I hate being in this situation, having no safety net, and what I really crave is financial security. By that I mean, covering my bills in the month, having enough in the bank growing for the future, having a nest egg of savings for more immediate use, and having enough left over that I can go on the holidays I want and buy the pretty things when I fall in love with them.
I've been trying to scrabble out of this money pit for years, but somehow I just end up back where I started, or even deeper in the mire. I've still got my student overdraft but it ran out of it's interest free period a couple of years ago. I have 4 different credit cards. Well, technically I have 5, but one's empty and has been given to my friend for safe-keeping. 2 of the remaining 4 are just carrying balance transfers - 1 interest free at some long distant point, but never fully paid off, and 1 big one that's currently interest free for another 12 months or so. And 2 credit cards for day to day use with balances of a couple of hundred each.
On top of that I have a bank loan to pay for my car (my old one got destroyed in the floods a couple of years ago) which will still be going for another 18 months.
I have probably paid off those credit cards about 3 times over, with various windfalls of money, but each time they're emptied, they just climb right back to where they were. The only good news in this whole sorry tale is that my dad paid off the remainder of my student loan a couple of years ago, so at least that's one less burden.
I feel sick though when I look at the mess I've got myself in and the amount that I owe. Don't get me wrong, I'm perfectly able to cover the repayments I make, but I'm like a hamster stuck in its exercise wheel - whilst I'm running away on the treadmill of life, I'm not actually going forwards. Every time I make a plan to pay off the debt I get overwhelmed by how long it will take, even if I scrimp and save every last penny I have.
What makes me feel a bit sicker is that over the years my Dad has given me lump sums of money to help me out and I've just burned through them and they've gone. What a goddamn waste. And I look at what I spend it on - I am the ultimate consumer machine. I buy stuff I do not need, for a multitude of reasons but none of them the right ones. I've been losing weight recently, and as I weed out the clothes from my wardrobe that are now too big, I'm horrified at how many either still have the tags on them and have never been worn, or have only been worn once or twice. And my wardrobe is still full to bursting even though the pile on the floor is a couple of feet high.
In another example of wanton wastefulness, I bought a new laptop at Christmas. Why? Because my old computer was broken? Because it couldn't do something I needed it to? Not really. I persuaded myself that that was the case, but truthfully it's fine - a bit old, and a bit slow by current standards, but nothing worse than that. Yet another amazing waste of my money. And I bought in on 6 month interest free credit, which means I've got to pay for it sometime at the end of this month. Nearly £600 worth.
So here I am, wading through the bog of frivolous spending I created for myself, and no idea how to stop. I earn more than I've ever earned in my life and I'm still in a mess.
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I stumbled across a website earlier in the week called The Simple Dollar. It's written by a guy, just an ordinary guy, who had a complete financial meltdown, and then dug himself out of it. He's not a financial expert (well not a qualified one as far as I know), but he's astute, intelligent and he looks at things a different way.
Reading his bio, I was frightened how close it sounded to my own - parents hard up during childhood, always just about scraping through, but being overly generous when the money did unexpectedly arise. An allowance that I didn't have to earn, although I was supposed to. And in my case, parents inherit some money just as I'm hitting adulthood - I get a new car handed to me on a platter, extra funding at uni, and every time I hit trouble and pluck up the courage to ask for help, a hand-out, usually a generous one, wings its away into my account.
On top of that, I've picked some massively unhealthy spending habits up since my teenage years. As a scholarship student at my rather expensive private secondary school, I've spent my teens being surrounded by friends who come from very wealthy families. So I quickly learned to camouflage the fact that my family don't have anything like that level of wealth.
I had a gap year where I worked, but spent everything I earned - revelling in the fact that for the first time ever I had a private income. My friends all went travelling, but I didn't because I was seemingly incapable of saving any money. I excused myself by saying that they all had savings given to them by their parents so they could afford to go, and it wasn't my fault I didn't have the money. Oh poor little me. The bank also gave me my first credit card, because I was working, and it's the start of the bad things to come.
Then I went to a uni notorious for the wealthy background of the average student. There was a running joke that it was 5 VW Golfs per student house, because all the students have nice cars. Yet again, I was surrounded by kids from more privileged backgrounds than me, and the pressure is on to keep up and conform - to never let on that you're different. By the time I left uni I'd run up over £3k on my credit card. I didn't even know how bad it was until the card got rejected one day in a shop because it was maxed, and I can still remember the heart-stopping feeling of panic when it happened. I'd also maxed my overdraft.
After uni I moved straight to London, and my snobby ways saw me taking flats I couldn't afford the rent on because I wanted nice surroundings. In the spend, spend, spend culture of London endless shopping trips and hedonistic nights out crushed my graduate salary and I got another credit card. Occasionally they'd get paid off by a bonus, but usually they just built up. My dad gave me two big lump sums in this time to help me set up in London, and then an ISA he'd set up in my name from the inheritance a couple of years previously. They were soon whittled to nothing.
After a couple of years, the charms of London faded and I came home. Although I took a big salary cut, I moved back into my Dad's and in theory my debts should have been paid back over the next year or so because my costs were so much lower. It worked for a bit, but I soon started spending all my salary every month, and then a bit more. Fast forward a couple of years and here I am - same old Sue. A little bit older and a little bit wearier, but still just as broke. I've moved jobs a couple of times since then, more than doubling my post-London salary, and I moved into a rented flat, but I'm still a disaster financially.
So back to The Simple Dollar. The author talks about how he looked at his spending and realised that none of it tied to his goals in life. As soon as he realised that and defined his goals, and then based his budget around them, his spending fell into line. So I followed his advice and defined the things that matter to me, and associated goals.
- Fun / Adventure - I want to travel and take the opportunities to do amazing things as they arise
- Family / Friends - I just want to nurture my relationships and enjoy the time I have with them
- Security - I explained that above - to be debt free, have savings, have enough money for the day to day, and own my house.
- Success - I want to be running my own business profitably and wake up in the morning excited about it.
- Health / happiness - I want to be fit and healthy, a decent weight that I feel comfortable about, happy with what I've achieved in life and not too stressed.
Nowhere in those goals does the spending of endless money on clothes, electronic gadgets, DVDs, books, stuff and other pointless things feature.
My spending doesn't make me particularly happy, unless it's on things like holidays and spending time having fun with friends, which I can't regret. The material stuff really doesn't matter so much though, and now I realise it never really has. Buying a ticket to go to the ball this weekend with my friends makes me happy, as will mountain-biking with them afterwards on Saturday - buying the new dress that's currently hanging on my wardrobe to wear hasn't, it's just made me feel guilty (it's going back by the way).
So here's the deal with the 10 Second Rule, now I've acknowledged these revelations. Whenever you buy something, stop and think for 10 seconds about whether you need this thing and how it fits into your goals. I can't count the number of times I ummmmed and ahhhed on the way to tills, not sure whether to splash and buy something. If I'd known to think about it terms of my goals, I wonder how many things I would never have bought. How much debt I'd have saved myself.
So over the next couple of months, I'm going to keep cash-tracking the way I have been, and I'm going to start using the 10 Second Rule. Let's see how much money I can save to put towards my debts next month, huh?
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