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.

@sirlee66 I would ‘self insure’. I think a big problem is that a lot of people save without designating the funds. So you double count the money eg you have £3k in the bank and in reality £1k of that is emergency fund (for things like boiler breaking) and £2k is income replacement. However the tendency is to look at ‘savings’ and allocate it three times over :). I set myself a monthly target and set aside money each month. I use a budgeting program called Ynab to help me - other budgeting programs are available.

I got a job with a ridiculously high salary when I was only 22, I went a bit crazy and racked up credit cards/store cards/loans because I wanted the "stuff" now and knew I could afford to pay it back over a period of time.

I then got made redundant a few years later (start of recession) and ended up only being able to find a job that paid considerably less (around 75% if my previous salary).

I simply couldn't afford all the repayments and had to agree repayment plans with all my creditors. 7yrs later I'm still paying it back but I can see light at the end of the tunnel (18 months - yay!!)

I will NEVER have a loan or store card or credit card again as long as I live and if I could go back in time I'd give my 22 year old self a slap in the face !!!

No "stuff" is worth the stress I've been through and put my DH through.

Thankfully I am not in debt now, but I have been in the past. Similar to Pinkie 1982 when I was much younger.. too many store cards (they used to throw them at you), only paying off the minimum, consolidating loans, very bad money management, getting made redundant without getting a job for 10mths and then accepting a job on 1/2 the salary I had been on before. A total mess and I ended up getting to be about 20k in debt. It was one of the most stressful times in my life and I had started investigating Debt Management/bankruptcy etc. All of this despite being on a reasonable income (40k at the time).
Thankfully when I met my (now) husband, after about 18mths together he paid it all off for me (I have since paid him back the full amount). I have never been in debt since and never intend to. We have been together 11 years and apart from our mortgage have never paid for anything on a credit card - in fact up until last week neither of us even owned a credit card but we now have them for online purchases and foreign holidays but have set up full repayment out of our joint account at the end of each month.

My advice is to never buy what you can't afford (apart from your mortgage/house etc). I see soooo many people driving round in posh cars which are leased, which they wouldn't have a hope in hell paying if they lost their jobs. So much of the culture of today is to live beyond your means, buy now pay later (and get hit with an extortionate amount of interest), champagne lifestyles on beer money. Save all you can, my husband's best practice is to have a years salary saved in case of losing a job etc - incidentally I have never been able to reach this Nirvana and I'm pretty sure for most of us this is completely impossible, but at least a few months salary as a buffer saved is a good idea.

Being in debt and the stress of it was so draining. It literally took up most of my time. I had nothing to show for it, it was just really bad money management and lack of education, also the era of credit cards/store cards (80's) being thrown at you and debt being acceptable.

I never want to be in that position again.

Our house sale fell through not once, but twice but we had already committed to buy (we're in Scotland) which meant paying two mortgages, two lots council tax etc for 6 months.

I got into debt to pay for a deposit, so I was not homeless. Had left ex after we were evicted - TOTALLY his fault. So would have been on the street otherwise.

Overdraft, then credit cards. I moved out at 16, barely earned enough to pay the rent, then got rid of the abusive boyfriend and went in rent arrears. Luckily this was back in the days when the council gave tenants time to pay the arrears off rather than eviction.

Then years later DH was made redundant just after we got married, he went abroad to work and ended up with a mammoth CC bill to pay off.

In terms of saving an emergency fund, 3 or 6 months of expenses, just put the money aside in a savings account. If you think you will be tempted to use it frivolously then use an account that requires 90 days notice for withdrawals.

Dp and I were both made redundant within a month of each other. Both companies went into liquidation so there was no cash from that coming quickly. We had some savings but had been ploughing most of our extra cash into the mortgage. We were very quickly forced into borrowing money to survive.

Marrying a financially illiterate man was my mistake.

Lost my job with v good salary and it took me 4 months to find another job, which was much less pay. We would have been ok but H's idea of 'cutting back' was so far removed from the reality of our financial position. by the time I was working again we had a fairly sizeable debt. It snowballed from there. Every time I tried to talk about it he shut conversation down and carried on.
And there's nothing to show for the debt, it was a constant drip drip of stupid shit we don't need.

I know what you mean OP. (Bad) Debt is scary. And normalised by a lot of people, as if it's OK because everyone's at it with the credit cards.

I've heard that basically everyone is just 3 paydays away from being homeless or something along those lines. You lose your job, landlord kicks you out or you get behind with mortgage.. benefits take forever.. circumstances can be harsh.

Saving 10% of your income or as much as you can afford is wise. The old "rainy day fund".

I got into debt when I ended up homeless. I went from having a two steady part time jobs, college and doing fairly well for myself and could help my parents and family out.

I then ended up homeless, jobless and pregnant and although I went on to university and I've had jobs since I've never really fully 'recovered' financially speaking.

I moved out when I was 21 and met now-DH shortly after. I was excited by my new freedom and took out credit cards/catalogue account/massive overdraft. I bought clothes and electronics, went on holidays and generally acted like a tit with money I didn't have. Then the minimum payments got higher and higher, so they took up most of my wage and I'd have to put my weekly shop onto credit cards.

In 2016 I contacted Step Change and I'm now just over a year into paying off £14k, for which I have naff all to show. My credit rating is through the floor and I wish I'd never, ever applied for credit. I've well and truly learned my lesson and won't even have an overdraft in future.

Redundancy, three lots of maternity leave within 6 years, dh going back to uni to get his degree to increase his chance of a better career, not being to go back to my old job after our 2nd dc and a surprise third dc (judge away, it genuinely was a surprise!) That All knocked us financially but we’ve been very lucky and paid off debts, and now live a much more comfortable life, thanks to dh’s increased earnings. It’s nit fun being in debt, and I hated it.

We borrowed money from family to pay the deposit of on our house, booked a holiday, then fell pregnant unexpectedly so was on maternity pay. Then our fence blew down in the storms last spring and needed a secure garden for the dog. Only the fence was on credit, rest to family, and the credit has been paid off so working on the family debt. If I hadn’t fallen pregnant it would have all been paid off in a year, but then I wouldn’t have my amazing DS2!

Psychologists suggest that you get as much pleasure from anticipating purchases as you do from actually making them. So sitting on garden chairs waiting till you had saved enough to afford a sofa will give you more pleasure overall, than walking straight into a shop and buying something on credit - and you don't have the non-pleasure of having to repay debt.

Buying "things" apparently gives you less satisfaction than you might think. Even the thrill of buying a new car wears off after a few days. Buying experiences gives you more. But again the anticipation is as valuable as the memories. So decide on your next holiday early and start saving.

OP I haven't been in debt but I know the way I live is considered majorly frugal..

I'd suggest that you keep a very detailed record of what's coming in and out of your bank accounts, then decide how much you can save each month (if any).

Keep emergency funds e.g. broken boiler in an instant access account then look at tax free savings like ISAs.

I wouldn't start faffing with unemployment insurance, just save. That way the money is there if you don't lose your job and just want to invest the money! It is very sensible to factor in job loss and illness but the main message is save, save, save. And don't let all the consumer stuff tempt you. What you did with the garden chairs is what I did in my first home...except in the end we got a sofa from a freecycle type place anyway. My parents were a bit horrified but it was a sofa in perfectly good nick...and we were never home anyway working long hours so I couldn't see why a new super shiny bouncy sofa mattered.

Another hands up for stupid naive teenager.... took out a loan to help my (lowlife halfwit) then boyfriend pay for this car/rent/whatever other junk he could emotionally blackmail me in to buying. It took a while to recover after that.

The second time me and DH took out a loan after buying our first house as it needed a lot of working doing but whatever we spent on the house added to it's value. DD came along not long after so we are paying it off slowly but at a steady rate. We now live frugally and hope to be debt free by the start of 2020 at the latest.

I’m close to getting into debt, mainly because I’m spending more than I earn and buying things I think I need but probably don’t. I need to rein it in. I don’t really have any excuses.

I think a lot of people get into debt because they have more going out than going in, life can be tough, all it takes is a few weeks off work sick or having to replace the car and before you know it your in a downward spiral. It’s easy for people on the outside to judge but sometimes it’s impossible to stay out of debt.

I had horrific debt due to redundancy after redundancy and a very feckless ex partner who spent recklessly and hid a lot.

Best advice to avoid debt is simply do not spend what you don't have and save every penny you can to self insure against bad times.
If things do go wrong face it from the get go, things like being prepared to take in a lodger and cancel unnecessary bills immediately (sky, gym) also, keep on top of home maintenance, keep your boiler serviced, keep an eye on your roof and for damp. Dealing with things straight away can often stave of problems further down the line. Same goes for cars, look after them.

Friends of mine have had to pay for two family funerals in the last 4 months. They thankfully had family to help out. It's a massive outlay.

I got into debt because of my exh. I'm just out of it now. I love saving up for things. I've saved enough now to buy new curtains for my front room. Plus I spent within my budget at Christmas.

If you have a mortgage or rent you are in debt.

We ended up in a LOT of debt (about £28,000) because we took out loans and store cards/credit as we could afford them at the time, but our circumstances changed dramatically when DH lost his job, we stopped receiving tax credits and we were then asked to pay back an overpayment of tax credits and housing benefit dating back to 2012 because someone somewhere calculated it wrong (nearly £11k in total . Ended up with a CCJ because of the housing benefit overpayment

We've ended up very close to not being able to afford to put food on the table and down to our last few £ every month but the end is in sight and we will be debt free in June 2019!

What to do to avoid being in debt (from my limited experience)

• do what you are doing now which is being careful about notbtaking in debts for things you dont absolutely need
• being careful not to overstretch yourself on the mortgage (we decide it had to be manageable on one wage)
• having some money aside. At least 3 to 6 months wage, easily accessible.
• Always putting money aside each month (we put any money left at the end of the month into the saving account for example and we also have some money moved at the strat of the month as savings)
• if you know that being on one wage meansmajir issues, have some insurrance (PHI and wage protection) in place.
• and yes not spending more than what you have, budget planning (eg putting money aside throughout the year for Christmas, MOTor hols) Because I’m self employed, I also put money aside to conver any hols I take.

Which then covers most of the reasons why people end up in debt which are spending too much/money they don’t have, being made redundant and/or getting ill.

And YY abit having to replace the car for example (or a big repair for said car, the boiler etc...). When you are reliant on said car to go to work, this can be a really big issue!

Heavy drinking.

It is INSANELY expensive, more than you would ever think.

But when you are deep in the throes of alcoholism, ALL that matters is the drink.

Still working off the debt from my drinking days, but the end is in sight.

ExDP left me with nothing, so it’s just me and my dc, who has autism, working 20hours pw as struggle to find childcare to accommodate his needs. In a rental house I can just about afford but moving costs money I don’t have and dc is settled here and moving house causes much upset and unrest. Oh and ex also took 80% of the furniture, left us with a bed each and the white goods, think no sofa/dinnerware etc. Had to borrow to get back on my feet, now on top of and in control of but it’s been a ball ache to get here.