Debt

Financial management should be part of the curriculum.

When my son started university they virtually threw a credit card at him, he literally spent all his credit immediately on a holiday to Amsterdam with his mates. He had no compulsion to make repayments and so a vicious circle of debt has dogged him for years. He can get credit but at extortionate rates. He has had a lot of support from us, his parents, and more recently a very stable partner so is coming out of this nightmare. I do wonder if it’s genetic, as his father( my DH) has a similiar attitude to paying debts,( I’ve taken over complete control of our own finances and we arevnow solvent, with savings) as do some of his male cousins - they don’t want to pay upfront for things even if they have the funds there!

The awful thing is that youngsters are encouraged to get credit cards to build up their 'credit score'. I have known mortgage applications turned down because applicants don't have a credit card.

People can land up getting some credit card debt even if they're good with money.

I shudder looking back knowing that I was doing what I reasonably could - ie lodgers/overtime/sideline jobs on top of my full-time job. But I just couldn't get round all those extra expenses of being single and, if something that was a necessity came up = what else could I do? (as I had no savings - despite all that work). Didn't smoke. Holidays - what were they (ie count on one hand how many I had)?

So it's not always the fault of the person concerned - it's just a combination of being single and low-paid and they're doing everything they can to earn more/do all those economy things (cheap food/shopping around/having little paid for social life/etc) and yet can still get hit for six financially.

Looking back and I wonder how I made it through at all sometimes. I think the time it started (ie having to go into debt sometimes) was probably after I finally managed to buy a starter house on my own (in a city that's not cheap) and I went from one month to the next from £90 per month rent to £180 per month mortgage (ie doubled!!!!). Whew! I basically didn't have a penny left after covering all the housebuying costs - and it was only a couple of years after that that they shot up the interest rates and I think it was another £40 per month I had to pay as well to cover that. Lots of people would have just lost the house - but I gritted my teeth and hung on in there grimly.

So yep...I'd bought in the first place thinking "I'll have to get in a lodger to cover those extra housing costs for me" and then got in a 2nd one too when they shot up the mortgage costs. But it was still not funny trying to manage financially.

Finally got rid of the mortgage eventually - but was in the position that my salary should have gone up, but it went down. Thankfully - minus the mortgage I think I managed not to get into debt again. But - despite moving to a cheaper area on retirement to swop from a starter house to a forever home and the renovation work cost a lot more than I'd anticipated and I also had to try and cover living costs from low job pension only (as the State had nicked my State Pension off me for about the first 3 years - yep WASPI woman here). So it wasn't funny trying to cover a lot of renovation costs and subsidise my "job pension only" income for 3 years and I ran out of money trying to do both.

That was cue for knowing I still needed to swop the kitchen on the house and it was tatty and highly-inefficient and the seating I'd brought with me from a damp Victorian terrace house had to be replaced - as the damp had moved with me inside that seating. Whew - so £14,000 loan for the kitchen and two sofas bought on interest-free credit and about £18,000 in debt again!

Thankfully I cleared all that when I had the chance to and have savings now....so it sometimes really isn't the persons fault if they've landed up in debt...they've just not been paid enough in the first place, been single or had some income stolen (ie that 3 years State Pension).

Some people do struggle with financial literacy, for all sorts of reasons.
When I taught older teenagers, I gave them an imaginary million pounds and asked them how they’d spend it.
The discussion that it sparked was very illuminating. Some were quite surprised how little it was spread over a lifetime.

It must be at least 15 years ago that a friend of a dd had £30k of cc debt. Dd went to see her, since she was depressed about it. Dd found that friend had just been shopping, there were several carrier bags with the things still inside.

So dd said, let’s take all this back now, you can get refunds.

‘But I went shopping to cheer myself up!’

She eventually had to take involuntary bankruptcy, as I think it’s called.
I don’t think there were any MH issues, it was just the case that for a long time her parents had endlessly bailed her out - she’d never been made to live within her own perfectly adequate means. And TBH her DM was the type who had taught her that unless you had a flash car (and your boyfriend did!) and designer this and that, you were ‘nothing’ and the world would look down on you.

I use my credit card for pretty much everything as I appreciate the protection it gives me but it gets paid off on a monthly basis. I get John Lewis vouchers for using it and my current account pays interest so it also gives me something back which over a year can be a pretty useful amount, so win/win! Sadly I think if you are reasonably well off it's easier to save money and poorer people end up paying interest and generally getting worse deals on things, not really fair is it?

If you can pay it all off on the due date why do you need a credit card?

I too do this because it provides better safeguards in relation to refunds if you are the victim of fraud.

“The cost of living crises is all too real” credit card debt is not about the cost of living it’s about spending money you don’t have.

Remember the days when you went to see your bank manager before embarking on a big purchase?
Now, the credit card comes out.

Unfortunately it’s too easy.

I only use my credit card for online shopping, much better protection, and set up to pay the balance every month.

I use a credit card for larger purchases as you have better protection than using a debit card.
I also use it for holidays for instance checking out of a hotel saves me keeping large amounts in my current account.
I pay the balance in full each month.

If you can pay it all off on the due date why do you need a credit card?

I didn't use one for years but last year realised I was missing out on some good deals so I used it for my holiday.

I pay it off at a little over the regular monthly payments and so it is manageable debt.

My son now lives with me partly due to his credit card debt. He thinks people just give him money! He is now paying them off but it takes years. He will probably never have his own home.

People borrow money all the time- to buy cars and houses for example. It is just a way of life for many.

Welcome to the real world!

seasider

When my ex was sacked from his job we suddenly lost his decent income . We didn’t have much in savings so we used credit cards for normal living expenses intending to pay them off when he got a job . He sank into deep depression so it took a long time by which time we owed over £20,000. We broke up soon after but the cards were unfortunately all in my name and I was saddled with the debt and he just walked away . Through perseverance , a frugal lifestyle and a second job I have cleared the debt . Not all circumstances are the same .

That’s only too easy to do and also happened to us in very similar circumstances.

I’d never judge, getting into debt is easy, getting out it again very hard.

When my ex was sacked from his job we suddenly lost his decent income . We didn’t have much in savings so we used credit cards for normal living expenses intending to pay them off when he got a job . He sank into deep depression so it took a long time by which time we owed over £20,000. We broke up soon after but the cards were unfortunately all in my name and I was saddled with the debt and he just walked away . Through perseverance , a frugal lifestyle and a second job I have cleared the debt . Not all circumstances are the same .