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Being in debt is frightening. There were times in the eight years I struggled with my finances where I felt helpless and afraid, alone and ashamed. Sometimes it even got so bleak that I would fleetingly wish I wasn't here anymore.
At the age of 18, I had left home in Southampton, England to attend college in Leicester. Before that, I had always been told by my parents that "money didn't grow on trees," and that they themselves were not "made of money." So, I learned that I needed to work to have money and that I had to live within my means. I got jobs in retail and if I couldn't afford something, no matter how much I wanted it, I just didn't buy it.
But when I got to college and went to the orientation fair, I was met with opportunities to sign up with a huge number of credit card companies, all of whom seemed to be offering me "free money." Without thinking of the consequences, I signed up to every credit card and deal on offer; I even got a loan. I probably got around £30,000 ($40,000) worth of credit in a few weeks.
After I got access to the money, I went on spending sprees almost daily. I would go out most nights; buying a new outfit each time and treating my friends to drinks. I felt free. And, I felt like having money made me popular. I didn't realize at the time, but I was actually just an 18-year-old getting myself into a lot of trouble.
In my first year I wracked up around £25,000 ($33,000) in debt, but I never felt like I didn't have any money, because I could spend, it wasn't until I couldn't afford the repayments when it started to really get too much. I felt really ashamed and I was worried I would be judged by my friends and family, so I kept it to myself. Eventually in 2003, during my second year of studies, I went to the college hardship fund and they gave me a loan of around £500, but that just made things worse; I couldn't afford to pay that back either.
I felt like a failure. I wasn't going to classes; I was just flunking out.
I didn't tell my parents or my friends for around three years, I felt too ashamed. Instead, I dropped out of college at the end of my second year. At that point, with debts of £35,000 ($46,000), I knew I wouldn't be able to support myself and pay off any of my debts unless I got a full-time job, working in a local bar. So, I worked in a bar for two years and finally got a "proper job" working in recruitment back in Southampton in 2008.
But I hid my financial worries from my boss, pretending that I was doing well. Then, one day in 2010, I was asked to do some recruitment work for a banking company. I was told this bank would need to do credit checks for me to work on the account and realized immediately that my company would know the extent of my financial woes. I had to tell my boss that I was in debt, and it was a very awkward conversation. After that, I realized I had to address my financial issues. By this point, I was in a spiral of payday loans and credit card repayments. I was borrowing more just to afford the repayments, and often missing deadlines, sometimes ignoring them completely. By 2011, I was in £40,000 ($50,000) worth of debt.
So, that year, at the age of 28, I went to the Citizens Advice Bureau—the U.K. equivalent of the American Citizens Services and Crisis Management—who helped me to put together a financial plan to get out of debt, they suggested using 50 percent of pay salary to pay bills, 30 percent on on my living expenses and 20 percent to pay off my debts, but I knew that wouldn't get me out of the hole I was in. Instead, I created a new financial plan that included spending 50 percent of my wages on my bills, 40 percent repaying my debts and the remaining 10 percent on living costs, which was really tough. I was living on about £30 ($40) a week for food, socialising and anything outside of essentials. At the same time, my mom started to help me to manage my bank account, she monitored my spending and gave me an allowance each week to make sure that I didn't buy anything new or get myself into further debt.
As part of this process, I started to take notice of what I was spending every day. I had so little spare money to spend on myself, that there were days where all I would eat was tinned tomatoes on toast or grocery store noodles.
Because I had so little spare money, I did everything I could to limit my spending during this time. I didn't buy any new clothes; everything came from thrift shops. I went to the grocery store at night so that I could buy cut price food as a treat. Sometimes, I would smuggle vodka into bars in a plastic bottle and buy soft drinks, just so I could still have a drink with my friends.
Around that time, I found out that my credit rating was 210, which is pretty much the lowest you can get. So, I worked to improve it by trying to view my approach as a game. I would challenge myself to earn more commission at work, so that I would be able to pay off my debts more quickly. By late 2012, I had paid off around half of my debt and so I stuck with my 50/40/10 strategy until I was completely debt free by late 2014,
Although I'm relieved to have paid off such a big debt, I also feel like I missed a really big chunk of my mid-20s in doing so, and it was hard work. But, on the positive side, I actually became obsessed with saving money. As soon as I paid off my debts, I began saving the 40 percent of my salary I had been using on debt repayment, so I was able to save quickly.
In 2015, I found out I was pregnant. At that point, I had £3,000 ($4,000) in savings, but that dwindled away pretty quickly whilst I was on maternity leave.
I supported myself on maternity leave with maternity pay and doing the odd day of work at the recruitment company where I worked, but it wasn't easy. So, in 2017, I decided that I wanted to help other moms enjoy maternity leave without having to worry as much about money. I launched a business, My VIP Rewards, with the aim of helping parents who might be in a similar situation to the one I had been in. It offers a discount card for parents so they can save money on days out, shopping and looking after their kids. Becoming debt free is when I finally felt free and being able to help people who might be in a similar situation to the one I was in, is so rewarding.
I am now 39 and, compared to my 20-something self, I have a completely different attitude to money. I won't buy anything unless I can get a discount on it! I have even been starting to teach my two kids, Ben and Harriet, the value of money over the past couple of years. I don't want them to be in the same situation as me when they are older. Now I save for a different reason, not to pay off debts, but to give my children the best possible memories.
Maddy Alexander-Grout is an ex radio presenter and has worked in HR for 12 years prior to starting her first business My VIP Rewards, a UK based money saving app myviprewards.co.uk.
All views expressed in this article are the author's own.
