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.

join up to Martin Lewes Money expert. Unforeseen things do happen, I wanted a cycle to get to work I didnt drive, too small ammount for a loan, bank gave me a credit card, used for esenstials, then ex H stopped paying mortgage, it took me 6 moths to pay, (he lost his job did a Reggie perin and didnt tell me) that was the first time, second time, he had his own business, had lost his contract pretended to go to work each day, insured me for £100.00 and tried to kill me, got divorced found out he had foged my signature and re-mortgaged house, he dissapeared, I had CCJ and lost house through no fault of my own, would never have a credit card again. Although, ironically, if you have never had one and paid it off, you will have a lower credit rating.

YY to saving every month. But not just what is left over at the end.

Work out your budget and put your savings into an account as soon as you're paid. Do not consider this money to be available except in emergencies.

Live off the rest of the money until next payday. If this means going without a night out then do it. Forget the money you've saved unless you really need it.

We got into debt when I had to take over a year off for cancer and I only received ssp so out savings went down by £1400 a month and then even when I did go back to work a simple cold would knock me for 6. We had to use credit cards to buy simple things like our weekly shop to make sure we had enough money to pay the mortgage and other bills.

In my late teens and early 20s I was rubbish with money (due to crap example from spendthrift parents) and had overdrafts, credit card debt etc. Taught myself better financial skills with help of DH and paid it off.

I had a student loan of approx £40k which I paid off by my late 20s. I don't begrudge that too much but I am trying to make plans now to avoid my children going into debt for study.

It can be easy to fall into debt due to misfortune. However there is not sufficient financial literacy encouraged ie public education. But household incomes are stagnant, housing costs and living costs high... It's very easy to fall into debt.

The people I know with the most ridiculous debts and risky attitudes to money are high earners.

I used to work in debt advice.
A really common way people get in debt is simply to live just slightly above their means for a long period of time, paying the minimum on credit cards.
Its all managable until it suddenly isn't.
Then they get a bunch of admin fees for non payment. I've seen cases where admin fees make up the majority of someones outgoings
Often the process is excellorated by a sudden drop in income. Lost job, period of illness etc..

I'm quite splashy with money. Spending on takeaways, days out, treats for the kids etc..
But I'm always careful to keep my fixed outgoings low. If I had to do my life on benefits- I wouldn't have much to renegotiate.

I simply bought too much shit I didn't need and couldn't afford.

Sometimes I used my CC for things I really needed when I was short of money, but it was not what lead me into debt.

When I was younger I was very impulsive. I wanted it, I got it. I regret it now, but I am getting it sorted. I can't change my past and I certainly had to pay the price and learnt the hard way.

When I was younger I didn’t earn a lot. Although I was frugal, I overspent and it was hard to get out of it even when I earned more as by that point it had spiralled with all the interest. That was easier 15/20years ago though as there was so much credit.

Once I paid it off I kept a really close budget for years. I withdrew cash for the week and that was all I could spend. I was able to change from a spender to a saver.

It can be really hard if you’re on a low income though and I can absolutely understand how people can’t get out of debt.

We bought our house and it needed carpeting throughout, we had saved for that and also a bit more to spruce it up when we saved our deposit but then our doors were letting in LOADS of water and some of the windows so we got new ones on finance, after paying that for a year we got an annual statement of payments and we didn't realise how dire the interest was so we got a personal loan and cleared it (payments much more reasonable). Our boiler then blew and it was hundreds to repair so we bought a new one on credit card as was a much more sensible idea then washer died and oven and then car needed new brake discs and pads so that's another lot on top. We redid loan for higher amount and cleared all credit cards so we just have our loan payment now and owe about 5 grand now.

We also lost a pregnancy so I spent almost a grand shopping on one of my cards as it made me feel better and I didn't give a shit quite frankly. Apart from that our debt was all necessary, we don't have a huge amount and it is managed easily. It's not a worry for me at all. We needed the windows, the washer, the oven and the car fixing, it wasn't an uncontrollable need to spend if that makes sense.

It's lovely to not need debt but we didn't have a choice. I gave up work after having my son as childcare was more than income and dh is on low wage so we really had no way of saving for things.
We're still on a low income and both retraining in new careers, in 3/4 years we will be in a totally different position and I imagine we will feel like we have won the lottery both being on decent salaries.

If I ever do credit cards now I find the longest interest free I can and then move it to another interest free when the time comes.

By making poor judgements in my early twenties.
Bought a load of usless shit I didn’t need, partied too much, smoked and drank too much, lost my job and paid rent and bills on credit card while still living like a mock millionaire going out every night. Ran up 20k. Companies kept offering me cards, I kept taking them until I had six.
11k left to pay off (most of that is owed to my mum because she bailed me out and paid off all the highest interest cards so I pay her back monthly - no interest)
Honestly, if you met me now you’d have no idea - I am so sensible with money and only make purchases if they are completely necessary ie food, treats for DS. hoping to be completely debt free by the big 3-0 in two years!

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 could have written this, CrashBangWallop. I was earning 30k in my very first job, aged 22, plus a nice starting bonus. It was outside London and I was renting from family so my rent was peanuts as well. I had a shitload of spare cash but I had never learned to budget and I just ended up spending it on... I don’t even know what! I’d stop off in M&S every night on my way home and just buy whatever nice foods I felt like buying, completely random (expensive) crap. If I wanted to make a ‘big’ purchase (like a new sofa, or a holiday) then I’d make a half-arsed attempt at saving for a month or two, but then I’d get impatient and just stick it on my credit card, figuring that I could easily pay it back in a few months. And I would make a dent in it, but then I’d just add more debt back on to it. When I first started earning I was really strict about saving some of my salary each month, but then the ‘spending creep’ took over and my savings soon evaporated.

One day something just clicked. I realised I had 5 grand on my credit card and I was horrified. I managed to pay it back over the course of a year or so and then managed to save another 10 grand over the following year. Unfortunately by that point I had realised that my job was making me thoroughly miserable, so I used that 10k to go back to uni and retrain.

I’m now in my dream job, but sadly I earn far, far less. The good news is that I’ve finally learned to budget! The bad news is that I’m back in debt as I had to take out a loan to cover some of my tuition fees for retraining. But I have been paying it back consistently for the past few years and it will all be gone in a year or two, at which point I can hopefully think about starting to save again (at last!)

Sometimes I think about all the money I wasted in my twenties and I feel sick. If I could go back and do it all over again I’d be so much more careful and I’d have a house by now! But it’s all life experience and at least I’ve learned some lessons from it!

@frieda909 it's scary looking back isn't it!

What we'd tell our younger selves given the chance......

When I was younger (early twenties) I was in debt because my parents lived abroad from when I was a teenager and I was left with the bills, house etc to manage from too much of a young age on a small salary. Then my then boyfriend persuaded me to take out a loan to support his failing business. I had no idea how to manage money as you normally don’t have to when you’re 16.
We then got out of debt eventually when my stepdad gave us a large lump sum to buy our house and had enough to pay off the debt.
We then had IVF which cost a lot so got back into debt, then had a year of maternity which put us further into debt, then we now have childcare costs which makes things hard. We owe about 4.5k now but will have it paid off by September and then we have no childcare costs from then either so things will be good.

I would say to avoid debt you need to educate yourself on how to manage money, saving each month for one off yearly expenses like car insurance etc to keep your monthly outgoings low and save an emergency fund of at least a few grand if you can so you can deal with most emergencies.

I watched a lot of Homes under the Hammer on maternity leave, then bought a wreck of a flat that needed gutting and doing from scratch. It took a lot more time and money that they make it seem on TV.

3 redundancies within a 5 year period with 2 of them overlapping each other was a definite trough in our lives. Then, the following 2 years having chosen to move for a new job during the 2007/8 credit crunch meant that we couldn’t sell our house (2 sets of prospective buyers couldn’t get a mortgage!).We did eventually sell after a few years in limbo but had a period of 10 mths when we were paying a mortgage and rent (with no rental income because we were selling a vacated property).

I won’t pretend that we were in danger of being homeless but we did have to flex the credit cards for bills. I’ve always been a saver (thanks to my frugal parents) but savings don’t last a long redundancy period unless you have quite a bit which we didn’t back then. That was over a decade ago. We have significant savings now and we have paid our mortgage off because I never want to endure that amount of stress again if we can help it. DH & I are employees working in highly paid industries where there is little job security especially at senior management levels. You don’t see many 50+ employees and we’re both in our late 40’s and are conscious that we’re very likely to be made redundant way before we reach state retirement age. Food for thought eh?