In these difficult economic times, I found myself working to pay the bills and still getting slowly into more debt. It’s only recently after much reading online and soul searching that I think I’ve figured it out and how to fix it. I’m sharing this personal story with you in the hopes that it’ll help some of you not fall into the financial pit that I have fallen into, because climbing out is very difficult. I also help by writing this it helps keep me on track so that I wont slip back in.
It wasn’t so long ago that I was pretty much debt free. I paid off my only credit card in 2009 after university but how things can change in just a few years.
During an 8 month period of unemployment I exhausted all my savings and went into credit cards by around £7000. I then ‘took advantage’ of a balance transfer with a 0% APR, but looking back the credit cards took advantage of me.
The big mistake that I made was that I didn’t change my spending habits. I didn’t fully budget to force myself to spend less than I earned, even when I started to work again. The result was a growing balance on two cards including the one I just paid off. I had only treated the symptoms and not the root cause – my overspending.
Balance transfers and debt consolidation alone are very dangerous as treating the symptoms but not the cause can make us go on without the pain, free from the emotional burden of the debt (while it’s in the low or no interest period). That being said, a solid budget where spending is less than earnings together with a debt management help, perhaps in the form of a consolidation loan, can have a great effect on reducing the mountain of debt.
I’m not debt free yet, but I’m on my way. As part of my recovery I reflected on the emotional issues I’ve had with spending and not ‘cutting my cloth to fit my table’. I found debt management help and constructed a very solid budget which say my spending drop and earnings increase as I took on extra shifts in the evening (working in a pub in Lancaster).
Apps and websites like Mint can help too if you take the time to set them up and set alerts for spending close to the budget.
The great thing about getting an extra job for even 5 or so hours a week is that it’s time that you won’t be spending money, it tires you out so you won’t want to go shopping when you’re not working and it feels great when the extra money that you otherwise wouldn’t have had get’s deposited to pay down the debt to a new low.
This is my story – always seek professional advice for your situation and talk with your bank and other professionals. Tell yourself to cut your cloth to fit your table – I do, everyday.