I first met Cat six months ago at a blogging conference and we have stayed in contact since then. We have a lot of interests in common and I love chatting to positive, like minded people. Cat blogs at Penny Wise Life Rich and also works as a financial coach. And she really gets it, she has been there with debt. Here is her story.
The Early Days: Teens
I had been a very money-savvy young person. Even having 3 little part-time jobs aged 14 to get some extra cash so when I moved out at the age of 17 I was fully prepared for my move. I had saved my deposit plus a month’s rent and even bought my TV licence for a year in advance so that I didn’t have to worry and could put the money aside for the next year. I was even super sensible when I moved in, I didn’t have a bed as such and I wanted a futon so that I could alternate between a bed and a sofa in my studio flat.
Everything was saved for and bought it with cash I had saved. After a couple of months, I noticed that money was a bit tight, income pretty much matched my outgoings so I looked for a part-time job. I found one across the road in a local pub and started to work there 2 nights a week.
How It Started
I was a couple of months into my 18th year on this planet when I saw something, I can’t remember if it was on TV or I’d been posted something (I didn’t have the internet then and certainly didn’t have a Smart phone!) but it was for a Capital One credit card. The cards had any pattern I wanted on it! Well, that was that, I had to have one. I applied and I was accepted. Wow! I remember it arriving and being so chuffed, I felt like a proper grown up!
I chose the Smarties design and I loved it. The credit limit was £150 and this was more than enough as I didn’t really plan on using it, I just wanted it! I also remember the minimum payment was £5. The minimum amount was never paid and for a couple of months I was really good and paid it off in full.
I remember meeting some friends as it was another friend’s 18th birthday and us comparing credit cards.
How It Spiralled
Well, that £150 soon got spent and the credit limit increased. Then I got another credit card, another sexy looking one too! A Mint one this time. Remember the advert with the nose??!! Well, I ended up with 2 of those. Then came an MBNA card, then came a Halifax loan, then came a camera on HP. I bought a laptop on finance.
In the space of 5 years I had amassed about £10,000 worth of debt. Phew! There was shopping, holidays, meals out, takeaways, nights out, drinks, being generous with friends and saying, “I’ll get this!” And the funny thing is, I didn’t really have very much to show for it!
The Turning Point
The turning point for me came in 2006. I searched online, ironically, for ‘ways to make money’. There was no intention at that point of clearing my debt really, but just wanted more cash! I stumbled across Martin Lewis’ site Money Saving Expert, I signed up and my life literally changed overnight! The credit cards were frozen in the freezer and I locked away my debit card. I became a member of the forums and was always in the Debt Free Wannabe area and Old-Style Money Saving area. So much time was spent in there that I even got my username mentioned in one of Martin Lewis’ books!
I absorbed everything I could about no-spend days, selling stuff on eBay, batch cooking, meal planning. I was that person that drank lime and soda because it was only 20p a drink! Every night was spend working in the pub, taking on extra shifts, I also did overtime in my office job. It worked though. In a year I had paid off my debts and saved enough money to pay my rent and bills on my little flat for 3 months.
I was off travelling! The turning point was that I hated my job and I wanted to leave to go to college and then uni to become a teacher. I couldn’t do that with my amount of debt so I had to do something about it. It was brilliant! We went to so many places and saw so many things.
Then It Happened Again!
That was the first time I got into debt. First time??!! I hear you say! The first time was totally different to the second time. The first time was just easy credit and living a champagne lifestyle on a lemonade budget. I do feel guilty as there are people out there that are in debt for truly awful reasons and I just frittered my money away. And also that I was in a position to be able to clear the debt so easily and quickly.
The second time was due to going back into full time education. I still worked my part-time job at the pub and took on extra hours around assignment deadlines and for the first year my boyfriend (now husband) paid my rent for me. I can still remember the exact amount, £238.33 a month! I’m not sure what you’d get for that now?! After I had completed college, I then started university and we moved in together. My grant and loan along with my boyfriend’s income didn’t quite cover our outgoings. Even with working shifts at the pub around a gruelling teaching course.
This meant going into the overdraft each month and it creeping up and up. We consolidated a couple of times and each summer I took on whatever jobs I could find to try and make up the deficit plus earn some money to cover the summer.
I did so many different jobs! Waitressing, working for a project management company while they did the rebranding of the Santander bank signs, homecaring where I did a mix of the office work and the caring (sometimes my days were 7am until 10pm here). I did a summer working for my husband in his office doing admin, the final summer I did supply teaching until July and then looked after our new 8 week old puppy. At this point, we were a little immune to the debt and did think, “What the hell!” and added to the debt by getting our gorgeous puppy.
The Final Turning Point and Plan
It was once I started my first teaching role that we sat down and came up with a plan to clear it all (one and for all!) and to save for a house deposit. At that point we had £12,000 worth of debt. We tightened our belts again and within 5 years we cleared it plus managed to save £15,000. The house of our dreams was found but we didn’t have quite enough for a deposit. We got lots of advice and it turned out that we were better off getting a loan for the remainder of the deposit, thereby creating a 10% deposit, rather than putting down a 5% deposit.
As we are today, we have had our house for 16 months and we have a mortgage and our loan as our remaining debts. We are doing home improvements and this time we are saving for each one before we complete it! I am also able to take on extra work doing supply teaching so we’re using this for home improvements.
This whole journey inspired me to start blogging and to become a financial coach and be able to help others on their journey.
Cat’s top tips are:
Never pay the minimum, even chucking an extra fiver at a debt helps to reduce it quicker.
Get help if you need it. There are so many amazing charities that can help you. I was lucky that I didn’t need to but they are truly wonderful if you do need them.
Yes, there may be short term discomfort but this is only for the short-term. The benefits longer term far outweigh the discomforts.
Thank you to Cat for this honest and inspiring post. The debt cycle can be repeated over and over again, but things are looking great now for Cat and her husband. Follow Cat on her social media, Twitter and Instagram.