I’ve been thinking a lot these past few days and as I catch up on emails and telephone conversations with friends in real life (not that you aren’t all friends, but I do have to remind myself lately that not everyone has a blog!) I’ve come to see a common thread between friends in significant debt, and I have 4 of them, and that is impulsivity! All four will openly discuss their debt with me (all are at least £30K in non-mortgage debt), 3/4 are American, between ages 38-42 and all have children. But one thing I find fascinating about our discussions is every time we have a discussion they have something new bought or planned. Here’s an example:
Friend A - Married, late 30’s, £45K of non-mortgage debt, plus mortgage (about 90% of the value of their home) stay at home mum, 2 children under 3. Our conversation last week, they bought new household appliances (theirs were on their last leg, apparently although still working!), a new mattress (as theirs was no good?!) and started renovations on their kitchen - it needs it apparently. And apparently the almost 3 year old needs to take tap and music lessons as she needs something to do.
Friend B - Married, late 30’s, £38K of non-mortgage debt, plus mortgage (negative equity), work full time, 3 children 7 and under, our conversation this weekend? Apparently they moved, switched jobs (not due to layoff or impending layoff, wanted something different), only can’t sell house or get renters, so now not paying mortgage, got 2 new cats and another dog, decided to breed the dog only couldn’t sell the puppies, so I believe they were being taken to a shelter.
Friend C - Late 30’s, £31K non-mortgage debt, plus mortgage (about 50% of value of the home as she bought it many years ago), 3 children ages 9 and under, work full time. Had another child (decided to and was expecting with a couple of weeks) and then told me they can’t afford the nursery fees on take home pay, so they go on the credit card each month as does the council tax!
Friend D - Early 40’s, married, £42K non-mortgage debt, no mortgage (they rent), 1 child age 4, mum works full time, dad works part time, got on a minimum payment plan for debt (consolidation) only pay the minimum. Our conversation this weekend? They bought a timeshare and she got the boots she needed, at £100.
I have news for anyone in debt, wanting to change their financial situation, those in desperate need of savings and anyone else. Stop with the impulsiveness!!!! If you want another child, then you need to plan for it. You need to work out whether you can afford maternity/paternity leave, whether you can afford nursery fees (if they need to go to nursery). I do not for a moment believe that children NEED to be as expensive as we make them. I parented children for almost a year and was amazed at what their friends had lavished on them. We had good old fashioned fun, we visited the library 1-2x a week, went to our local council run community centre for free or heavily subsidized programs, we went on nature walks, visited parks, had picnics outside, bought art materials and set to work outside. We had birthday parties with small groups of close friends, including “a Victorian tea party”. If you want to add to your family, you need to focus on getting out of debt, saving for those costs with are necessary (maternity leave, basic items etc) and make a plan! Children are such a blessing, but our actions as adults often make children seem like a burden. It is us who spends too much on babies, it is us who thinks giving a child everything is about finances, when actually often it is more about time, stability, love and simplicity.
Household items - the whole time I was in London full time I had no vacuum, yes none. Yes it was a lot of work to sweep those floors and sweep those floors and sweep those floors. But more than I needed a vacuum I needed an emergency fund. Same goes for a kettle - yes I went without a kettle. I went 12 months without a camera which was difficult, very difficult, but I don’t need a camera to survive! I don’t have a drying machine (fine by me as it is more eco friendly to hang clothes to dry anyways). My point is that we need to really really really see the difference between need and want. This has been such an important lesson for me. I’ve mentioned it before, because I also think it is about using the right language“our household appliance is on it’s last legs” could be changed to “our household appliance may be old but it is still working, so we are focusing on saving to replace it when necessary”. See the difference there? I’ve been told it would be a good idea for me to have a surgery (I’ve chosen my words carefully there many people would say need a surgery but I don’t believe it is a need because it won’t kill me not to have it, it will make my life easier if I have it, it will probably make me feel better about my health situation but those are not needs). It will cost me around £6,000 (it isn’t covered on the NHS). I can see why the surgery is a good idea. I could sit here and say “I can’t afford it”. But that wouldn’t be using the right language to use or the right value to teach myself. So instead I say “there is a surgery I would like to have, that right now I don’t have the money for, I plan to start saving for it and hope to eventually be able to have it“.
Moving, selling houses etc - unless you have to, you don’t jump jobs and areas without selling your house or being able to rent it out unless you can absolutely afford those mortgage payments for, I would say in this economy, a year. You don’t create chaos for your children, your marriage and your own life by making a decision to quit a job on a whim with no back up, move when you have to put your moving costs onto a credit card with no real plan or backup should things go wrong. You are risking the roof over your children’s heads doing this!!!
Pets- I love, uber love my kitty. I’d love a dog (I had one growing up, through my adolescence etc), I really really would. But you know what? Right now it isn’t in the budget. In order to have a dog not only do I need to be able to afford to feed it and take it to the vets, but I need money for when I go away, any potential health issues, insurances etc. In terms of the pecking order of finance, right now the priority is emergency fund, catching up on retirement savings (doing well so far, need to update on this!), then a house fund. There are so many ways I can spend time with dogs, by volunteering at the RSPCA or another animal shelter, volunteering with working dog charities and programs, helping walk friend’s dogs etc. For some people having a dog may be more important than a house fund, maybe some people can afford both, right now I’m choosing not to do this not saying I can’t afford to, simply because there are soo many changes in my life right now that I need to know I’m at the right time, place and financial situation to commit to a dog, not for a month or two, but for 10 years plus. When the time is right, I’ll make sure I have £500 in a pet fund, to ensure that if vet bills crop up I can handle them!
I guess the point of this long, rambling post is to remind myself and everyone to PLAN! Make a 1 year plan, a 2 year plan, 3, 4, 5 year plan. Where do you want to be and perhaps more importantly how are you going to get there? If you want children then how are you going to make that happen? So many people say “we’ll have a baby in 2 years” well are you willing to forgo things now in order to make that happen? Are you willing to quit eating out and save that £20 a week into a fund to top up your maternity leave? Have you figured out childcare costs and how you will afford them? If you know you’ll need (said cautiously) a new vacuum, bed, tv, camera, car….well what are you doing about it? Are you cutting back now to be able to buy it cash? Are you really really examining need vs. want? A tv isn’t a need, really it is a want. Sure it is nice to be able to put it on, but let’s be honest. When I went 7 weeks without a tv as I didn’t want to buy one until I had the money in the bank to pay for it, I never never said I need a tv, that meant I didn’t feel sorry for myself, I didn’t think I was going without, instead I admitted what I wanted and found a route to get it, through hard work, saving and a plan!
Just remember when someone knocks at your door, or you walk into that electronic store/furniture store/salon, they are looking for someone, hopefully not someone like you, who will buy into myth that you need and deserve what they are selling, that it will make your life easier, make your image better and make you happier. And you know what? For most things it is an absolute lie! There is nothing like the contentment of knowing you have no debt and savings (even a small amount) behind you. Don’t get sucked in. Start with no spending days to train yourself in self-disciplin and change your financial picture as a result!!
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