Kaleidoscope: Life through different lenses

Part One: How Debt Happens

This blog post will be in two parts. In the first part, I examine how we can fall into debt using my own experiences. In the second blog, I will discuss the strategies I used to get out of debt. As a side note, some debts are acceptable, such as a mortgage on a house, while others are based on personal choices.

“A small debt produces a debtor, a large one produces an enemy.”

If you have never experienced debt in your life, count yourself amongst some of the lucky ones. This post is not to judge, condemn or shame those of us who have been through it. My objective is to share my story and offer some tips that helped me get out of debt and stay out. My second aim is to highlight the negative effects that debt can have on a person’s mind. Sometimes breaking free can, in extreme cases, require counselling and, in most cases, a change in lifestyle. Debt is the peace stealer. You become anxious and frustrated with your situation. It can lead people to depressive states. Debt is like quicksand; the more you struggle to escape, the tighter the hold becomes and the deeper you sink, and yet it is so easy to fall into it. This dark cloud of looming disaster can weigh heavily on your mind.

How did mine start?

Learning to plan and manage your finances is a life skill you need to develop, part of the adulting process. When I started my teaching career twenty years ago, my salary was  R7000 (roughly $427). I lived at home and had minimal financial responsibilities. Since I lived close to work, I walked to and back home from work. But I had dreams of driving my own vehicle and eventually moving into my own place. To get a car loan, I had to show a credit history. I’m sure you can see where this is leading to. If you have little experience with using lines of credit, you can spiral into that quicksand pretty fast. This is what happened to me. It started with good intentions. I wanted to build my credit history, so I opened a clothing account. Once you have one, you fall into the credit lender’s radar, and more offers get sent to you. Now, I understand that it is a personal choice to accept these offers. I took the offers because having these accounts allowed me to make instant purchases that, on a teacher’s salary, might have taken me longer to save up for. At one stage, I owned four clothing account cards and two bank credit cards. On the positive side, I built a strong credit history by paying my bills every single month. But making the payment left little for me to cover other expenses, such as food, gas, and other living costs. Although my salary was growing, I did not feel much change because of the mountain of debt weighing over my shoulders.

What were my main problems:

• I had impulsive buying syndrome; if I saw it and wanted it, I bought it.
• I wasn’t good at planning for the future or saving gradually for the things I wanted.
• Knowing my financial situation, I decided to make some changes to save money for the future, so I opened a 32-day notice account. This account gave me the avenue I needed to save small amounts of money, and the inconvenience of keeping this amount out of my reach helped to increase this savings.
• But my debt kept growing, and I kept buying more than I could afford. Sometimes I used one debt to try to pay off another.

Budgeting Woes

Budgeting was a challenge for many reasons. Each month, when I did my budget calculations, at least 60 per cent of my salary was allocated to my debt, leaving a minimal amount for my living expenses and a forced savings account. But what made the cycle even worse were the monthly payments. I convinced myself to always pay extra because I could spend it if I needed to. But the sad reality was that the monthly interest added to every outstanding balance inflated the total amount I owed. My quicksand was fast, deep and determined to sink me whole. I found budgeting pointless because I needed to find a system that worked for me. I tried different systems to manage my finances. First, I tried to keep every receipt for every spend, but that became overwhelming when calculating the monthly spend. Then I tried writing down every single thing I spend money on, but this, too, became tedious, and long-term maintenance was not practical for me. But the biggest problem was that my mind and the way that I looked at my debt had to change.

Mind in Need of Transformation

• I did not like looking at my debt because it overwhelmed me and made me feel helpless.
• I felt ashamed that, as a grown adult, I had these struggles and was unsure of how to dig my way out.
• I stressed about many things, such as how I would put gas in my car to get to work, buying electricity and paying regular bills outside of my debt.
• I knew that my biggest issue with the debt was that I was downplaying it and pretending it did not exist.

The primary reason I was forced to take a hard look at my debt and start making changes was my decision to eventually purchase my first home. This desire and dream were strong enough to propel these changes in me.