Consumer debt is a massive industry, and you wanna know why? Because there’s tons of money to be made! Banks and businesses all know that we want things we can’t actually afford but they make our dreams come true. Like a reverse fairy godmother. They give us ‘money’ (more like a loan disguised as such) so that we can go out and buy what we want. When we want. 

Sounds great, doesn’t? Slight snag: when we fail to pay back our dues, they slap on interest, with the average rate being 18%! So now you see how it’s in the lenders’ interest for you to miss your payments. It’s in their interest for you to have eyeballs that are bigger than your wallets. My mum still remembers the day she turned 18 when she was flooded with post from all sorts of credit card providers incentivising her to take out credit and go into debt. They practically threw ‘em out like candy. Bad, bad stuff. 

While you may be thinking how you had none of this when you turned 18, you can’t even complete your order without seeing buy now later (BNPL) options. The advertising for this stuff is huge and it’s super easy to get started and fall down the rabbit hole. (Read my spiel on the matter, here).

We want what we don’t have. It’s that simple. 

These companies feed off our desires. That’s exactly how they get richer and richer while we get poorer and poorer. There’s no money in being a borrower. But a lender, wow you’d be making the big bucks!

While not all debt is created equal, consumer debt is without a doubt bad. There’s no good side to it. It acts as a drag on your finances and overall wellbeing. It’s like permanently walking around with a chain around your neck. The freedom when you escape is like no other. But why wait to experience that freedom? Avoid falling for the trap to begin with!

And it all starts with being real, honest and completely open with yourself. Lying to yourself is a dangerous game. Understand your desires and motivators. Because at the heart of this kind of debt is desire.

Let me tell you something, things always seem way more sparkly when you can’t afford them. The second you can afford it, you’ll find it no longer sparkles as it once did. That’s human nature. We want things we can’t have but when we have those things, we’re onto the very next thing. That’s materialism. There’s no end. And there never will be one because there’s just too much money in it. 

The glitter wears off, quickly.

A family friend of mine came from a poor, working-class family and built her way up to become a business owner and her very own boss. She told me how she used to ooh and aah at the Jimmy Choo heels in the shopfront window and tell herself that one day she’d be able to afford it. Without feeling the pinch.

She now has an entire wardrobe of Choo’s, but she told me nothing compares to that first glance. That longing to afford something that’s just that bit out of reach. Once you reach that milestone, things quickly lose their appeal and they’re not as exciting as they once were. 

Don’t work toward things, work toward places. Places are far more fulfilling and longer-lasting. Things are never-ending. They drain your bank and fill your space. Cluttering it with things that was once money that was once time.

Why do we get ourselves into debt?

We all know someone who’s gone into this kind debt, or have even gone into debt ourselves. But why are we going into debt? Is it to impress people? Thinking we deserve more than we have? Or is it because we’re downright bad at managing our money and need debt to tide us over? 

There are loads of different approaches to paying down debt, so I’m not going to bore you with them all. But instead, I thought to share some accounts of people I know who got into credit card debt and how they got outa it. 

#1 Small biz owner, 20yo 

My friend is a small business owner. He managed to set up his own biz from his bedroom during lockdown, while still at college! He’s had his fair share of ups and downs that he was open to me about but the one thing he was most embarrassed about was that fact that he had slipped into credit card debt.

He had a business card but his mistake came when he started using it for personal purchases. Before he knew it, he was knee-deep in debt. In the thousands. It came to a point where he was paying 20% interest on his debt. Luckily, he was with a reputable provider who took into account his age, experience and so on. Together, they came up with a payment plan. He’s investing his money as he’s paying off his debt to give him a sense like he’s in control over his future.

He said his biggest regret was telling himself he’d pay it off soon. He kept on delaying it and the number got bigger and bigger to the point where he couldn’t look at his statement. His message to anyone struggling with debt: take on an extra job to give you extra cash to mark sure you pay off as much as you can per month. But he said don’t let it get to the point where you’re freaked out to see your statement. As soon as you’re in debt, get out QUICK. Before it escalates. See, debt is like a snowball. You’ve gotta stop it before it rolls around gathering more snow (money).

#2 Retired teacher, 50yo 

This person is someone I’ve known for ages and their story is one I bet loads can sadly resonate with. She grew up in a poor family and by poor, I mean real poor. She lived on hand-me-downs and second-hand stores were her go-to. She took out her first credit card when she turned 18 and shopping never tasted so good. She indulged in designer-wear to make up for what she never had. Fast forward a few years later and she was drowning in debt. £15k of debt to be precise. And this was back in the 80s!

She got her statement in the post, telling her she had racked up this sum of money and that the interest was piling up. It hit her that she had gone too far and was drowning in the debt of her addiction. Cut the story short, she took on 2 extra jobs and worked her socks off to pay it all back. She got rid of her car, she moved back with her parents (to save on rent) and within 16 months she’d done the job!

She finally moved out and got a place of her own and since then, has never gone into debt. Ever. She told me that relief was unlike any other. I asked her what piece of advice she wants to give you and she said this “don’t let your past define your future. Your past (whether good or bad) is over. The only thing you should be doing is looking forward and using the tools you have to carve the very best life for yourself.

Excuses are easy and shortcuts are plentiful. Take the hard road, and you’ll land up in an easy place after”. Sometimes yo’ve gotta hit rock-bottom to know you need to make a change. But don’t wait till it gets to that point.  

Oh, and this friend reached early retirement a little while ago with a few properties providing her income. It can be done!

Wherever you’re at in life, there’ll always be someone who’s better off than you, who has more than you and who’s more successful than you (whatever that means!) but don’t let that force you down the path of envy and regret. Because consumer debt is at the heart a psychological problemo.

Understand that, and you’ll be one step closer to climbing out of debt and putting up the barriers so that you don’t dare go there in the first place.

Remember, you have all that you need and not all that glisters is gold.

Keep your eye on the prize and don’t let anything get in your way. Especially depreciating assets like clothes and shoes. Unless of course it’s a Birkin bag in which case, hold onto it! 

Disclaimer: This blog is not investment or financial advice. It is my opinion only. This blog is not a personal recommendation to buy/sell any security, or to adopt any such investment strategy. Always do your own research before you commit to any investment.