Drowning in debt

It’s time to face up to the worst financial decisions we’ve ever made. The ones that make us sweat and tremble. The ones that we pay for. Over and over again.

I’m talking about debt.

If you’ve done any sort of personal financial study, you’ll know that we should only take on debt for appreciable assets. That is, we should only borrow money if we’re confident the asset will grow in value.

If you’ve done any sort of personal financial study, you’re also in a minority. We live in a society where financial literacy not only is not part of our education system, it’s also not part of public discourse.

You know that old adage – don’t talk about politics, religion, money. It’s got us all into so much trouble.

Pretty much the only debt that makes sense financially is a mortgage and some business investments.

Yet we also live in an absolutely daft system where the only way to get a good credit score is to have some debt history, which for most of us means credit cards, overdrafts, bank loans and car payments.

In some sense we are forced to take on debt. Add to that a social acceptability of these loans and we’re headed for trouble.

If this is you, you’re far from alone. Most of us have some sort of unsecured debt at some stage of our lives. A lot of us have a lot. Especially in the horse world, where is can be awfully tempting to take out a loan for the special horse, put the horsebox on finance, decide you need a new arena. Not to mention the unexpected vet bill that has to go on the credit card.

The galloping housewife has been there. She’s also made her way out.

The only way you’re going to do this is by facing up to it. Digging all those bills and statements out and writing them down. Figuring out exactly what you owe and who to.

Next write down all the current repayments you’re making – minimum payments, direct debit loan repayments, car repayments, overdraft interest charges.

Dig out the terms and conditions. Find out if there are any you can take payment holidays from, and what impact that has over the long term. See if any have early repayment penalties or rewards. Note the interest rates for each debt.

Finally calculate what you’re currently spending on debt servicing and what you can afford.

It’s only now that you can begin the process of digging yourself out of the shit pile.

The galloping housewife recommends that you start by committing yourself to a season of paying it off. This doesn’t mean that you live like a pauper, in fact far from it. Doing so is unsustainable and counterproductive. The only way that we can improve our financial situation is to improve our worth and the first step for that is self-worth. Make sure you allow yourself the little luxuries that make you feel human and abundant.

What it does mean is that for a period, you’ll set aside a portion of anything that comes in towards paying the debt off. Beyond a safety net of savings, the surplus goes into this.

The financial gurus will tell you to pay off the debt that costs the most, first. That is, the one with the highest interest rate.

The galloping housewife suggests something quite different. She knows just as financial worth is tied to self-worth, the understanding that it is possible to pay off debt is key to actually paying off the debt. And not just academic understanding, actual, real, tangible understanding.

Therefore, she suggests that you attack the smallest debt first. Do whatever you can to get it paid off. Sell something. Do overtime. Take on a side hustle. Even reduce the payments on your other loans for a time. Just get it gone.

The sense of achievement, the sense of pride, the utter relief from having just one small loan removed from your ledger is priceless. This is what is going to give you the confidence that you can do this. This is what is going to ensure that you remain motivated both consciously and unconsciously as your subconscious chases these feelings again and again.

Then simply rinse and repeat. After popping that champagne you have on ice. If there’s something worth celebrating, it’s got to be making the first step to regaining financial control.

Please note, the galloping housewife is not a financial advisor in any capacity. Anything she writes is simply her own opinion and must be considered as such. She is a horse person and an entrepreneur and speaks only from lived experience and her lifetime accumulation of knowledge around budgeting, accountancy and economics through personal study and an unfinished finance degree. But most of all she appreciates that we are human. Sometimes we screw up. And the way back from that is not just numbers on a balance sheet. The way back from that is understanding that most of the reasons we get into difficulties in life is because we followed our emotions. And it’s these same emotions that are key to leading us home to the safety and security we crave.

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