Respect for sharing this man. The mental space you gain from not having debt weighing down on you is incredible. Makes me sick how these high interest rate products are shoved down young peoples neck as soon as they start receiving a regular income.
Part of me wishes banks had good systems to allow for short term lending based on things like knowledge of income and outgoings, which wouldn’t force some to go to payday loans.
It’s a sad state of life that those who need to borrow money are the ones who have no access to do so, while those who don’t need to have access to so many funds.
I won’t say it’s a good system, but as far as I’m concerned, that’s the role of a credit card (though many disagree). Even a high 30% APR annually is roughly 2.5% per month. Which is the same APR for a mortgage. It falls down with low repayments, ease of attainment and excessive limits (given on the basis that you’re not meant to use them inappropriately).
My point is that often those who need that fund will not qualify for a credit card and therefore will resort to payday loans.
Or it’s something that’s just not payable by credit card - bills or rent for example.
Or it’s something that’s just not payable by credit card - bills or rent for example.
This falls down to the issue of “cash recycling” which is a problem only for bad business models like interest-free introductory offers (where they don’t want you to easily take that money out to invest somewhere else).
An ethical, no-nonsense credit card provider can do away with that and allow you to withdraw your credit to your account via a Faster Payment (because they would charge interest from day 1 they couldn’t care less about what you do with that money).
You see on topic of credit cards, 118 money scare me with their new approach…
They say they don’t charge interest, but a fixed monthky fee of £17, regardless of credit limit or spend. Causing excessive spending as it’s costing no extra and most cards have a £250, so that’s months interest of 6.8, around 80% a year… But all their marketing is trying to say it’s a “revolutionary alternative” to high interest cards.
Edit: reason I wrote this is to show you how they easily try to trap and convince people into over spending and lack of understanding.
Over the last 10 years I myself got into spirals of debt several times over. I accept that poor financial planning on my part was the main driver, but these companies are vultures, preying on those in desperate situations.
This time last year I was thousands of debt, defaulting on numerous loans and no end in sight until I stumbled across a website called Debt Camel.
I wasn’t even aware that these companies were breaching financial regulations supplying me with loan after loan after loan. I made affordability complaints against Wonga, QuickQuid, LendingStream etc. Every lender I complained against wrote off loans and refunded interest payments from historical loans. Some voluntarily, others following intervention from the Financial Ombudsman. I received a couple of thousand pounds in refunds and was able to use that to clear off any remaining debt. I’ve got a clean slate now and will never touch these companies ever again.
That’s great news, glad to hear of a happy outcome!
I have raised plenty of compliants too but unfortunately I wasn’t in the categories to it being unaffordable, due to my own mistake of working so much ! If I’d of stick to just the 9 to 5 definitely think I would of had a better success!
The sheer fact that Wonga has collapsed due to interest refunding from upholding compliants show that it’s a ticking time bomb before the next!
What a great story. Thanks for this. I wish schools taught kids how to budget, the meaning of APR and the satisfaction that you can get from beating the pressure to buy ‘stuff’, saving and being financially secure. You’d be a great role model!
Thanks for sharing
i feel a little bit like there shouldn’t be so much stigma around debt as there is, there’s a lot of work being put into depression etc with “its ok to not be ok” and stuff like that, but for me a lot of my debt came from depression or feeling down etc, - You’re in debt so feel down - feel down so buy something or go for a drink - spend money so end up in more debt and back to the beginning again
I think general finances of sorts need to be in the school curriculum, explaining the basics at least of how APR variable, Gross, monthly interest etc work, the way mortgage loans are calculated but i feel they never will be, because the payday loan companies pay taxes etc which if everybody stopped using them because they saw how bad they are then the government etc wouldnt get the income.
Having said that we are as a country/planet reaching a breaking point, i read an article the other day saying debt is $21 Trn yet GDP is $20 Trn (iirc) if that isn’t steered in the right direction soon then there will end up being another banking crash
Iv only just recently became legacy debt free (if that’s even a term!) i have my car finance and just taken out a mortgage, however its taken 10 years of struggle which looking back i could of done a lot more a lot quicker if id been given the right advice, or had the right people around me, i was 19 and took a job at heathrow that paid £4 an hour more than the going rate, so i was by far the highest paid out of my (bad) group of friends, so it was me that drove everywhere as they had no money it was me that got the first round and probably the last while most just sorted themselves out etc, plus i had fallout at home so was living alone and needed the company, so had days off hungover which meant i had less money but was living in a bad part of town, (a guy was stabbed 4 foot from the front door on the first night) with a chipshop across the road next to an off licence so id get a bottle of jd and some chips and that would be my night, it got worse then i started to pull it together and met a girl who got pregnant way too quick but we stayed together for a while then broke up and the rails came off again, drinking, waisting money, i started seeing another girl who dragged me even further into debt, once that ended i owed £15k was homeless as she hadn’t been paying the rent and had no work,
My aunt took me in and that was the point to sort it out. new town, new jobs, pretty much starting from nothing.
That was 8.5 years ago and now as i said I only have car finance which im trying to get paid of shorter than the term and a mortgage which realistically we all have to have in some way
Theres been some dark days and a lot of stress but in the last year theres been an even bigger push and a drive to be better and debt free. the attitude i had a lot before with paying bills was “i for hard im going out for dinner, what are they going to do if i don’t pay my gas bill”
Not portions blame to anyone other than myself and being easily led/reckless i also didn’t have the best example growing up, parents divorced my dad in tons of debt and living of credit cards i didn’t really look at the ways to live other than that.
i have recently been looking at a lot of other peoples opinions and theories on how to be better with money and some have made a difference (hence Monzo!), one being that everyone puts money in savings which is pretty much 0 interest at the moment, i think i have one with a preferential rate for 12 months at 2% but now its 0.25% but if you have a set figure in your savings for emergencies then why not put the rest to outstanding debts or mortgage, hopefully i worked this out right, i know the theory is but my figures might not be lol but over 12 months if your mortgage is 4% then £100 you could put in savings would get you £2.40 at 0.2% or £100 at 4% is £48 but doing that onto the mortgage would mean you then bring your total interest payment down and get mortgage free quicker which we all want
i appreciate to many my theory will be obvious but its an approach im going to try, My girlfriend has some credit cards with high limits that she doesn’t use so should there me an emergency we will be covered, i can then put my money to getting mortgage free in a short a time as possible, just to save the interest.
hopefully my waffle isn’t too much
Really appreciate the share and happy to see you’ve also got things going well!
Definitely a good attitude to have! Keep waffling to people as it’s only way to clear the stigma People still hold and stopping others having to get out of similar situations !
Such a great post — thanks so much for being honest and open as it helps people to see there’s always a way out if you’re prepared to make some changes and be humble. On another note, how good is it that Monzo has created a space where we can have these types of conversations. I’m such a fan of their ethos, I hope one day a whole generation of people moves to Monzo and the big banks that have relied on greed and dishonesty for far too long all become relics of the past.
@Dannytc great experience shared! I some similar experiences learned which have helped me pay down debts (no car finance, sim only iPhone, no credit card debt etc). However, one debt I haven’t concentrated on is student loan. What made you decide to pay it off? MSE regularly say to never pay it off however I’ve worked out that I will pay it off before it gets written off. What made you’d decide this was the way rather than just let it run it’s course?
Once it’s paid off it will feel like a mini payrise reward from my salary and be great to owe not a penny to anyone
I had this train of thought…but then I decided if I had the extra cash I’d pay a lump sum to the mortgage company. The trouble is that my partner and I are very 50/50 so that’s a no go - offset mortgage anyone?
I don’t have a mortgage yet, so also helps me look better when the day comes to apply for one if I have no student finance
Pay your mortgage I’d say!
Coral crew by day…financial advisor by day
Offset mortgage it is!
I used to have an offset mortgage but then the savings disappeared and well there wasn’t too much point!
Moved to a really low fixed rate for a few years which actually knocked 3 years off the mortgage for an extra £1 a month!