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I recently read The No Spend Year: How you can spend less and live more by Michelle McGagh.
I’ve been left puzzled by exactly what I was spending money on prior to this debt-free journey.
If you’ve not read it, it’s well worth it, as it does provide some inspiration and insight into your own spending habits. It also opens up a world of possibility that you may not have considered before. Like the amount of free activities you could benefit from to totally expand your horizons.
Young and naive
In reality, I’ve been practising frugal living for a number of years. It all began when I lived on my own in my late teens and early twenties. Young and naive; convinced that I could afford to live alone and independently with rent and bills. (I already had a significant amount of debt to my name in the form of a credit card, an overdraft, car finance and a bank loan.)
At a time that all my friends were out buying clothes and living it up, I had £50 a week to live on. After bills and debts, £50 to cover my food, travel, social and clothing. As you can imagine, it didn’t stretch very far. I vividly remember traipsing around Netto with my shopping list in one hand, and my cash in my pocket, adding up my purchases as I put them in the trolley. Because I could only afford what I had in my purse.
Don’t sweat the small stuff
Back then, I was embarrassed. I felt like I could barely afford to feed myself or splash out on nice things. Occasionally, I’d scrape together some money from my money box to treat myself to a nice bottle of wine. (Which you could get for around £4.00 then).
Nowadays, I don’t care if people wonder why I’m adding up my purchases. I know I have a budget and sticking to it helps me save money and pay off debt. And that makes me in control of my finances.
Because of my early experiences of having very little disposable income, I have an inbuilt voice that tells me I can’t afford something. I’ll pick something up off the shelf and look at it, then put it back with the realisation that I don’t actually love it. And I don’t need it. I don’t buy new cushions for my sofa, because they’re not a necessity. We have cushions. I don’t need to fall into the consumerism trap, because I already have enough ‘stuff’. I don’t want any more clutter, thanks.
Having very little money makes you realise that you can make do with what you have, and is the reason I rarely buy myself new clothes (unless desperate – for example, if something is falling apart).
So, why so much debt?
I’ve asked myself, how the hell did I get further into debt over all these years? If I’m not a typical spender, how have I spent what I don’t have? I don’t buy coffee, or lunch, I take my own in a conscious effort to save money. I know the difference between a home-made salad (pence) and a ridiculously over-priced cheese sandwich (how is £2.90 justifiable for a couple of bits of bread and some grated cheese?!).
So, what’s the deal? Truthfully, I can put my hands up and reason it probably stems from the “want it now” phenomenon. If I think really hard about it, I could probably put this psyche down to my Dad’s permanent mantra of “I can’t afford it, darling”. We couldn’t ever have treats like ice creams, and we never asked for expensive birthday presents. I grew up in a family where money was tight, and my mum recalls a situation of her own as a single parent, traipsing round the supermarket and picking things up, before retracing her steps and putting back the things she could do without – like kitchen roll – as she didn’t have enough money.
I could buy anything I wanted
When I was old enough to earn my own money, suddenly the world was my oyster and I had more moola than I knew what to do with. Until I spent it all. Then I got a credit card and spent on that, too. But when money got tight, I clawed back my extravagance and made more conscious choices, using the same mentality I’d grown up with. But my debt remained, as I suppose I never really considered the importance of paying it back. Then I’d need a new car and so I’d take out a consolidation loan. As I grew up, I still understood I needed to pay my debt off, but owing money just became the norm. I always paid the minimum payments, but that was it.
I’d move back to my mums, sell all of my furniture, then move into a new house, and need to buy new furniture again. Cue more credit (after all, it’s only £15 a month, right?). Then I’d realise I couldn’t afford to live on my own again (I was miserable, having no money), so I’d move back home again. I also think there was some level of emotional spending in there, too. I’d been in and out of bad relationships in my twenties. In hindsight, the instant gratification was a way to make me feel better about myself.
I kind of went on a loop like this until I met my now husband and we moved in together. Except the loop of intending to pay off debt – but instead getting into more debt – continued. Bank loans for car purchases and debt consolidation, hire purchase agreements for a telly and a sofa. Why? Because we “needed” them, because the clever marketers told us so. And because we could afford the monthly repayments (marginally aware, but blissfully ignorant, of the total amount payable). Plus, a finance agreement meant we could get it the same day, or in time for Christmas!
In my mind, these are the major reasons I’ve fallen into so much debt in the past 20 years (let’s just call it £1k per year).
But, there’s more.
It’s not just the big stuff
There’s been the days I’ve been so fed up with cooking and with kids that won’t eat. I’ve being too exhausted to cook again after having meatballs thrown at my head. So I’ve given up and ordered a takeaway.
Then there have been the times I’ve been so pissed off with never treating myself, that I’ve just though “fuck it”. So I’ve bought a meal out for my husband and me, or my family, on my credit card. I felt I deserved it.
And there are the times I’ve realised I’ve forgotten to plan for someone’s birthday and need to get them a present. So it’s gone on the credit card. Then there’s been the time I’ve been running a bit low on cash… so I’ve used my credit card. I have no idea why I would have considered this as an acceptable way to manage money. It’s not free money and needs paying back.
Organisation is key
It’s become really clear that the problem lies not only in poor financial education, but also in poor organisation.
If there’s one thing this debt free journey has taught me – and is a theme that appears often in the aforementioned book – it’s the importance of planning your life in advance. It’s not just about drawing up a budget (which needs more in it than just food and fuel), it’s about looking ahead to future plans. To consider events that may need to be accounted for. It’s to ensure you leave room in your budget and time in your life for little treats to look forward to.
Imagine living off rations in the midst of World War II? History can teach us a lot about the importance of planning and thrift. About using what you have, and making it go a long way. Because if you use up your rations in the first couple of days, you go hungry for the rest of the week. And that’s you screwed.
That’s why I’m making a conscious effort to be more organised. It’s not just about your spending habits. It’s about how well you plan your life, and your future.
We can all do it. It just takes grit and determination. And I know you can do it too.