Day 28: Debt, and how I pulled myself out of it

 

Via weheartit

The worst advice I ever received?  That's easy.  It was when Natwest sold me a loan to "consolidate my debts".  Never listen to a bank salesperson, because they will lie to you or twist the truth for their own ends.  I wish I'd realised that ten years ago.

I'd got myself into a financial mess at university and in my early twenties, but by that point had managed to pay off a lot of one student overdraft and most of the sole credit card I possessed.  My Natwest graduate overdraft was large, yes, but manageable.  However, the idea of having just one loan to pay off, rather than three small piles of debt, appealed to my sense of order.  I agreed a loan of a little over £3,000.

Problem was, once I realised how easy it was to get credit, it was always too tempting to add to it. 

Maybe I'd find a new loan at a lower interest rate and take that out, of course adding a bit more to the total amount so I could buy x or y.  Maybe I'd put a flight on my credit card, promising myself I'd pay it off, but never doing any such thing.  Maybe my boiler broke, and I had no savings to speak of, so I added to the loan.  I don't even want to think about how much debt I've accrued by doing this, but would estimate the total over the years as being around £20,000.

My total debt now?  £6,000 on two 0% credit cards.  No overdraft.  No loans.  Nothing but easily managable monthly payments on which I pay no interest, and enough surplus income most months that I am building up a nice cushion in my savings account.  And all this in a year when I'm spending obscene amouns on travel because of my long distance relationship.

So how did I do it?

The Not Buying It experiment was my first step to taking back control of my finances.  For two months in autumn 2011 I bought absolutely nothing beyond the essentials (food, drink, petrol, The Guardian!).  By stepping off the consumer treadmill I was able to reassess what was important to me in terms of spending.  This impacted on me long-term: I definitely make less frivolous purchases now than I used to.  I was also able to clear £1000+ of credit card debt over the course of the two months, which just shows what a stupid amount of cash I usually spend.

I'd enjoyed the challenge of a spending ban, so last autumn saw the beginning of the £100 Challenge, in which I endeavoured to limit all spending (after bills) to £100 a week.  This time I kept it up for three months, and it was responsible for seeing off another £800 credit card.  This time, I also remembered to close the account so I couldn't rack up the debt again! 

Since completing the £100 Challenge I use a spending app on my phone to keep track of every single expense: without this, it is all too easy to 'forget' about the £2 I spend on a magazine, the £8 I spend at the corner shop, the £11 I spend in the pub, and then to wonder why I don't have any cash left.

And finally, I cannot praise the Money Saving Expert website enough.  Over the past two years I've used their advice to change pretty much every utility and service provider, bringing my monthly household expenses (including mortgage) down from £1,100 to £770 a month.  Every time I switch anything I also check Quidco to see if I can get a cashback deal: I've received £300 in cashback over the past 12 months, after changing my mobile phone, my car insurance, my house insurance and my home broadband.

I'm obviously not there yet, but the past few years really have seen me take some positive steps to reducing my debt.  I don't think I'll ever be brilliant with money - I have too much of a Veruca Salt "I need it NOW" side to me to ever stop spending - but I've got myself to a point where I no longer feel sick about checking my bank balance.  Where I'm no longer scared of bailiffs knocking at my door (this did actually happen to me once, and was one of the worst experiences of my life). 

Come September I am keen to begin a new spending challenge: if anyone has any suggestions on what it could be, I'd love to hear them.

The £100 challenge

Photo via weheartit

Last autumn I embarked on a 'Not buying it' challenge, and although in the short term it was a success (in that I didn't buy anything for the duration of the experiment), in the long term it hasn't really stuck.  Throughout October and November I was blogging about how it had changed my consumer patterns for good, but it didn't take me long to fall back into bad habits and I'm now, once again, regularly spending more than I earn each month.  On what, I'm never quite sure.  Necessities like petrol and train tickets, food and drink, yes, but also masses of clothes, CDs, DVDs, gig and theatre tickets, meals out, books, homewares... I just seem to spend and spend and at the end of each month I'm left with an empty bank account and a hefty credit card bill. 

My first job out of university was working for Waterstones, where my full time, take home pay was just over £600 a month.  Not suprisingly, I always spent every penny and more.  Eight years ago I started teaching, which put about £1100 in my bank account every month and, without fail, I would spend £1150 a month.  I now earn twice that and it depresses me that, no matter how much I make, I always live beyond my means.  I'm not helped by having debts still left over from those lower-earning days: a big chunk of my salary each month goes on paying off loans, and living alone means that there's no-one to share the mortgage and bills with.  But still, the fact remains that I am enormously priviliged to earn a good wage and I need to start being more responsible about managing my money.

So my new spending experiment is the £100 challenge.  For the next three months (with a week off for October half term) I am going to limit my spending to £100 a week.  If I can spend less that would be amazing, but I'm trying to be realistic and allow myself to still have a social life and the ocassional treat.  Some of you reading this will be thinking, "£100 a week is LOADS, what the hell?!" and they'd be right.  But compared to the £1000+ (just typing that figure makes me feel ill) I manage to waste every month, it's positively thrifty.  I'll be making a note of every penny I spend, and what I spend it on, and giving regular updates here.  Wish me luck!

Where did the summer go?

This summer has been a weird one; nothing really went to plan for me.  Instead of leaving in July to live for a year in America, I learnt I would be staying in Leicester and so I packed my bags for a holiday in South Africa instead.  The trip was a good one, but any visit to South Africa is too fraught with familial, historical, emotional and political tensions to be truly relaxing.  Since getting back to the UK a couple of weeks ago I've been busy hunting down bargains, reading a lot, spending too much time in the pub, hiking, biking, festival-going and all the other pastimes that I enjoy so much.  The summer holidays are my chance to truly be myself; to be 'Janet' instead of 'Ms Brown'.  Don't get me wrong, I (kind of, sometimes) love my job, and eight years of teaching has been a revelation, giving me the kind of respectable, steady life that my parent's probably despaired of me ever having.  BUT it does feel good to remind myself every July and August just who and what I am beneath the veneer of responsibility!

This time last year I was making a list of new school year resolutions, which I failed almost completely to keep, and beginning my 'Not buying it' experiment, which I succeeded at.  For those of you who weren't readers last year, I basically spent the whole of my first half term back at school last year buying nothing apart from the essentials (which I defined as petrol, food, drink and The Guardian newspaper).  In the spirit of 'new (school) year, new start', I'm going to be beginning a new spending experiment tomorrow, of which more later.  For now, though, I want to remind myself of the ten item 'To-do' list I compiled in July:

1. Appreciate and enjoy my city.  I haven't spent much time in Leicester this summer, but I was so glad to come home after my time in South Africa, so I guess that counts as appreciating my city?
2. Appreciate and enjoy my country.  I did intend to go on some day and overnight trips, but time and money ran out on me.  So still need to work on this one.
3. Appreciate and enjoy Europe.  See above!
4. Get my house in order.  I've finally had the shelves put up in my living room, and I love them.  Add to which a painted garden fence (a long overdue job, that one) and some new shelves in the kitchen.  There's still lots to do but I'm getting there...
5. Buy a bike and ride it.  Not yet.
6. Take more photographs.  I tried really hard to take lots of photographs when I was away, but since coming home I've been less good.  I have been carrying my camera around with me, it just never comes out of my bag!
7. Work less, live more.  I can't wait to start my nine days a fortnight timetable at work!
8. Be a better teacher.  Hmm, we shall see how this one goes in the next few weeks.
9. Get a new tattoo.  Not yet, mainly because I still don't know what I want.
10. Try and work out where to go next.  A work in progress, shall we say?

Lovely things

It's funny how the imminent need to pack up everything I own and put it into storage for a year has dampened my usually voracious consumer habits.  That being said, I have picked up a few lovely bits and pieces over the past couple of weeks.

1. I found this polka dot dress (apologies for crappy image quality, but it's the only picture I could find) in Oliver Bonas when I was in London last week.  It'll be perfect for work this summer.

2. Laura, who blogs at Make Do and Mend, very kindly offered me her copy of Wilson after I mentioned it was next on my 'to-read' list.  I love Daniel Clowes' first graphic novel, Ghost World, so am looking forward to reading this one.

3. I've actually had this Scrabble mug for a while but only just started using it.  I love it!  It's the perfect size and shape for wrapping your hands around, and fits the perfect amount of tea.

4. Ok, I have a problem, I admit it.  I need to go to polka dot rehab or something.  But these fabric earrings are so cute!  Found at a vintage fair in Leicester recently.

5. Scenes From Occupied America promises an overview of last winter's astonishing upswell of protest in the USA, which rapidly spread worldwide.  One to read before I move to the States (eek!) in July.

Not buying it: the aftermath

Two weeks after finishing my half term of buying nothing, and I am heartily sick of shopping already.  Suddenly, free time that I was using for crafting, baking or reading have become consumed with, well, consuming.  After spending the third afternoon in five days shopping, I have decided to call a halt to the whole thing. 

Two dresses, a pair of shoes, two CDs... they're all lovely but the thrill I got from purchasing them was very fleeting, replaced quickly by a little voice asking, "but do you need them?"  Actually, it was five dresses that I bought, but another feature of my borderline addiction to shopping is a tendency to buy something, then return it the next day.  Of course, laziness or circumstance sometimes means I never return the item and hence my wardrobes are full to bursting of things that have never been worn.

One thing I missed last half term was my Saturday ritual of walking into the city centre, browsing the shops, buying a couple of things and finishing with lunch, so this Saturday I was excited to return to my usual pattern.  However, instead of enjoying it I just found the whole experience pretty empty.  Like Chandler Bing at major New York landmarks, I found myself wanting to moo at the crowds mindlessly wandering from one shop to another.

It seems ridiculous to me that I made it to the age of 33 without realising the utter pointlessness of consumerism, but at least now the scales have been lifted from my eyes.  However, I work best with rules and it wouldn't be enough to control my spending to just say to myself, "oh, I won't shop so much".  So I am reinstituting not buying it, from today.  I have some slightly different rules this time though, to make it a more sustainable long-term approach.

1. No more ban on magazines, however I'm not returning to Red or Glamour.  Mollie Makes, Fat Quarter and Bitch will be allowed but magazines that exist purely to fuel consumerism are still out.
2. There are a limited number of clothes that I genuinely do need.  New bras, a new pair of jeans (my old one have holes in the thighs that are becoming obscene) and, because I just can't quit my spot habit, a polka dot dress will be allowed.
3. Bearing in mind the time of year, Christmas presents are of course allowed.
4. Anything secondhand is fine.  The local charity shops, vintage markets and secondhand bookstores can rejoice at the return of a reliable customer.
5. Buying CDs from an independent record store is fine.  Despite usually being more expensive than Amazon, I try and buy from the wonderful Rockaboom in Leicester, because I would feel terrible if they ever went out of business.
6. The thing I missed most last term was my little Saturday trips to nearby towns like Stratford, Melton Mowbray and Ashbourne.  So in a contentious move, purchases out of Leicester will be allowed within reason (so no trips up the motorway to Meadowhall: that's cheating).
7. No internet shopping.  At all.
8. Craft supplies are an essential: I nearly went mad last term, not being able to buy new fabric when I saw lovely bits and pieces.

Last time around, knowing that I had the blog to report to made me much better at sticking to my rules.  This time around I don't intend to blog much about the details because I hope it will have longevity and it would become pretty boring to write about the same thing every week.  However I know my local readers (especially Leanne, who is very good at reminding me of my rules!) will be keeping a watchful eye on any purchases.  Wish me luck!

Not buying it: week # 4

The first week was easy; I enjoyed the challenge in the second week; last week I had Ofsted to worry about.  But this week I have started to struggle.  The thing is, I like shopping.  I enjoy spending a lazy afternoon wandering round the bookshops in Clarendon Park or oohing over the dresses in H&M.  I'm one of those strange people who actually enjoys supermarkets and can quite happily while away hours browsing the aisles in Tesco, popping bargain clothes and kitchen implements I don't really need into my trolley.  Making it even harder is the fact that some of the clothes in the shops at the moment are so lovely.  Polka dots are everywhere this autumn and I adore polka dots.  I love cardigans and woolly jumpers and brogues and thick tights and everything else that's just hit shop floors. 

However, my self-control has surpassed anything I could have anticipated.  This afternoon I found myself at Leicester's out of town shopping centre (to return a broken vacuum cleaner, so totally allowed), and having had a shitty lesson last thing this afternoon was even toying with the idea of treating myself to something.  "Who'll know?" I thought.  After all, I live on my own so smuggling something into the house wouldn't be a problem.  I walked into Dotty P's, looked at the lovely dresses on display longingly and... walked out again.  I just couldn't do it.  Even an utterly gorgeous dress (with - what else? - polka dots) in Sainsburys couldn't tempt me.  "Three more weeks," I repeated to myself as I scurried back to the car.

A few years ago (even, perhaps, a few weeks ago) there is no way I would be able to walk away without buying something I wanted.  I was totally in thrall to the 'must have it, and must have it now' mentality that is so pervasive in modern society.  I'm frankly amazed that in the space of four weeks I have managed to reprogramme myself so effectively.  Whether it will last when the experiment, with it's clear rules, has finished is another matter.

Not buying it: day # 8

Yesterday I completed week one of seven in my experiment and so far, so good.  With rather fortuitous timing, the post on Friday yielded up my yearly bank statement, a terrifying/brilliant (delete as appropriate) new idea from my bank.  It's an A4 booklet full of charts, diagrams and lists showing where, when and how I spent my money over the past 12 months.  Well, considering in 7 of those months I spent more than I paid in, this experiment is definitely long overdue.  The thing is, I earn a good salary, certainly compared to my days as a wage slave at Waterstones when my take-home pay was just over £600 a month.  But I've always been profligate with money and have always struggled with deferring a purchase, subscribing more to the Veruca Salt school of acquisition: I want it, and I want it now.  But looking at that yearly statement I realised that some months I was happily spending upwards of £500 (so about what my entire salary was a decade ago) on travel deals, Amazon sprees, eBay bargains and endless new dresses and cardigans.  Not good.

The past week has been something of a revelation.  Walking into the supermarket this afternoon, I turned right towards groceries instead of left towards clothing and in doing so managed to finish the shopping within 15 minutes.  Every marketing email from internet retailers goes straight into the 'Trash' file, freeing up at least 10 minutes of extra work time first thing in the morning.  And instead of whiling away my evenings on Asos or the Dotty Ps website I have been baking cakes, writing to friends and crafting like mad.  Would I want to extend this experiment past 7 weeks?  Hell no, but so far I'm pleasantly surprised at how easy I am finding it.

Not buying it

I have just finished reading How To Be Free by Idler editor Will Hodgkinson and would heartily recommend this book as food for thought.  While I didn't always agree with his ideas, he certainly puts his opinions forward in an entertaining way and the book is extremely well-researched, covering philosphers and thinkers from Neitszche to de Beauvoir.  One of his central theses is that the consumer treadmill - buy stuff that adverts tells us we need, get into debt, work to pay the debt off - is damaging, that "We desire things, we are attached to things, we believe that things will make us better" but that to find happiness (or, at least, freedom) we should step off the treadmill.

Well, with a credit card debt the size of a small country's GDP and a sneaking feeling that the path to true happiness does not lie in Topshop, I've decided to try an experiment.  Loosely based on Not Buying It, a book about journalist Judith Levine's year-long abstinence from consumerism, I've decided to buy nothing this half term.  Which is to say, I will still be buying food and other essentials (the Guardian, painkillers and wine-type essentials, not my usual idea of an 'essential', which tends to be yet another dress).  But apart from that, nothing.  No books, no clothes, no CDs, no random bits of crap for my house.  Until school breaks up on October 14th I will endeavour to spend as little as possible.

Why?  Well, getting rid of some of that debt will be nice.  I'm interested to know whether I can find different ways to occupy my time, so that weekends don't revolve around a trip into town and my evenings aren't spent shopping on the internet.  And let's face it, I can hardly close my dress wardrobe (yes, I have a whole wardrobe just for dresses) and my books are beginning to spill off the shelves and onto the floor.  I don't actually need anything new.

How many times do we say to ourselves, "I need that cushion/t-shirt/CD," when we already have cushions on the sofa, many unworn t-shirts in the chest of drawers and piles of CDs that are never listened to?  We become convinced that without the item in question, our lives won't quite be complete.  That the pretty dress will make us happy forever and ever, rather than sit lonely and abandoned in the cupboard a few months later.  And of course stores collude in this.  My inbox is constantly clogged with 'Free delivery: ends soon!' or '20% off, shop now!' emails.  I subscribe to Groupon, Vouchercodes and Moneysavingexpert emails, all of which promise bargains if you buy now, without hesitating to consider whether you really need the product or service they're offering.

My 'Not Buying It' rules will be:

1. Food and drink are essentials and as such are allowed.
2. The Guardian counts as an essential but magazines do not (and anyway, most magazines only exist to point out how rubbish your life/house/wardrobe is and make you want to buy new things).
3. Replacing something that has run out (e.g. deodorant, face powder or tin foil) is allowed, stocking up on random things just because they're on special offer is not.
4. Buying birthday presents is allowed.  Not Christmas presents though (I know it's only August, but I start my Christmas shopping in January and carry on throughout the year so it's not as weird as it sounds).

I will be regularly updating on my progress.  I don't think for a minute that this will be easy: I'm a borderline shopaholic and shopping (whether it's for clothes, books, food, whatever) is one of my favourite pasttimes.  But it will certainly be interesting to find out how I manage.  Wish me luck!