How did you get into debt?

[sirlee66]

I'm positing in AIBU because I think it is unreasonable to ask this.. but I really want to know so that I dont make the same mistake if I can avoid..

Please don't divulge if you don't want to - I promise I'm not being a nosey fecker!

DH and I have, so far, been ok financially. We had to work so hard to save up for our deposit and have never had any help financially from family/friends for anything. We've always scrimped and saved for everything. For example, We spent about 6 months on garden chairs in the living room because we couldn't afford a sofa. I really wanted to either go into overdraft or get one of those deals where you pay nothing for the first however many months but then pay back with interest.. so, I think, in the long run you end up paying more? We didn't do it in the end because I was worried about going into debt.

I was just wondering.. is that how it can happen? That easy? Can it be avoided and if so, how?

Debt is something I worry about because If we lost our house, We'd end up on the street.

If one of us lost our job, we'd be truly f*cked. Unless We could get into another job quick... Well I'm not sure what we'd do. We might be okay for a month or two tops because of savings but then... well is that how you get into debt?

I'm sorry I know I sound stupid – I basically just don't want to make any mistakes if I can avoid so I thought perhaps hearing other people's stories of how they got into debt might influence me into making different life decisions.

[PoorYorick]

While there are those who just buy too much shit that they don't need, in a great many cases it's to do with illness, injury and job loss.

[RocknRolla]

I got into debt when I was my made redundant. Still had to pay for nursery as was looking for employment and didn’t want to lose DD space. Also got into debt when my dad died as had to pay for his funeral.

[rabbit12345]

The fact is you can be as careful as you can and still end up in debt. Let’s face it if you have a mortgage, you have debt so it depends on what you mean? Do you mean unmanageable debt? Surely you know why people end up in debt? Is this a stealth boast on how good you are at managing money?

[HelloSunshine11]

I haven't been in debt for a while but when I was, it was because I was having a really nice time going out a lot and buying clothes and doing fun things when I didn't earn very much. I was young and stupid and wouldn't do it now, though I do still have tendencies to want to live beyond my means. However, now I have a mortgage and a child and the implications from me doing that are too significant.

We don't use credit really. If we can't afford it, we don't do it. That extends to holidays, cars, renovations etc - all the things most people would use credit for.

[pinkie1982]

I was a naïve teen - store cards, overdraft then a loan to pay off and so on and so on. Ended up owing £20k at the age of 22 with nothing to show for it and have been on a Debt Management Plan ever since. I am mid 30's now and have paid off £13k of that original figure - but I am excellent at budgeting now!...oh the benefit of hindsight

[reetgood]

I graduated with a £2k overdraft in 2004, then lived in London and never earned over £15k with insecure/freelance income.The debt stuck around for 10 years.

Moving back up north, living with partner and income stabilising plus discovering a budgeting program I could work with meant I paid it back. It took me a year.

It was never about living beyond means for me, more about not having enough means.

Job loss would be a risk in your position. I would suggest an income replacement fund might help you feel more secure - 6 months might be a good target to aim for

[sirlee66]

@rabbit12345 Is this a stealth boast on how good you are at managing money

Oh no, not at all. We are both quite young and naive when it comes to money and we are both just doing the best be can as it's the first time we've gone out and done it on our own.. so to speak.

I'm just really worried that I'm going to make mistakes with money without realising and it would be my fault we lost the house. It genuinely terrifies me because it's all we have! I've never been good with money. DH is better at it than me but sometimes it's like the blind leading the blind!

[Thesmallthings]

By making poor judgments,esp when in a bad situation all ready.

My main debt was from having left abusive dh with nothing. The council gave me a flat for me and mybtwo boys. I tried to get a grant from the council to help as we had NOTHING.but apperently didn't meet the requirements for a hardship loan soni got a 1500 over draft from the bank and havnt been able to get out of it since.

[Chienrouge]

Because we spent more money than we earned.

[swingofthings]

Firstly, they say that ideally, you should always have 3 months worth of income to deal with unexpected issues (illness, loss of jobs). I think in reality, few families do this. If you can though, that certainly is the way to reduce the chances of being in debt.

You then need to weigh the risk of losing your income. What are the risk that either of you would and if so, how quickly ie. anyone can be sacked without reason if under 2 years of service, so if that's the case for both of you, you are in a more vulnerable position. If over 2 years, you would have to be made redundant (unless sacked for gross misconduct, so make sure to avoid this too!). The longer within the company, the higher the redundancy and the less risk of debts.

You also need to consider illnesses/accidents and what you would be covered under your contracts.

You need to decide whether it would be worth taking insurance to protect your mortgage payment in the case of losing your job, but then need to decide whether it's worth paying the premium rather than just putting the money aside.

Finally, you need to accept that getting into debt doesn't mean the end of your financial stability if only temporary and you have means to increase your income/lower your outgoing. Just make sure you keep on track and don't let temptation guide you to take loans to pay for things that are not essential.

[Babyroobs]

The only time we really got into debt with credit cards and things like that was when I was on maternity leave and on a greatly reduced income.

[Thesmallthings]

Why the bank gave it to me fuck knows and not how i didn't qualify for a hardship loan I don't know.

[InDubiousBattle]

I went to university.

That was the first debt in any case.

[SavageBeauty73]

Divorce. Becoming a single parent with NO financial support from my ex. Living in London. It's all manageable but I have no savings and I'd be in a very vulnerable position if I lost my job.

[sirlee66]

@reetgood I would suggest an income replacement fund might help you feel more secure - 6 months might be a good target to aim for

Thank you! Would this just be putting away a bit of money each month into a savings account and then only using it if one of us were to lose our job? or Is there an actual like, insurance type company you can use?

Thanks so much again

[ToastyFingers]

We live frugally day-to-day. All our furniture is second hand, DH and I cycle to avoid using the car, meals are made cheaply and we don't have sky or anything similar.

But I'm mentally ill and a compulsive shopper. I buy children's clothes mainly although it can vary depending on my mood.

This, combined both a string of bad luck (car died, had to move, fridge and Hoover packed in) means we're about 2k in debt, we're managing, but I will be so good to get it paid off.

[Littlepond]

Lived in a leasehold property and hit with a 25k maintenance bill.

[sirlee66]

@swingofthings Thank you so much

[Caulk]

Earning a very low salary for a long time and needing to take out a loan to pay rent.

[rabbit12345]

@sirlee66

I apologise, it is just you have raised most of the points in your post. If losing the house is your concern would it be a good idea to set up ISA savings accounts “just in case” also life insurance and some insurances to cover work lost through illness maybe? All you can do is prepare for all eventualities. It already sounds like you are being as cautious as you can be.

FWIW my business has just folded and I am now facing bankruptcy despite having little personal debt “although sole trader so no difference really and not going ltd was a mistake” to be honest when you get to this low point, the house is not even in my top 3 of worries.

[gingerbreadmam]

I moved out at 18 which is when I first ever borrowed a significant amount of money.

Paid that off no problem then borrowed money to buy a car. Then it kind of just escalated.

I've had bad teachers though. My parents started out very young and have had to rely on debt to get by sometimes so I've never seen a problem with having it.

However a couple of years ago my son was stillborn and the debt became a problem because having a reduced income at a time I didn't think I would I just couldn't pay everything. I took out a DMP and finally feel like I have a fresh start.

I will make sure my kids have some sort of savings and educate them better should I be fortunate enough to have them

[quitecontrary123]

I'd probably say having babies. We had paid off student loan, overdraft etc. With our first child we were able to save in preparation for everything we needed, maternity leave etc. Second child came along quite soon after I had returned to work. I had returned part time, we were paying childcare which we had to continue to do throughout mat leave to retain our child's place. We hadn't been able to save anywhere near as much but we're determined our children would have the same experience, starting nursery at the same age etc. Slowly but surely we are managing to chip away at the debt. It's a cliche but when I look at quickly my children have grown up I don't regret it at all.

[Tink2007]

I was a stupid and very naive teenager who thought it was cool to put everything on credit cards 🙄🙄

[Ratonastick]

Like a poster above, I was made redundant and it took me 5 months to find another job then a month before my first pay cheque. I had a 3 month savings cushion and was on 6 months contractual notice in lieu so should have been fine. Problem was, the company went bust before I was paid and I got about £600 statutory redundancy after a 2 month wait only. As a single parent, I had to keep DS in childcare to keep the place as I needed it to get back into work. Basically it was a shitstorm of everything that could go wrong at once. It took about 4 years to clear my way out of it.