The dangers of debt

Many people I work with have found their spending spiralling out of control. With credit so easy to obtain, debt problems can creep up.

Today, I am sharing Annie's story, which warns about the dangers of spending beyond your means. She got into serious debt, using credit to fuel her spending habits.

Annie shared, "My debt just crept up on me. It all began when I got my first job; I was 18 and was out shopping for clothes. When I took my large haul to the counter to pay, the shop assistant offered me a store card and explained that I would get a discount on my purchases if I signed up. I agreed as I didn't understand what I was signing up for, and it felt like free money. I had the money to buy the clothes but didn't use it. I spent it on other things and paid off the minimum amount the next month. It seemed an easy way to get what I?wanted.

Before long, I had three store cards, three credit cards and a mobile phone contract."

From credit cards to other loans

As you get approved for credit, it is then easier to get more!

Annie explained the next part of her story: "At 20, I passed my driving test, immediately got a car loan, and bought my first car, which was way beyond my means. I then started taking foreign holidays, and if I couldn't afford it, I just paid for it on my credit card. As the balances crept up, they increased my limit. My overdraft followed the same path. It kept being extended.

Getting onto the housing ladder

"I went on to buy my first house with my first husband with a mortgage deal at the time, which was 105 per cent. This meant I didn't need a deposit. I furnished my new home with furniture on "Buy Now Pay Later" interest-free deals, and without realising it, I was getting further into debt. I made the monthly payments, so there was no problem for me. My career progressed, and my salary increased. So, what I owed was never really a consideration."

A change of circumstances

Annie then experienced a significant change of circumstances that could happen to anyone. She had two significant life events in succession.

"I became ill and had to take time off sick from work, and then my marriage broke down. When my husband left, I continued to pay the bills and mortgage; he hadn't been great with money and often gambled, so it was a relief that my money was now mine. I removed him from the current account.

Then, I had a car accident that resulted in spinal surgery. It led to eight months off work just after my 40th?birthday.

Now, my life began to collapse financially.

My company only paid three months' salary on full pay. So, when that expired, I received statutory sick pay, which was about ￡90 a week. My outgoings, including mortgage, bills, and debts, were ￡2,000 a month. My take-home pay was around ￡3,000 a month, so only receiving statutory sick pay meant my finances quickly started to get into a mess.

I had no emergency fund. I wasn't well and didn't contact any of the lenders. I thought I would be off for another month, so I delayed acting. It turned into five more months, and I buried my head in the sand."

Default notices

"My bank stopped making payments as I had exceeded my overdraft and stopped my debit and credit cards. I literally had no money. Default notices started arriving daily.

It was then that Annie decided she needed to act.

"To begin with, I needed to figure out where to turn. I sat and opened all the letters and realised I was in a terrible financial state.

I confided in a friend who suggested I speak to the Citizens Advice Bureau. They were brilliant, and when we totalled my debts, it was almost ￡26,000. This excluded the mortgage and car loan.

The advisor helped me formulate a payment plan for each lender, and we wrote to each one. They all accepted payment plans, and some froze the interest. I cut up my cards, and it has now taken almost five years to clear my debts."

Life in my 40s was not how I imagined it. But I knew I had to get things under control.

Debt-free life.

I am almost 50, and it has taken me several years to sort this out. Now, I don't owe anyone anything besides my mortgage and car, which I lease.

But it's been tough, and my biggest lesson to share is don't get into the mess I did.

Things happen in life, and the more debt you are in, the harder it is when life throws you a curveball.

Don't ever think challenges won't happen to you.

Some of my friends are in serious debt. Their attitude is that they deserve the holidays and expensive clothes, bags, and makeup, so they use their credit cards.

I worry about them and what might happen if they get sick or lose their job.

Annie's advice for young women

My message is simple: Only buy something on credit if you plan to clear it when the statement comes in. You have no control over using credit to purchase things.

If the money isn't there, I cannot have it.

I now save first, buy later. I learnt a harsh lesson in life and will never repeat that pattern.

I also now have critical illness cover and income protection so I am ill I have a safety net to replace my salary.

Getting into debt is easy, but getting out is extremely hard.

Annie's story is not unique, and many of the women I speak to are in this situation. So, if you are reading this and any of this resonates with you, seek advice and support.