Get rid of your debt!

In the UK in 1979 household debt was 37% of GDP. By 1990 it was 73%. Just before the COVID lockdown, it was 83%. It is quite apparent the economic systems that have been implemented by the governments over the years have emphasized public borrowing to increase public spending. This has resulted in an ever-decreasing interest rate to stimulate borrowing. The entire system is built on debt. This debt creates the illusion of affluence. We see a nice car and think “Oh they must have a lot of money!” When instead we should be thinking “Oh they have a lot of debt!“ Most new cars on the road are bought with debt.

This borrowing culture has resulted in knock-on effects. Anxiety, depression, homelessness and suicide are linked to financial problems. Yet like an addict, the solution is more. More deregulation. More borrowing. More spending. More consumption. And like an addiction, it can only end terribly.

Many years ago, I was talking to a guy who was selling the Big Issue. I asked him how he’s got into that position. He said “I was married, had kids, a house and a job. I started gambling. I started losing. I started borrowing money to pay it back. Eventually, I couldn’t afford to pay it back!” It’s easy to think it only happened because of his addiction to gambling but people get into tricky situations financially for many reasons.

Much of my laissez-faire borrowing and spending was done under the pretence that nothing could go wrong. That I would always be in a position to get a job to pay it back. In 2008, there was an economic crash that resulted in me losing my job and not being able to find another job. The wolves at the door still demanded their pound of flesh. Sob stories don’t pay a debt, unfortunately. So I ended up borrowing more money to pay back the other money. I felt like a Dickensesque peasant going cap in hand begging for salvation. Thankfully, more debt was on hand to save me from the other debt.

“Every time you borrow money, you’re robbing your future self.”

Nathan W. Morris

Eventually, I found another job and got working. I paid back the people who had lent me money. I did this by borrowing money from a loan company. More debt. Yet, I continued to spend money I didn’t have on alcohol. I turned loans into lager and credit cards into vodka. The more money I borrowed, the greater my anxiety, the more I drank. It was a terrible time of avoidance. I understand that during difficult times it is hard to get by and a bit of borrowing is necessary. I understand that a lot of people are in wage debt. Meaning their wages don’t cover their outgoings. But our culture is one of “Why wait?”

“We must shift from a needs- to a desires-culture. People must be trained to desire, to want new things, even before the old have been entirely consumed. […] Man’s desires must overshadow his needs.”

1927

“I could be dead tomorrow?!” was the motto that drove me to destruction. Those words were the motivator for unnecessary levels of alcohol consumption. I wanted my last night on earth to be a party. If I was going to die the following day then why not go out celebrating. Fortunately, I didn’t die but I was left with a giant hangover from that lifestyle. Debt is comparable to a hangover because it is the cost of a good time. It is the downside to the pursuit of happiness through pleasure. The question that I never considered was “is it worth it?” Is the now worth the cost in the future? The cost of most things is simplified into monetary value. The numbers on the price tag and the need for instantaneous gratification outweigh future implications. Interwoven, access to cheap debt and the carpe diem mindset create a dangerous culture of escapism through consumption. Maybe my outlook is jaded. Maybe the self-flagellation I endured in the pursuit of happiness has left me cynical. I look upon contentment through consumption as I look upon contentment through alcohol use, impossible.

The weight of the debt I carried into sobriety was a burden. A terrible reminder of many slips combining to make a giant mistake. I had to do something about it. In a society that judges economic standing on the external demonstration of affluence, I found it difficult to make the choice to breakaway. To throw down the shackles of expectations and say “I’m out,” takes strength. Thankfully, quitting drinking had given me the clarity to see through the veil of nonsense. I was killing myself. For what? I wasn’t having fun. I was depressed. I was on the verge of ruin. I lived in fear of losing my job because I would be bankrupt. I lived month to month. For what? For a few “treats?” Like a couple of pints at the end of the day. Or “congratulations you are good at staying in debt and paying us our interest so have more debt!” To buy things to present the illusion of affluence at the cost of my own mental wellbeing. Is it worth it?

I get it. Life is fucking hard sometimes and the little treats are what makes it bearable for a lot of people. I understand that but I have learned; the need to escape diminished when I focused on the simple. A tiny bit of research shows that the things I had been told would make me happy and the things scientifically proven to make me happy are completely different. How can this be? One has to be lying. Is it the research or the people who are trying to make money? I had been following the marketers for years I decided to try another way.

“You have nothing to lose but your chains”

When I quit drinking I had around £20,000 of credit card, overdraft and loan debt. The amount of interest paid on my credit card was astronomical. My debt was keeping me financially unstable which caused more anxiety and fear. It was also limiting my freedom.

The plan: I owed £4500 on a credit card and £15,000 on a loan.

To give you an indication of paying back that £4500 credit card debt:

Paying £70 a month off the credit card would mean that it would take me approximately sixteen years to pay off the debt and it would have cost nearly £9000 extra in interest.

Or another way of looking at the crippling effects of credit card debt; £2500 of credit card debt paying off the minimum repayment would take 25 years to pay off.

(There is a reason why financial education is so atrocious/non-existent in schools. The cynic in me thinks that schools don’t prepare you for life. The conspiracy theorist in me thinks if they teach the rules to the game they can’t cheat you while you are playing.)

I moved my credit card debt to a 36 month, interest-free credit card. There was an initial charge for moving it over, of about 3 % and one on purchases but no interest on the £4500 I moved over. I continued to pay £70 a month at first and a bit more where I could. I saw the debt coming down with every repayment instead of paying a huge amount of interest. Previously, when I was paying the £70 a month £50 was interest. Now I was starting to chip away at the total amount. It was good to make progress.

Next, I took out a £15,000 loan over five years. The interest rate was higher then than it is now. It was about 10% then. Now it is about 3%, it is a perfect time to start to climb out of debt. Many people think “Ohhh debt is cheap I’ll get more.” Which is fine if it is used wisely but I had turned my debt into alcohol and drank it all. I refinanced the loan after two years when the balance was lower and decreased the number of years to keep the repayments the same.

There is probably a better way to do it but that is what I did and it worked. I managed to have a bit of spare cash here and there as well.

Spending money is a habit

Every day, I would think “I have worked hard, I deserve a drink,” and would then fall into the trap of drinking excessively. When I first quit drinking I was seeking a dopamine hit. I used shopping, sugar and salt to replace the hit I got from alcohol. Slowly, I began to see the same behaviour that I had when using alcohol. I had just been using a reward system that had bestowed upon me. The same reward system that kept me drinking every night under the pretence “I’ve worked hard I deserve it.” I should buy shit because I’ve been good/worked hard/feel down, the approach is the same to them all. I had to rewire those habits by doing something different until the feeling to treat myself was no longer there. The same with spending money; I had to resist the urge to buy shit I didn’t need. To do this I asked myself the questions; do I need it or do I want it? Can I afford it?

It took me a year to start seeing real financial improvements. The clearing of debt for me was cathartic. Closure on a previous life. If you want to be free from debt then you have to retrain your spending habits. It doesn’t mean you have to live a monastic life just a restrained life!

“Less is more.” It took me years to realise by getting less debt I would have more options. It also took me years to pay off the debt and liberate myself from the consequences of following a path to self-destruction disguised as liberation. I had chipped away at my debt, made sacrifices and stuck to the task. After five years, I was free of personal debt.

Quitting drinking, stopping borrowing money and stopping over-consuming allowed me to reverse the problems I had encountered. It also gave me the financial and mental freedom to choose a path of my own creation. To create a life that was more of a reflection of my inner desires. A life that allowed me to feed my spiritual, creative and physical pursuits instead of shutting them down.

You can have anything but you cannot have everything.

Jordan Peterson

Alcoholism and debt took my physical and mental freedom away. Sobriety and self control brought liberation. The days of anxiety have declined dramatically. Of course, there is a possibility that due to the current economic downturn I may lose my job but thankfully from taking the steps I did my outgoings are not what they were. I encourage anyone in a similar position to the one I was in to take the steps to liberate themselves also. I can’t tell you how to live, nor would I want to. All I can tell you is borrowing money to fix a problem today is at a much greater cost than finance tomorrow.

It is quite apparent that the lockdown in the UK has had an impact on people. Many see that the old way of living has had it’s day. Unneccasry discontent brought about by the need to escape the discontent now seems futile. I am not suggesting society regresses. Maybe more of a rebalance.

One thing I do know for sure is borrowing money to drink, smoke and shop to demonstrate my freedom was the biggest trap I ever fell into.

Charlie.