Read on for my own personal and honest teenage debt story, or scroll down for helpful debt management articles.
I understand the many struggles that come with being in debt. In my younger years I hit debt crisis. This meant I was paying debt off with debt and never actually improving my financial situation. I was only ever getting in more debt.
The debt was all irresponsible and built up from the moment I turned 18 and could access credit, right through to age 19. It was a whirlwind couple of years of crazy spending for a variety of reasons.
Ultimately, I was leading a lifestyle my shop assistant wage at the time could not afford. I went out partying several times a week, ran a car I didn’t really need and had high mobile phone bills - back in the day when there were barely any free minutes or texts and so I was paying for each and every one.
I developed a shopping addiction and would buy clothes almost every day.
I had low self-esteem, was very self-conscious of my appearance, lacked confidence and suffered with depression.
I tried to fill a void within myself by buying new clothes to make myself feel better.
It made me feel great when people complimented my outfits and loved my style. It became an addiction and I would rarely wear the same clothes more than a couple of times. I had to have something new.
I also had fear of missing out and wanted people to like me so I never turned down an invite to a night out or party. My colleagues at the time and friendship group were very sociable, so these were regular events - weekdays and weekends.
I'd constantly buy rounds of drinks and shots on credit cards as I couldn't really afford them.
I wanted to impress people, be liked and be invited out again. I never wanted to miss out or be missed out.
My fear of missing out meant I was always one of the last at the bar or party, spending more money the longer I was there.
If I had no money and wanted to do something then I'd get a loan, increase my overdraft or get a credit card.
If I wanted more clothes I'd open another store card. I was addicted to spending and it was out of control.
I never thought about the consequences.
Although I never actually worked out all my incomings and expenses, I just stupidly assumed I would always be able to afford the minimum payments. I never worked out what the total of these would be if I maxed out everything.
In less than two years, before I was even 20 years old, I owed £17500.
I didn't even know the extent of my borrowing until I sat down at Citizen's Advice and we worked it all out. I had an overdraft, three credit cards, two loans and seven store cards, if I remember correctly. I had nothing to show for it.
I had been young and irresponsible and had no money management skills whatsoever. I know it was my fault, but I also wonder how the banks kept lending an 18 year old so much money without question.
Surely they should have looked at how much credit I already had and how much I had already spent?
Suddenly I realised I was in trouble. I couldn't afford all the payments.
There was no credit left anywhere for me to pay any of my debts. The red letters started coming and I had no available credit left anywhere and I suddenly couldn't get any more. Things suddenly turned very bad.
I was getting constant calls and letters demanding the payments.
I feel that in recent years people are more understanding about debt, but at the time, in the early 2000s I had some really awful phone calls from my creditors constantly harassing me and demanding money that I didn't have. Never in a polite manner, but threatening and scary.
Being in so much personal debt and not seeing the light at the end of the tunnel was a horrible and very low place to be. It's a place I never want to be again.
I was terrified of debt collectors turning up or court dates and I wanted to sort my mess out.
I thought I was going to have to go bankrupt at only age 19, but thankfully I was advised against this.
Luckily I very quickly got advice from CAB and went on a debt management plan with PayPlan in around 2004.
It took just over five years, but I paid every single penny back on the strictest budget of my life.
Essentially, PayPlan took every spare penny I had after my rent and bills, aside from a very minimal amount which I was left for food and anything else I needed.
It was one of the biggest lessons learned and one of the most stressful and dark times of my life.
I was even told at one point I had to make one more normal payment to a creditor, before starting my debt management plan, or I could risk going to jail for fraud as they could say I opened one of the accounts without intending to pay it back.
I was still a teenager and this absolutely terrified me!
Even when I was on the debt management plan, it took several months for some of the creditors to stop calling me. I was constantly harassed by companies who even found where I worked and called so much that my boss started to tell them I didn’t work there to stop the calls. This was whilst I had a plan in place to pay it all back.
Luckily these calls eventually stopped and I paid all of my debt back, whilst having to learn to really budget as PayPlan would only allow me the bare minimum to have for food each month. The rest, after my rent and bills and a nominal amount for food, was divided between my creditors.
I stayed totally debt free for around five years...
Fast forward to 2014 and I decided to get into debt again, but a little more responsibly.
I have started a family now and decided to buy a house and have a mortgage - the biggest debt of my life, but also an investment.
We buy a fixer upper so I also got a home improvement loan. After a lot of careful consideration I also took out a personal loan for a medical surgery and a car, but both with very affordable monthly payments.
I was in debt again, but this time I could easily afford the monthly payments and my credit rating is good so the interest rate is low. It all felt much more responsible, but I still hated having the loan debt...
... so I overpaid the loans and cleared them as quickly as I could
I paid them back years ahead of the original schedule.
Skip forward again to the end of 2020 and we decide to take a loan for home improvements. We make renovations to change our home from a 3 bed one bathroom, to a 4 bed three bathroom by converting a garage to a bedroom with ensuite, adding a downstairs toilet, a porch, as well as some new windows and doors.
All drastically increasing the value of our home, utilising wasted space and making it more liveable for ourselves as the children get older and sharing one small bathroom has its challenges. With the pandemic and financial insecurity for many, it also gives us an extra bedroom we can rent out to a lodger or via Airbnb should we need extra income at any point.
Now, this loan is more than my first ever debt, but this time it's an investment and not unwise spending. We'll make our money back (and then some) when we sell. It also gives us another business opportunity if we need to increase our income streams. So we have peace of mind that we can increase our home income if we need to.
My financial situation is so much better this time too. I have emergency savings and a good monthly income.
This time my debt is manageable and I don't plan on getting more. I feel in control of my money now.
In fact, I even have enough money, if we combined all our savings accounts, to pay back the debt if I ever need to. I explain in one of the blog posts below why we saved a large emergency fund before paying back our previous loans. And we'll leave that emergency fund there this time too.
It might seem crazy not to use our savings for these improvements as we have them sat there, but my husband and I are self employed so that's our emergency money should we not be able to work due to sickness/injury and need to cover our household bills.
However, it's very satisfying to know the money is there should we need to pay back our debt back immediately at any point. Again, I plan to overpay this loan and we have been making large overpayments to reduce the monthly payment and ultimately to get the loan balance down and repaid as quickly as possible.
This time, again, I feel in control. I don't feel like all borrowing is bad. There are many reasons and ways to lend money responsibly and to be in control of your debt without it getting out of control.
I understand the many lows of being in debt crisis and I have experience in being on a debt management plan. I understand being in the depths of unmanageable debt, but I also understand being responsible with debt and in control of debt.
Please do not suffer in silence if you are struggling with debt.
Please seek advice; there is lots out there to help you.
For me, when I was in debt crisis, PayPlan were amazing and free to use to manage all my creditors and debt repayments.
Citizen's Advice was also free and very helpful.
What to do if you're struggling with debt + finances
Here are lots of helpful articles if you are struggling with your debt payments:
- 4 things to do when you're struggling with debt
- How to raise cash for an unexpected bill
- What is an IVA?
- What to do when you have debt you cannot pay
- What to do when you can't afford essential household items
- What is equity release?
- Is renting home appliances better than buying?
- How to pay off credit cards faster
- Can ignoring debt make it go away?
- What to look for in a debt management plan
- 10 ways to keep your finances happy
- How to save money and overpay a loan
- Why I saved an emergency fund before paying back debt
- 4 rules to prevent future debt
- How to avoid financial hurdles
- How we saved £6500 in 6 months
- What goes into a credit score?
- How best to manage loan repayments
- Smart ways to use a credit card
- Risks of borrowing money