How We Got into Debt
four into one
How Does Getting into Debt Begin
It is amazing how easy it is to get into debt. It doesn’t happen over night but once it starts happening things seem to go into a downward spiral. The descent is rapid making it difficult to turn things around.
It was the early 1970s when my husband went from being a married couple with a dog to being a family of four and a dog.
We had gone from having two incomes to having one. Now four of us, a dog and a mortgage were having to live on one wage packet.
Instead of two into two it was now four plus a dog into one and so began our decline into debt.
Just after our daughter was born in 1973 we started to look for a new house. The house we lived in had only two bedrooms and we wanted one with at least three bedrooms.
We sold our first home and bought the one that we were to live in for the next thirty years.
We had to move out of the city as we could not afford a three-bedroom house in the city. We moved to a small market town which was fifteen miles from our old house.
The houses in the small market town were cheaper than the city.
After much searching we found the house that we fell in love with at first sight.
We put down the biggest deposit we could and we got the biggest mortgage we could.
My husband managed to convince our Building Society that we could afford the repayments. I still don't know how he did this because these were the days when lending was still done responsibly.
I think that maybe it was the fact that we had put down a large deposit that got us the mortgage. The money for the deposit came from the profit on the sale of our first home.
We started off just about able to break even at this point. We had one child but within the year our second child was born so our expenses went up quite a bit.
What followed next was a series of mortgage interest increases. These increases were the start of our troubles.
When we took out our mortgage the interest rate was about 7%. The rate was to rise over time to a staggering 14% unfortunately our income did not rise to match this.
From Babies to Toddlers
In the next two years our children went from babies to toddlers. Our toddlers grew and changed fast. At this stage toddlers they need new clothes and shoes, almost continually.
Our first child was a girl and our second child was a boy. There were a few things our son could wear after his sister had grown out of them. But many things he could not as they were not suitable for a boy to wear. It was during this time that things started to go wrong.
We continually had more month than we did money. With two young children I was tied to the home.
There was no way I could earn any money to help out. The burden for providing for the family was wholly on my husband.
Bless him he did his best, he did all the overtime available yet still we began at the start of the month on pay-day in a hole.
When we paid all our standing orders and store cards we were already out of money to live on for the coming month.
It got so bad that we had a letter from our Bank Manager. The letter basically said they wanted to go back to the old arrangement. This was where we banked with them rather than them banking with us.
The letter was amusingly written. But make no mistake the bank manager was deadly serious. He was telling us that starting each month off in debt and going overdrawn at the bank had to stop.
Store Credit Cards
How had we got to this point? It started off when we had needs that we had to meet and no money to meet them.
When the children grew out of their shoes, they needed new ones. It did not matter that their old shoes still had plenty of wear left in them. The shoes were too small for them so I had to buy new ones in a larger size.
Not having any money we were not able to go to the shop and buy a new pair of shoes so we had to find another way to pay for them.
Our answer to this problem was a store credit card from the Co-op. With this card we could buy things in the Co-op right away when we needed them.
We still had to pay for them of course but we could pay later by instalments. At the time this seemed to be the answer to our prayers.
Our Co-op was a large department store that sold everything that a family could need. The store sold food, clothing, electrical items, shoes, furniture and everything in between.
How easy was it to get store credit cards in our dire financial condition? It was ridiculously easy.
During this period we were never refused a store card all we had to do was fill in the relevant form.
The good thing, or so it seemed at the time, was that the necessary repayments were small. What we didn’t think about was that it also took a long time to pay the amount off.
We paid the minimum we could off our store cards each month. We didn’t take notice that when we paid off the minimum allowed we barely covered the interest due. That left the sum that we borrowed hardly touched at all.
My husband worked in an office type environment so he had to have decent clothes for work. So again a store card came to our rescue and we got a Peter Brown store card.
Peter Brown was a men’s tailors. So any shirts, ties, suits or jackets that my husband needed for work we got from Peter Browns.
The repayments on this card were only small and spread out over a long period of time.
We also obtained a credit card so that we could buy in an emergency from other shops.
Once we obtained a credit card it was not long before things popped up that seemed like emergencies.
At First Keeping up the Repayments Was Easy
At first having things purchased using store cards was fine. We managed quite easily to repay the small amounts each month on each card.
It was not too long though before we needed to buy more things. Because we were only paying off the minimum our previous purchases were not yet paid off.
In a short time even those small repayments start to add up and it was becoming difficult to repay.
We soon found that we were still paying for items long after the kids had grown out of them.
As a result of our mounting repayments due on the cards we had no disposable income available to us at all. Every penny my husband earned was already spent before it even came into our hands.
It was a vicious circle mounting repayments meant we had no cash. No cash meant we had to depend on the store cards to meet our needs.
We truly felt trapped. We felt that having no money meant that we had no other choice than to use the cards.
As our children grew we needed to buy them new clothes and shoes. The only way we could see at that time was to get them was by using the store cards that we had.
Name Brand Goods
Name Brand Goods
Stores big enough to offer their own store credit cards often stock named brand goods.
In town we had half a dozen or more large chain shoe shops that sold cheap shoes. In these shops and on the market I had my pick of cheap shoes. I could probably have bought shoes for the children for around £5 a pair from these shops.
The problem was I needed cash to buy from these kind of shops.
But when I bought the shoes from the Co-op, they didn't sell the cheap no brand names. Instead they stocked branded shoes like Start-rite and Clarks.
These branded shoes were anything but cheap. Normally these brands shoes started out started at around £20 a pair.
There is no doubt that these were good shoes. The children’s feet were always measured properly for their shoes. The sales person fitted them and checked the fitting.
No doubt either that the quality of the shoes were well worth the price. But at that time I could not afford to pay that sort of money for shoes that they would grow out of in less than six months.
If I bought Jeans on the market I would pay around £3 for them. When I bought in the Co-op they only stocked Wrangler and Lee Cooper. The branded jeans cost around £12 a pair.
This was a phenomenal price for me to pay for children’s Jeans, they were almost the same price as the adult jeans.
A Stupid Thing to Do
I remember one time we had gone out only needing to get a pair of jeans for our son, but this was not what we ended up doing.
Our debts were mounting and we were already having difficulty meeting the repayments. Yet in spite of this we ended up going on a buying spree.
Instead of just buying the jeans that my son needed we also bought the Wrangler jacket too. If this was not bad enough we also bought the same for our daughter.
As if this madness was not enough we went one step further and purchased a pair of Wrangler jeans for my husband.
If I had just had the £3 in cash in my purse that day then I could have got a pair of no name Jeans off the market.
Because I didn’t have £3 cash we needed to buy the Jeans on the market I ended up spending far more. That day we ended up spending in a moment of madness over £50 that we didn’t have.
We had thrown caution and common sense to the wind. Why? We knew that we were already drowning in debt. But in a weird way, this momentary madness had given us a sense of relief.
Of course there is no doubt that it was a stupid thing to do. Of course the exhilaration of spending that money didn’t last long.
The moment that the next Co-op store card bill landed on the mat reality hit us. We saw the increase in payments, we came down to earth with an almighty bump.
'What the Hell'
Something strange happened after our debts started to really mount up.
As we got deeper into trouble we started to get a mind set of ‘what the hell.’
When we were operating in the 'what the hell mindset' our reasoning became warped. We began to think things like what the hell lets buy it. We reasoned, after all what difference will it make in the grand scheme of things?
We were already way out of our depth debt wise. We were out of control and we could see no way out. So what difference does one more thing that we can't pay for make.
This sort of thinking not surprisingly threw us right over the top. Sense and reason flew right out of the window and a resentful rebellion took their place.
We didn’t want to be in this position and we didn’t want to get further into debt. But no matter how hard we tried or how many things we cut back on it made no difference.
What ever we did the end results we still the same, we continued to get further and further into debt.
To add to this negative and toxic mix we also had a great big pity party going on. To us it all seemed so unfair. No matter how hard my husband worked his money was not enough to stop things getting worse.
Drowning in a Sea of Debt
Lost in a Sea of Debt
We were lost in a sea of debt. We were a working class couple who were use to only having enough money to live on from pay-day to pay-day.
Back in the 1970s neither of our families had a bank account. This was not strange because they had nothing to put into a bank.
Like us our families lived pretty much pay day to pay day. The jobs they had paid wages not a salary. At that time both of our families had their wages paid in cash either every Friday or every other Friday.
In the 1970's those who had a career had a salary. If you had a salary it was usually paid into a bank account. Salaries were usually paid monthly.
Jobs usually had wages that came around at work to each worker in the form of a pay-packet with cash in it.
The payment of wages in cash was changing in the 1970s. Soon everyone would have their pay paid into a bank account.
We had a bank account because we had a mortgage. Our families could not understand why we had bought our own home.
From my family's point of view, we had saddled ourselves a huge millstone around our necks. A millstone that would be there for the next twenty-five years.
So when we got into financial trouble our families could not help us, nor did they have much sympathy for us.
It was hard having to learn how to live from pay day to pay day when we only got paid once a month. It was much easier when we got paid weekly in cash.
No Way Out?
We had dug this hole all on our own. So we knew that if we were going to get out of it, we would have to get out of it all on our own.
There is a saying that my folks used quite a lot, and that was ‘you’ve made your bed now you must lay on it’.
What this amounted to is, where you are is the result of your own actions. So you are the one that will have to pay the consequences of those actions.
Even if our families had wanted to help us out of our troubles they couldn't. They didn’t have the financial means nor the inclination to do that.
Even when we managed to not buy anything new on the cards, the sum we owed never seemed to go down by much. This was down to the fact we were still only paying the minimum on each card.
We paid the minimum because we felt that we had no choice. As we saw it we had no money so how could we do otherwise.
Paying the least amount we could each month we had only paid a little more than the interest due on our card debts. This left the debt itself almost untouched. We were reducing what we owed each month by pennies instead of pounds.
After paying for many months we were depressed to find that we still owed almost as much as we did when we started. Also with each new purchase that amount grew.
There seemed no way out we just didn’t know what to do next. How did we get out of this fix? Well that will be the subject of my next hub.
The Follow up to This Hub
You have seen how easily we got ourselves into debt. If you want to find out how we managed to turn things around then read my follow up hub.
In the follow up Hub you can read how we got ourselves back out of debt and how we took back control of our lives and our money.
Click on the blue link to go to this next hub