Lesson Twenty One: Reflect, Understand, Plan & Execute
This is Lesson Twenty One of the Simple & Calm course. Today’s lesson more of a personal reflection session as I journal my thoughts and get to grips with how I move forward from losing my job. I’ve written this lesson to show how easy it is to get out of debt, the mistakes I’ve made a long the way, and how I should have done things differently. This course is for paid subscribers only, but if you’d like to enrol and get immediate access to this lesson, and all previous lessons, then you can upgrade your subscription by clicking the button below. I’d love to help you live a simpler and calmer life.
It feels strange writing this lesson about money when my own financial future has never looked more uncertain. If you missed it, I shared in my previous post that I’m now jobless come October when my maternity leave finishes. You can read all about that here.
So, this has put a giant spanner in the works for me. I could teach about simple money in this lesson, but instead I’m going to talk about what I should have done to prevent being in this situation, what I’m doing to get out of it, and how I’m going to protect myself in the future so that this never happens again. Maybe you’ll find value in this real life example.
Growing up my family never had money. It was a bonus if the bills were paid, and I saw the stress that brought on my parents. I learned many of my money mistakes from my parents. They never had a budget, and any money that came in went straight out to pay for various late bills or loans. I vowed I’d never be in the same financial situation as them, but somehow I failed.
Mistake #1 - moving out aged 17
In 2010, aged 17, my then boyfriend (now husband) and I moved into our first studio flat together. I was a student at college, and my husband was an apprentice, so I’ve no idea how we thought we could afford it, but we wanted our own place. I had a part time job, and every penny we earned went on paying the bills. We were frugal and bought or sourced all of our furniture and appliances second hand or for free from places like Freecycle and Facebook Marketplace. It was a struggle, but the bills were always paid.
This would be the first mistake we made, and I would advise anyone teenager now to stay with their parents for as long as possible, until they finished education and had enough saved to either buy or rent a house.
Mistake #2 - getting an overdraft
Whatever we needed we had to save for, or try to source for very little money. If only we had kept that mindset with money, but unfortunately we didn’t. Luckily, at this point I wasn’t old enough to get a credit card or loan (you have to 18 in the UK), but my husband was a year older than me and so he was offered a £100 overdraft by his bank. Being young and naive, he accepted it. This would be the exact moment that our debt began.
We now had an extra £100 in our bank, what a treat! So, the first thing we did was head to the shops and buy some food. Not exactly extravagant but we were teenagers so our diets were poor. We had money for some nicer food so that’s what we bought.
Mistake #3 - financing a car
My husband ‘bought’ a car on finance so that he could get to work each day. He could get finance because he was employed full time, even though he was an apprentice, and so we sourced the cheapest car we could at £180 a month.
What we should have done was save our money for a few months so that we could buy it outright, but I’d recently found out that I was expecting our first child, and so this put some urgency on buying a car for us.
Mistake #4 - becoming pregnant before I qualified
I had my older two children whilst at university where I studied to be a nurse. At this point, by husband had qualified and was working as an engineer which helped us financially, but we could have been in a much better position if we’d have waited for me to qualify too. Having children is expensive, but even more so when you don’t have a job yet because you’re studying full time.
Obviously, I don’t regret having my children, they’re my entire life, but I do wish I’d waited until I was qualified and employed as this would have taken a lot of the financial burden away for us.
Mistake #5 - getting an overdraft to buy a car
Now that I was a parent, I needed a car to take my children to my parent’s house while I went to my university lectures, or work placement. I spoke to the bank and they recommended an overdraft instead of a loan because I didn’t have an income. Wise words bank, NOT! Naturally, I thought they knew best and went ahead and arranged a £2500 overdraft. I bought an old second hand car for £1000 and my insurance for the year was £1500.
You see, I thought I was being frugal here because I bought a cheap car. In my head I thought I didn’t owe any money on it because I bought it outright, unlike the monthly finance payment of my husband’s car. Clearly I didn’t realise that the massive overdraft was in fact the payment I owed on the car.
At this point, just 4 years after my husband and I had met, we’d gone from having £0 debt to having £2600 in overdrafts and around £8000 in car finance. I had qualified and was working full time as a nurse, but we were now over £10,000 in debt. We were making so many payments, but we were constantly living hand to mouth.