We’re making good progress with paying off our debt – particularly this month – and this latest little achievement has got me thinking about our relationship with money and how it’s changed over the years.
From my point of view, my relationship with money seems to have changed and developed over time in three different stages.
Stage 1: My younger self recognised the value of money
When I was fresh out of college and in work for the first time aged 18, I was richer than I’ve ever been in my life. At least it feels that way. I remember going out shopping and buying a state of the art ‘Sony 3 Disc Mini Hi-fi (one of those really large stacked CD/Cassette systems) for around £350. I paid in full in CASH. My perception of money back then was that my hard earned cash was indeed hard earned and I used it to reward myself.
I was earning minimum wage at the time, I think my take home pay for a full time job was around £400 per month (yes slavery!). So I saved up the cash for this hi-fi and it only took me 2 months to do so. I took the money out of the bank and just paid for it. I was so proud of this music system and it lasted a good few years. I had monthly expenses to pay out of my hard earned wages too – I was living at home but I still had to pay my mum a small amount of board each month for her to ‘keep me’. (Don’t worry she’s lovely – she was just trying to teach me about the value of money even back then.)
I was a financially responsible young adult back in 1998, earning money, paying bills and buying my own possessions with pure hard cash. I bought what I could afford and nothing else.
Where did it all go wrong?
Stage 2: I stopped being in control of my finances
This part of my relationship with money spanned 10 years. I spent money that I didn’t have and I didn’t really pay much attention to what I was doing in all honesty. There are some
excuses reasons that I’m not too proud of along the way as to why I spent money when I couldn’t afford to do so.
1. I wanted what my peers had
I started earning more as I moved on to bigger and better jobs. I went out partying and had a blast with my friends. I began to want what they wanted such as brand name clothes and shoes. I thought nothing of going out for 3 course meals all the time and spending a small fortune on gadgets. I liked buying expensive presents for family and friends. It all seems so irrelevant now.
2. I thought spreading the cost was a great idea
Even though I was living at home I began to have less and less disposable income (as I was going out more and spending more money on clothes etc). One day I really wanted some furniture for my bedroom at home but I couldn’t afford it. So my mum let me order some stuff through her home shopping catalogue (she was never in debt – she was one of those people who used catalogues to spread the cost of Christmas shopping and paid off any balances within a few months).
The APR on any goods purchased was a whopping 32%! But back then, it was the norm. It seemed ok because I bought something I really wanted and the payments were spread so that it was affordable. Great!
3. Everyone was doing it, so why not me?
When I realised I could get this fantastic new stuff and pay for it with regular affordable payments like a lot of people that I knew, I was really happy! I added a few more purchases now and then that I really wanted but couldn’t afford. I later did away with the catalogue and added a credit card or two to my portfolio with lower interest rates – well that was sensible right?
I wasn’t a shopaholic but I was prone to impulse buying from time to time. I just wanted a few things that were beyond my limited means. If I could have told myself back then (and believed it) that I didn’t need these things I surely would have.
I racked up around £7000 of consumer debt and eventually when I met the hubby I started overpaying towards my debt because we were saving for a house and a life together (this was back when we had our own bank accounts and therefore we were sorting out our own financial affairs). I didn’t know the extent of the debt the hubby was in and vice versa.
My perception of money gradually started to change. I found out about real bills by buying a house with my hubby and everything that came with such a commitment. Buying luxury items became less important and I tried to pay down the debt a few times but every so often I’d put something on the credit card that we ‘really needed’ to pay for like a huge electric bill or a car repair. So it never ever got paid off as time went on. And you know the rest about our joint debt situation and how it increased beyond recognition – if you don’t, grab a cuppa and read Our Story.
Stage 3: I wanted to wear the pants in my relationship with money
After years of worrying about money, I realised that as a family we had to actively tackle our debts. Making minimum payments is not going to get us to where we want to be in life. The hubby and I agree that if we became debt free, we would have more opportunities to live the way that we want to. We might be able to send our daughter to university without her getting into debt and we might be able to start saving and investing in order to live out our later years comfortably.
We’re actually starting to gain control over our finances and the feeling of being trapped by debt is subsiding. In all honesty, I no longer want or need what my friends have. I can look into a shop window without feeling an urge to buy something. In fact I feel cheated if I buy a product at full price. I enjoy getting a bargain for something and I love charity shops. I don’t actually see money as something tangible – it’s just numbers to me now.
For the first time, my own personal debt (which is now on just one credit card) is at its lowest – £3645. Back in January this was over £6000. I really feel like I can finally get rid of this at last and it’s my goal to have eliminated this credit card by Christmas.
After a lot of lessons learned, I feel like I’ve come full circle and my relationship with money is beginning to work out the way I want it to.
Can you improve your relationship with money? How has it changed over the years?
- Our debt ladder
- Staying positive whilst paying off debt
- Is someone you know hiding debt?
- Telling someone about your debt feels good!