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.

OP, have a look at the Money Saving Expert forums. There are ones on debt, on saving, on budgeting - all sorts of financial topics, in a very chatty manner. They are interesting and you can pick up a lot of good advice and tips.
forums.moneysavingexpert.com

I learned more about pensions from them than I ever did from my employer!

Potplant you didn't say if you're still with him. tell me you got rid/escaped - your post is full of misery/being tied to someone who's pulling you down!

I came from a family that never seemed to have any money despite running two cars and mum and dad each having their own business. We got no financial education at all. I actually was naive enough to believe that the banks lent you money to help you and didn't even know what an APR was. I had no idea, I was as green as a cabbage. I also had no idea that credit refference agencies were a thing and somebody was tracking all the bills I skipped paying. I was doomed before I was even diagnosed bipolar.

I was diagnosed bipolar after massive impulse control issues, spending extreme amounts, addictions etc and was forced into bankruptcy in 2007. I did really well for a long time, paid my bills religiously, capped my spending. I even managed to go drug free and maintain my no debt minimal spending policy. Then my bipolar pattern/season affective disorder totally changed about 18 months ago, from its normal 20 year high-in-summer/depressed-in-winter pattern......I was in a constant mixed state and didn't even realise it. I was up and down so quickly that I often didn't even remember ordering stuff off the internet or booking holidays until days later when the money vanished out of the bank. I tried and tried to get refferals to the crisis team but was considered non-emergency and due to cutbacks my appointment was for 4 months later. I started self harming, couldn't carry the guilt of slipping up again. By the time I got to the appointment to ask for the mood stabilisers I was already in 8k of debt. It is now up to 11.5k and I know I am facing a debt relief order .

Funny thing is, I heard by accident that you can add an amendment onto your credit file that stops an automatic search and means that an actual person has to check it and approve your application for credit. If I had know that, I would have amended it with ALL the credit agencies and written " I AM BIPOLAR, DO NOT GIVE ME MONEY!" . That would have likley prevented it but there is no real programme for helping people with mental health issues deal with credit problems before they happen.

Please could I jump in with a related question... I'm intrigued by this thread as I've wondered the same as the OP before, and think I'm rather financially naive. It's really good to have some guidance like saving x months income in an ISA, and also an idea of what kinds of things to avoid.

But what I also wonder is, if circumstances (like PP saying about how they got into debt because they had to continue to pay childcare after redundancy or in case of unexpected pregnancy) force you to get say a loan, where do you actually get one from? I'd have thought banks check your income etc before giving out a loan, and so if you were just made redundant why would they give you the money? Same with credit cards - I thought you had to qualify for them by having a decent enough income in the first place? So I'm wondering... If I ever got into a situation where I just needed to get into debt temporarily via a loan or a credit card (don't have one at the moment as never saw the need), would I definitely be able to get one??

Thanks - and apologies for hijack!

fannyfelcher
That sounds really tough!

Yes to over spending mainly credit card
I have never had on thankfully.
Just try and divide all of your money up then you know what you have for each area of the your life.
Freecyle, many charity shops, local fb selling sites loads of places to get a sofa

My advice is to never buy what you can't afford (apart from your mortgage/house etc)

That's it in a nutshell. I was in debt for years due to reckless spending and can honestly say that the pleasure of knowing I'm financially secure gives me far more satisfaction than all those clothes, shoes and nights out ever did.

Avoid credit and save for what you need is my advice.

Some people simply can not afford to take measure to avoid debt. When I went to uni my first rent was £200 more than my first grant (remember them!) . My grant was short because between it being calculated and me going to uni my mother died and my dad could not afford to make up the difference. Even working I had to get a student loan and over draft just to live. When I finished uni dp was offered a PhD and I had a job offer but we needed a flat, being fresh from uni we had no savings so had to borrow a deposit and first and last months rent. We probably ended up paying back at least twice what we borrowed.
I didn't earn an enormous salary and needed to pay back my overdraft, dp was on PhD Student money (about £4500 a year- this was 16 ish year ago)so sometimes the money didn't stretch. I remember having to put a travel pass on a credit card to go to work. Dp had to put bench fees and thesis binding costs on a cc. All of these were re payed at vast expense. Being in debt is so expensive. Every time we had an unexpected move (ll selling etc)or bill it cost money we didn't have. We honestly weren't living it up, just had a low household income and no family help.

It's easy to say you should live within your means when you have the means with which to live. There were times in our past when we just didn't. Now dp earns well and we still have some (very manageable) debt. We get by fine now, and it's not because we're better at budgeting or more frugal, it's because we have enough to pay everything now.

x3 maternity leaves in 5 years!!!

All SMP.

Had savings first time, got into a little debt (CC) second ML and only went back part time so we've been chasing our tail ever since.

Transferred all CC debt onto a 30 month interest free CC and we'll pick up a serious repayment plan I go back to work.

I have expensive taste.

Honestly, simply by not having enough coming in to cover bills/expenses/childcare, and only have one income coming in as a single parent, without any family or other support.
I budget very carefully and very rarely buy anything offbudget or spend on treats. For example, I don't remember the last time I bought new clothes for me and I rarely have nights out.
It simply gets to about a week or two before pay day and I'm about to run out of electricity or groceries and so it goes on the credit card. And that way it inches up a bit every month.
I know how bad that is, but it's either that or I don't feed us.
Same with any unexpected expenses like repairs etc.
I've tried looking at ways to reduce costs and increase my income but at the moment, nothing is practical, especially as I have no savings.
So for example, I could possibly save around £50 a month by moving to a cheaper place but I dont have money for fees and deposit.
I could maybe earn a little more if I applied for a different job but I live very close to work now so the extra time/travel would wipe out the savings in additional petrol and childcare.
I also do some evening freelance stuff from home after DS is in bed. Not sure what else to do tbh.
I hate owing money.

My ex got us into debt. He secretly had gambling issue.
Wanted to buy more and more things. Took out loans upon loans expecting to pay them off when we remortgaged (when house prices were rising swftly), and then the company he shared with his brothers went busy and he took on some of that debt too.

I still feel quite bitter about it even now.

I'm more careful than ever with money but still use credit sensibly where it's beneficial.

Sometimes it's worth having spare cash in the bank with a purchase made on 0% if that leaves you with emergency funds.

It's meant that I've been able to have maternity leave off without any financial worry

Those money grabbing institutions called Universities.
They took all of my monies.
I don't mean at undergrad. level (I still technically owe them 10's of thousands for that, but I like to stick my head in the sand about that...) - in real terms, my post grad. degrees made me poor - I should have planned better for the long run...
Hey ho. Perhaps one day I'll become the Vice Chancellor of Bath Uni...

My OH has student debt of £15k and a 0 % credit card with around £1800 on and he doesn't bat an eyelid, where as I wouldn't want that for myself .

So I guess people have different ideas of debt and what's manageable or not

On paper I shouldn’t be in debt, I’m 29, living with my parents due to insane rent prices (earn to little to rent but to much for any help) and have no DC. I obviously pay rent in into bills but nothing like proper prices. I’m extremely lucky to be able to do this else I’d be fucked.

BUT I lost my job and didn’t work for a year, still needed to pay rent as my parents needed it but you can’t get any help if you’re living at home and paying rent, I still had travel costs to pay for interviews etc plus mobile phone contract I could afford when I got it, gym membership as well...food, toiletries etc all cost money I didn’t have and then HMRC informed me that they had indeed messed up my tax (despite me trying to sort it for 2+ y)for the last 6y and I owed them ALOT of money.

Basically just a serious of crap events...I’m just grateful I didn’t have proper rent/full bills etc to pay or god knows where I’d be

I made the mistake of moving to London with my ex boyfriend and neither of us could keep up with the cost of living there, despite having (poorly paid) jobs so we ended up using overdrafts and credit cards.

The only debt I have ever taken on was a mortgage. Anything else I saved for or went without.
Good financial planning is a must no matter what sort of salary you are on.
Life insurance and critical illness cover for both of you is a must as if anything happens to either of you the other is financially protected.
Have a realistic budget and stick to it. Impulse purchases can make money disappear really quickly.
Get into the habit of saving. It doesn’t matter if it is only a small amount as some savings is always better than none.
Make sure you are getting the best deals for gas and electricity. Shop around and change supplier as and when better deals come up. If you are used to paying £100 pm gas and you get a deal at £80 then stick the saved £20 straight into savings as you won’t miss it if you are used to paying £100.
Set standing orders up to savings accounts so you are not tempted to skip a months savings to buy something on impulse.

For me it was moving out of my family home due to an abusive husband. I had no choice as I wasn't able to earn enough to save for a rental deposit, fees and to furnish an entire home for myself and my children.
I got a 0% credit card and used it to pay for everything. I knew I could pay it off when the marital home sold (which it just has) but it has been a huge struggle. I have resorted to payday loans a few times as my earnings don't always cover everything.

Because MIL was a single mum bringing up her son, who then developed a disability and lost her well paid job. By the time her spending habits had caught up with the new reality she was thousands in debt. Whenever something came up that was needed it went on a credit card. Her entire income goes on paying credit card debt, so DH and I have to pick up the slack, which has ended up with us having debt of our own, which is compounded by me having to stop work to care for her. It's a giant hole that I have been living in for more than a decade and I can't see how we will ever claw our way out.

From a financially abusive relationship.

From a business failure due to recession 2008.

It’s not always down to feckless spending.

Save, if you’re able to.

MrsRhubarb you need to go to citizen's advice. you can't keep that up indefinitely and bury (all your) heads in the sand. if she's been surrendering all her income to service debt for 10 years - well, that's exactly what DMPs and bankruptcy is designed to work out. it sounds like you're all going under eventually, whether that's 2 months or another 10 years from now. utterly unsustainable!

I am not in debt because I grew up in debt and it was miserable.
In our case it was my parents bad choices and wild over spending but I can see how easily it could happen to more careful families too.

14 years ago I had a good part time job and a couple of other casual ones.
OH was working full time.
Two primary aged kids so no childcare costs.
Within a year I had a sick child, had to leave work overnight losing all my income, a very young baby with high needs (not our birth child) and my OH had been diagnosed with MS. We had the huge added costs associated with having a seriously ill child and one with SN.
We didn't have any loans or credit card debts. Imagine if we had.
We would have spiralled into unmanageable debt really quickly.

Life was harder than hard and we have never got back to our old life but thank god we didn't have debt to deal with on top

I had a severely disabled child, I had to give up a well paid job to care for him 24/7. My husband could not cope and left. A very high proportion of long term Carers are only just financially managing and are in debt. (The Joseph Rowntree Trust has looked at this) I got by due to an inheritance but would definitely have sunk otherwise.

I think the secret is to not be too afraid of having a small amount of debt on, say a credit card, but to listen to Martin Lewis's advice and pay it off IN FULL every month. If you do that you won't go far wrong.

Also make sure you get into the savings habit - even a small amount each month will build up surprisingly quickly into a nice little nest egg

I'm sure you will be absolutely fine op. The fact that you are aware of the danger of too much debt shows you are responsible and sensible.

I just want to say thank you so so much to everyone of you who has commented. I really appreciate it so much, so thank you.

The advice I keep seeing poping up is to save save save which hasn't been a priority for us as we generally spend whatever is left over at the end of the month as we've looked at it as disposable income... So that is something in going to change today and save it.

Thank you so much again. I know this will sound dramatic but I feel like I've dodged a bullet! Thank you so much for your stories and your advice!! You've really helped me.