Four Into One
How Does Getting into Debt Begin
It is amazing how easy it is to get into debt. It doesn’t happen over night but once it starts happening things seem to go into a downward spiral. The descent is rapid making it difficult to turn things around.
It was the early 1970s when my husband and I went from being a married couple with a dog to being a family of four and a dog.
We had gone from having two incomes to having one. Now four of us, a dog and a mortgage were having to live on one wage packet.
Instead of two into two it was now four plus a dog into one and so began our decline into debt.
Just after our daughter was born in 1973 we started to look for a new house. The house we lived in had only two bedrooms and we wanted one with at least three bedrooms.
We sold our first home and bought the one that we were to live in for the next thirty years.
We had to move out of the city as we could not afford a three-bedroom house in the city. We moved to a small market town which was fifteen miles from our old house.
The houses in the small market town were cheaper than the city.
After much searching we found the house that we fell in love with at first sight.
We put down the biggest deposit we could and we got the biggest mortgage we could.
My husband managed to convince our Building Society that we could afford the repayments. I still don't know how he did this because these were the days when lending was still done responsibly.
I think that maybe it was the fact that we had put down a large deposit that got us the mortgage. The money for the deposit came from the profit on the sale of our first home.
We started off just about able to break even at this point. We had one child but within the year our second child was born so our expenses went up quite a bit.
What followed next was a series of mortgage interest increases. These increases were the start of our troubles.
When we took out our mortgage the interest rate was about 7%. The rate was to rise over time to a staggering 14% unfortunately our income did not rise to match this.
From Babies to Toddlers
In the next two years our children went from babies to toddlers. Our toddlers grew and changed fast. At this stage toddlers they need new clothes and shoes, almost continually.
Our first child was a girl and our second child was a boy. There were a few things our son could wear after his sister had grown out of them. But many things he could not as they were not suitable for a boy to wear. It was during this time that things started to go wrong.
We continually had more month than we did money. With two young children I was tied to the home.
There was no way I could earn any money to help out. The burden for providing for the family was wholly on my husband.
Bless him he did his best, he did all the overtime available yet still we began at the start of the month on pay-day in a hole.
When we paid all our standing orders and store cards we were already out of money to live on for the coming month.
It got so bad that we had a letter from our Bank Manager. The letter basically said they wanted to go back to the old arrangement. This was where we banked with them rather than them banking with us.
The letter was amusingly written. But make no mistake the bank manager was deadly serious. He was telling us that starting each month off in debt and going overdrawn at the bank had to stop.
Store Credit Cards
How had we got to this point? It started off when we had needs that we had to meet and no money to meet them.
When the children grew out of their shoes, they needed new ones. It did not matter that their old shoes still had plenty of wear left in them. The shoes were too small for them so I had to buy new ones in a larger size.
Not having any money we were not able to go to the shop and buy a new pair of shoes so we had to find another way to pay for them.
Our answer to this problem was a store credit card from the Co-op. With this card we could buy things in the Co-op right away when we needed them.
We still had to pay for them of course but we could pay later by instalments. At the time this seemed to be the answer to our prayers.
Our Co-op was a large department store that sold everything that a family could need. The store sold food, clothing, electrical items, shoes, furniture and everything in between.
How easy was it to get store credit cards in our dire financial condition? It was ridiculously easy.
During this period we were never refused a store card all we had to do was fill in the relevant form.
The good thing, or so it seemed at the time, was that the necessary repayments were small. What we didn’t think about was that it also took a long time to pay the amount off.
We paid the minimum we could off our store cards each month. We didn’t take notice that when we paid off the minimum allowed we barely covered the interest due. That left the sum that we borrowed hardly touched at all.
My husband worked in an office type environment so he had to have decent clothes for work. So again a store card came to our rescue and we got a Peter Brown store card.
Peter Brown was a men’s tailors. So any shirts, ties, suits or jackets that my husband needed for work we got from Peter Browns.
The repayments on this card were only small and spread out over a long period of time.
We also obtained a credit card so that we could buy in an emergency from other shops.
Once we obtained a credit card it was not long before things popped up that seemed like emergencies.
At First Keeping up the Repayments Was Easy
At first having things purchased using store cards was fine. We managed quite easily to repay the small amounts each month on each card.
It was not too long though before we needed to buy more things. Because we were only paying off the minimum our previous purchases were not yet paid off.
In a short time even those small repayments start to add up and it was becoming difficult to repay.
We soon found that we were still paying for items long after the kids had grown out of them.
As a result of our mounting repayments due on the cards we had no disposable income available to us at all. Every penny my husband earned was already spent before it even came into our hands.
It was a vicious circle mounting repayments meant we had no cash. No cash meant we had to depend on the store cards to meet our needs.
We truly felt trapped. We felt that having no money meant that we had no other choice than to use the cards.
As our children grew we needed to buy them new clothes and shoes. The only way we could see at that time was to get them was by using the store cards that we had.
Name Brand Goods
Name Brand Goods
Stores big enough to offer their own store credit cards often stock named brand goods.
In town we had half a dozen or more large chain shoe shops that sold cheap shoes. In these shops and on the market I had my pick of cheap shoes. I could probably have bought shoes for the children for around £5 a pair from these shops.