i.e. I knew it was a problem and wouldn't get another credit card to buy stuff when I was at the limit of another card i.e. I knew I was getting into a place I didn't want to be. Also I think a lot of my issues were as a result of putting things off i.e. not paying off a student overdraft from 2006 until 2018 due mainly to having low paying jobs, then a career and then a family but there was never enough (in my estimation) cash to start paying off debts so I didn't bother.

I am letting the loan run its course because even though I work abroad and have a good job and could pay it all off now - I think there is something to be said for going through the "pain" of paying it off.

I have been there in my younger years with parents paying (my much smaller) debts off. Indeed my parents offered to pay off my loan this time and I pay them interest free but I decided, they are retired and if they just wave a wand I will forget the lesson.

To be honest your mental health will improve greatly when you start tacking this and saving. Sit one day and work out how much interest you are paying on stuff in real terms. For example, by me not dealing with that overdraft I was paying about 6 quid a month to Barclays for having it and then when I missed payments or whatever I would get charged 12 quid a time. Now even if I round that down and say I had about two of them a month - from 2006 - 2018 is 12 years, I wasted close to 4k on an overdraft I didn't need.

It probably isn't good for you to work stuff like this out now, but this time next year you could reflect and see how much money you have deliberately saved as savings and also how much you have saved by not having debt.

kimwp

You need to get it straight in your head that credit cards and loans are a loan from your future self, your wife and your children. One that not only takes from them, but costs them more because of the interest.

No more loans, only use a credit card for the protection and ONLY when you have saved the money already. On payday, put money away for the children and for the future, then for anything you need to save up for. What is left is "all" you can spend until next payday.

kimwp

kimwp said:

You need to get it straight in your head that credit cards and loans are a loan from your future self, your wife and your children. One that not only takes from them, but costs them more because of the interest.

No more loans, only use a credit card for the protection and ONLY when you have saved the money already. On payday, put money away for the children and for the future, then for anything you need to save up for. What is left is "all" you can spend until next payday.

By straight into your head, I mean so it's part of your understanding of the world - as soon as you think about overspending, you immediately consider the cost on your children. (You've obviously had the lightbulb moment that this is the case, now you need to make sure you remember that)
It might be worth thinking of some strategies to remind yourself- their picture in your wallet, for example. And maybe get yourself excited talking about how much you are going to enable them to do by saving money for them?

theoretica

Consider anyone's lifespan.  As a child you aren't earning, but still have costs - so say 0-20 you spend, or have spent on you, a lot more than you earn.  Then from retirement age 65 or so, again you are not earning but still would like to spend.  So your earning years in the middle - you need to remind yourself you are earning for more than one year of future spending already - now and retirement.

Money management is something I see a bit like brushing teeth - good for your future, needs to be done daily (start keeping a record of *all* your spending) and once you are in a routine no more than mildly tedious with bigger checkups every few months.

TheAble

Money is a complex subject and these kind of issues are I would say psychological. There are those who struggle to stop spending, but also on the other side there are those who struggle to part with money which is also not good. One has to work to find a balance.

Johnfarraway

Thanks everyone,  really good advice.  Maybe I am over analysing thinking everything has to be counselled when actually it's is just a case of common sense and using some strategies you all mention. I have definitely had a lightbulb moment and want to continue this forward, to a certain extent,  basically I think it's about growing up at 43!!

With regards to the loan, I know graeme had said he let it run to endure the pain and learn the lesson, is this a general consensus or should I be paying the loan down as quick as possible while still trying to save as much as possible? If this is the case is there any percentages of disposables out there people use to overpay debt and save? 

Thanks again.

John

Karonher

If you are allowed to overpay it and can then t would be a good idea as long as you are still saving. As long as the extra money is not taken away from the family it is still your pain clearing it but once it's gone you can carry on saving for the future.

EssexHebridean

OK - the good news here is twofold - firstly that it seems your lightbulb is now (finally) on. Second that you've already learned the hard way that consolidation doesn't work - so hopefully you won't be tempted to go THAT route again! 

You've been thinking about the debt the wrong way - by thinking that on your current interest you can pay the debt off, "no problem" you're creating an environment of reassurance for yourself. Instead switch your thinking. if the wheels come off the bus tomorrow - you - for whatever reason - lose your income, THEN what happens? Can the debt payments be covered from the remaining income that the household will have? Regardless of whether it *could* - the other huge question here is "Should it have to be"? 

It sounds like you're sailing close to the wind with your wife on this one - and I'm going to be honest, I can understand her questioning your future together. To have behaved like this with money once is forgiveable in a lot of circumstances so long as lessons are learned, and it is a one-off. By doing it again, I imagine she' feeling that you've disregarded the trust that there should be between you - and that is far harder to overcome than any financial hits will be. 

You need to stop using ANY form of credit immediately. If you still have credit cards in your name, then you need to clear them and cancel them. Instead if a CC is needed (and it is a good idea particularly as a homeowner to have at least one) then your wife could perhaps take one out for use for section 75 protection where needed. If you're not in a position to clear cards down right now then at least remove the cards from your wallet and either give them to your wife to keep or - preferably, and definitely if she is second card holder on them anyway  - cut them up. Removing the access to credit which you have so often fallen back onto partly from habit is going to be key to you. 

On the loan - usually when we say "you need to endure the pain of clearing debt" we mean not consolidating, accepting family help to clear debts etc (ironically your wife didn't help you in the least by clearing your debts before - although I totally appreciate that her doing so was done with the best of intentions). Overpaying is great, and indeed sensible. You must already have cost yourself thousands upon thousands of pounds in interest over the years - that money is gone, but you can certainly minimise any future losses on that front!

You can do this - and hopefully your wife will see that this time you really are looking to change your mindset for the better. You can also use this as a recipe to ensure that the financial education you give your kids is solid - very much by saying "I did this, this and this, and it took a lot of putting right - so those are the things NOT to do".