Being in debt is scary. There were times during the eight years that I struggled with my finances when I felt helpless and scared, alone and ashamed. Sometimes it was even so dark that I fleetingly wished I wasn’t there anymore.
When I was 18, I had left home in Southampton, England, to go to the University of Leicester. Before that, my parents had always told me that “money didn’t grow on trees”, and that they themselves weren’t “made of money”. So I learned that I had to work for money and that I had to live within my means. I found retail jobs and if I couldn’t afford something, no matter how badly I wanted it, I just didn’t buy it.
But when I got to college and went to the orientation fair, I had the opportunity to sign up with a lot of credit card companies, all of which seemed to offer me “free money”. Without thinking of the consequences, I subscribed to all the credit cards and all the offers offered; I even got a loan. I probably got around £30,000 ($40,000) in credit within a few weeks.
After I had access to the money, I continued to splurge almost daily. I went out most nights; buying a new outfit every time and getting my friends drinks. I felt free. And I felt like the money made me popular. I didn’t realize it at the time, but I was actually just an 18-year-old kid who was getting me into a lot of trouble.
In my first year I racked up about £25,000 ($33,000) in debt, but I never felt like I had no money, because I could spend, it’s not that when I couldn’t pay the refunds when it started getting really too much. I was really ashamed and afraid of being judged by my friends and family, so I kept it to myself. Eventually in 2003 in my second year of study I went to the university hardship fund and they gave me a loan of around £500 but that only made the things. I couldn’t afford to pay that back either.
I felt like a failure. I wasn’t going to class; I was just falling apart.
I didn’t tell my parents or my friends for about three years, I was too ashamed. Instead, I dropped out of college at the end of my sophomore year. At that time, with debts of £35,000 ($46,000), I knew I would not be able to support myself and pay off my debts unless I had a full-time job, working at a local bar. So I worked in a bar for two years and finally got a “real job” working in recruitment in Southampton in 2008.
But I hid my financial worries from my boss, pretending that I was fine. Then, one day in 2010, I was asked to recruit for a banking company. I was told that 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 problems. I had to tell my boss that I was in debt, and it was a very awkward conversation. After that, I realized that I had to sort out my financial problems. At this point, I was in a spiral of payday loans and credit card repayments. I borrowed more just to pay repayments, and I often missed deadlines, sometimes ignoring them altogether. In 2011 I was £40,000 ($50,000) in debt.
So that year, at the age of 28, I went to the Citizens Advice Bureau – the UK equivalent of American Citizens Services and Crisis Management – which helped me develop a financial plan to get out of debt, they suggested I use 50 percent of my salary to pay my bills, 30 percent of my living expenses, and 20 percent to pay off my debts, but I knew that wouldn’t get me out of the hole where I was. Instead, I created a new financial plan that included spending 50% of my salary on my bills, 40% on paying off my debts, and the remaining 10% on living expenses, which was really difficult. I lived on around £30 ($40) a week for food, socializing and anything non-essential. At the same time, my mother started helping me manage my bank account, she watched my expenses and paid me an allowance every week to make sure I didn’t buy anything new or get into more debt. .
As part of this process, I began to become aware of what I was spending each day. I had so little money to spend on myself that there were days when I only ate canned tomatoes on toast or grocery store noodles.
Since I had so little money aside, I did everything to limit my expenses during this period. I didn’t buy new clothes; everything comes from thrift stores. I went to the grocery store at night so I could buy some discounted food as a treat. Sometimes I would smuggle vodka through bars in a plastic bottle and buy soft drinks, just so I could still have a drink with my friends.
At that time I found out my credit score was 210 which is about the lowest you can get. So I worked on improving it by trying to see my approach as a game. I would challenge myself to earn more commissions at work, so I could pay off my debts faster. By the end of 2012 I had paid off about half of my debt so I followed my 50/40/10 strategy until I was completely debt free by the end of 2014,
While I’m relieved to have paid off such a big debt, I also feel like I missed a very big chunk of my 20s doing it, and it was hard work. But, on the plus side, I became obsessed with saving money. As soon as I paid off my debts, I started saving the 40% of my salary that I used to pay off my debts, so I was able to save quickly.
In 2015, I learned that I was pregnant. At the time, I had £3,000 ($4,000) in savings, but that dwindled quite quickly while I was on maternity leave.
I was supporting myself during maternity leave with maternity pay and doing a few days of work at the recruiting company where I worked, but it was not easy. So in 2017, I decided I wanted to help other moms enjoy maternity leave without having to worry so much about money. I started a business, My VIP Rewards, with the aim of helping parents who might be in a situation similar to the one I was in. It offers a discount card for parents so they can save money on going out, shopping and looking after their children. I finally felt debt free and being able to help people who might be in a situation similar to the one I was in is so rewarding.
I’m now 39 and compared to myself in my twenties, I have a completely different attitude towards money. I won’t buy anything unless I get a discount! I even started teaching my two children, Ben and Harriet, the value of money over the past two years. I don’t want them to be in the same situation as me when they grow up. Now I save for a different reason, not to pay off debt, but to give my children the best possible memories.
Maddy Alexander-Grout is a former radio host and worked in HR for 12 years before launching her first company My VIP Rewards, a UK-based money saving app myviprewards.co.uk.
All opinions expressed in this article are those of the author.