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Using cash got me out of more than £50k of debt

Buying a house and starting a family got me into a spiral of debt I thought I’d never escape from – but paying for most things in cash saved me, writes our guest author Katie Johnson.

This is a guest post by Katie Johnson. All views expressed are Katie’s own and not necessarily shared by Which?.

My debt problem started at uni in the late 1990s. I just didn’t have enough money coming in to cover costs: the near full-time job barely covered my rent (this was before minimum wage) and my parents didn’t have a lot of money to help me.

So I came to rely on credit cards, overdrafts and store cards for day-to-day living. I had a store card for almost every shop. I relied on them for my clothes, sometimes buying books I needed. It was crazy how easy credit was in those days. I left university with about £2-3k of overdrafts and store card debt.

I think if I’d just stuck to using cash and budgeted, I could have avoided this – but at the time having debt didn’t seem like a big issue… and so it went on.

Easy credit

After uni, I met my husband and we wanted to buy our first house. We took out a £6k loan for our deposit – incredible to think you were able to do that back in the early 2000s… then we got a loan to buy our first car.

We got married in 2002 – we took out a loan to pay for our wedding and honeymoon. We didn’t even have big incomes, but loans were just so easy to get – no one refused us. And it just went on like this.

By 2005, between the overdrafts, credit cards and the loans for the car, the wedding and home improvements, we were over £53k in debt. Every penny we earned was now paying the mortgage, food, petrol and debt repayments: the debt repayments were 2/3rds of our outgoings. It was mad.

Being in debt is devastating. I don’t think you can ever explain how horrific it is getting 17 creditors calling you up five times a day, every day between 6am and 10pm at night. Telling me that I’m worthless. It was so tough. It can break you.

Taking control

But in 2008 I took control. I did a course on personal budgeting with CAP (Christians Against Poverty) and applied the principles to our own finances.

We started using cash primarily to pay for everything and it entirely changed how we used and thought about money – you can’t go overdrawn with something that’s physically in your purse.

Read more about the Which? Freedom to Pay campaign

To budget, I opened two more bank accounts, one just a cash account, one as a savings account. Every month I put a lump sum of cash into the cash account and then took out a set amount each week and kept it in my wallet.

I’d have envelopes in my wallet for what the cash was for; the food shopping money, petrol money etc. If there was anything left in the cash account at the end of the week, we’d have a takeaway as a treat.

Debt busting

We followed this for eleven years and finally went debt-free in October 2017. We knocked 6 years off this debt management plan just because we completely relooked at our finances.

So much of this was achieved by just using cash to pay for things.

I work for CAP now as a money coach and it’s horrendous the effect debt can have on people. Every year we deal with about 8,000 people struggling with debt – and it can cause severe emotional and mental health problems.

It’s a huge problem across the UK. If some people just dealt in cash, if people were educated better around money management, so much of this debt and the suffering it causes could be avoided.

Comments

Just to be absolutely clear, Katie, do you believe it was the ease of obtaining credit that was primarily responsible for the situation in which you found yourself?

Like you, my wife and I also went to University and incurred significant debts, which we cleared once we were both working, by a process of strict budgeting. Of course, credit was absurdly easy to get but we read the bit where it said we’d have to pay it back, did the sums and borrowed what we could afford to repay within our budgets. Of course, that involved cutting costs and not spending lavishly on unnecessary items, such as getting married and honeymoons.

It seems to me that the entire topic header is misleading in the extreme. Using cash was not the primary cause of escaping more than £50k debt. Budgeting is. And it does worry me that some may be misled into believing that just using cash will abolish all their money worries. Being financially unwise often suggests other issues, and simply moving to cash is rarely the answer.

Gosh; am I starting to sound like Malcolm?

Well, I agree with Ian 🙂 . We can get ourselves into painful debt by borrowing money when we do not really have a plan to repay. But in my view, like Ian, the key here is to make a budget so that you know, out of the money coming in, where it needs to be spent on unavoidables, what might be left to save for a rainy day and, if you are fortunate, spent on nice things.

I was brought up in the days before credit cards and also believe there are merits in cash; taking real money out of my wallet still gives more of a feeling of parting with real wealth than does the credit card, debit card or online bank transfer. I doubt that modern people will experience that. But I don’t believe that cash is the answer. It is to budget and to use common sense when committing to spending.

The Money Advice Service has what looked to be an excellent tool to help people prepare budgets. Banks should promote the same tool to all their customers.

One of Which?s services, as part of its social responsibility, could be to offer a “Which? Budget” tool.

What has happened to Ian’s comment? Both Malcolm and I have referred to it but it cannot now be seen.

It is being moderated, folks; quite why eludes me. It concerns me that the thrust of the header – and in particular the title – is misleading. Cash was not the solution; budgeting was.

If Which? is promoting the idea that using cash is a panacea to debt-related problems then I think that should be raising red flags.

Ian, I’ve sent you an explanation by email.

And I’ve replied, Jon.

I read Ian’s opening comment and cannot for the life of me see why it has disappeared. Can someone explain?

I could print Jon’s email, except he might put it into moderation.

Katie, I appreciate(d) your predicament and understand the difficulty people get into with money. I went through the same kind of problem when I was young.

I did look carefully at your story. I still maintain that the key to staying out of, or getting out of, debt is to firstly know how much money you have coming in and secondly to know what your absolutely essential outgoings are. You can then see your financial picture. This is about creating a budget. Even if your essential outgoings exceed your income you need to know the detail which is what a budget is about; without one you are simply financially blind.

How you decide to operate that budget is the next step. I am from a cash generation and I find that spending it has more of an impact than cheques or, particularly, credit cards. So if that works, then fine. But putting pound notes in envelopes is still preparing the budget.

I guess most people cannot pay for everything with cash. They will have direct debits – mortgage/rent, insurances, car loan, maybe so they need to track all these as part of their financial control.

I do a fairly detailed budget every year, even though I have less need to now. It is a habit and was essential in earlier married life with a family to stay out of debt.

Teaching students in school about financial matters is an essential life subject in my view. I’m sure you find it rewarding.

Katie, you say above
“I don’t believe the ease of gaining credit was the issue

but in the introduction you say:
we wanted to buy our first house. We took out a £6k loan for our deposit – incredible to think you were able to do that back in the early 2000s… then we got a loan to buy our first car.
We got married in 2002 – we took out a loan to pay for our wedding and honeymoon. We didn’t even have big incomes, but loans were just so easy to get – no one refused us. And it just went on like this.
“.

I’d suggest that if credit had been more difficult to obtain you might have got a cheaper house, cheaper car, spent more prudently on your wedding and honeymoon and thought harder about what home improvements you needed and could afford. So I suggest going for credit and loans was a major factor, ignoring the balance between income and outgoings – the essence of budgeting.

Katie’s story is a parable for modern times. It is easy with hindsight to see where things went wrong and I am pleased that, through determination and persistence with a recovery plan, things have turned out alright in the end . . . but at what a cost, and not just financially.

How can we inculcate financial prudence? Financial mismanagement is such a potentially perilous state of affairs, with all manner of adverse personal and social consequences impacting beyond the subject, that much more effort should be put into teaching the lessons of overspending and over-borrowing at around sixteen years of age. If people clever enough to go to university can easily fall into this debt dependency culture then how can we save those less gifted or less experienced?

Could it be that going to university was the catalyst for all that followed? That’s an uncomfortable thing to suggest, and things are worse for today’s students who are coming out of higher education with a mountain of debt and – depending on what course they followed – not guaranteed to pay it off before they need a home of their own, start a family, and join the consumer society with its ‘spend it today, think about it later’ philosophy. Even with the suspension of student loan repayments until an earnings threshold is reached the continuing existence of the debt is a psychological handicap and could also make it more difficult to get out of rented accommodation since it could affect the capacity to take on a mortgage. Gadding about the world in a gap year might also be rued in due course. No opportunity to make money and save it should be wasted at that point in life.

As Ian says, budgeting is the key – using only cash can be a useful mechanism to assist budgeting but the primary motive must be to live within your means from day one of the independent adult life.

In terms of the temptations to lead us into debt I think store cards have a lot to answer for. No one lender can see the overall picture so each account is allowed to run up to an excessive and unaffordable limit. If credit referencing worked properly this would not happen

There is news today that a pay-day lender that has gone into administration will not be able to meet its compensation liabilities for ‘miss-selling’ short-term loans. It did not make sufficient enquiries into the income and outgoings of its clients and has been ordered to pay compensation which it cannot now afford because its cash flow from continuing loans is inadequate. The people who will lose out are probably some of the most necessitous. But what controls are there on store card lending to make sure people can manage them properly and afford the repayments at very high compound interest rates? Why do people not realise that a ‘credit’ card is actually a ‘debt’ card?

I believe Katie’s story is far from unusual and there might be very many people who will remain saddled with big debts for decades and with little hope of escaping and bettering their lives. It concerns me that ‘consumerism’ and the ‘have it now’ attitude to life, coupled with anxiety to keep up with one’s peers, will claim many more victims. They might not break down psychiatrically but their relationships might and their family circumstances could plunge into a downward spiral that affects later generations.

Thanks for sharing your story, Katie. I’m glad to hear that you have succeeded in tackling your debt.

Living at home when I was at university saved me the cost of paying for accommodation. I did have a couple of credit cards but that was so I could place orders over the phone and at the interest rates charged then (and now) the balance has always been paid off in time. If you need to borrow money there must be cheaper ways.

As far as I know, my parents never borrowed money other than paying a mortgage. That worked for them and it has worked for me. It amazes me that people pay for sandwiches, cups of coffee and ready meals when it’s simple, cheaper and often more environmentally friendly to make your own.

@katie-johnson – thank you so much for sharing this. We really appreciate people opening up like this to highlight issues that others might not have considered as their life experience is completely different. There is a lot of stigma and misunderstanding about debt – you opening up will help towards breaking that.

I thankfully didn’t end up in as bad a situation as you did but your story has many parallels to my life. I have gone through times when overdrafts and credit cards were just too easy to use to get me through to pay day. I also found cash essential to help me budget in those times.

Thanks for coming back to your Conversation, Katie. I hope you can remain debt free in future and be able to save for your retirement.

I strongly support the need to keep cash available for everyone who wants or needs to use it.

I don’t believe debt per se carries a stigma, Katie. But events happen in everyone’s lives; I lost both my parents, but before we had children we took care to do the sums carefully to ensure we could live within our means, even if our income were to halve. We didn’t have an expensive wedding, we didn’t buy new cars until we knew we were financially secure and we deferred buying new household items until we knew we had the money in our accounts.

You say

I just didn’t have enough money coming in to cover costs: the near full-time job barely covered my rent (this was before minimum wage) and my parents didn’t have a lot of money to help me.

My parents had no money to help me. My first full time job paid £17.00 per month.

Now, and as he will tell you, I’ve debated with Malcolm long and hard about punitive interest charges on accounts for those least able to afford them. There continue to be significant sections of society in real need and I’ve been active outside of W? with groups opposing the government’s continued austerity which affects only the low income earners and which is iniquitous in the advantages in gives the wealthy.

So I do not regard debt itself as anything to be ashamed of. In many cases it’s utterly unavoidable. My issue is with both the title of this piece, which I feel is misleading, and my confusion over the details. When you say

loans were just so easy to get – no one refused us.

even back in 2002 I believe you had to complete a loan application which would have asked how much else you already had on credit.

You also said

by having a new relationship with money that was cash based, I paid off all of my debt

which is laudable, but I do wonder about what the phrase

by having a new relationship with money that was cash based

actually means. I suspect most of us write down our outgoings and income, because that’s far safer and easier to comprehend than having a bag of notes and loose change every week.

So I admit to being confused about this scenario.

Most of us have been in debt at some time – buying a house for example. There is nothing wrong with debt providing when you take it on you are able to repay it. No stigma in being sensible about making us of “credit”.

We should teach everyone about financial affairs including debt.

Ian is quite right in that we disagree about overdrafts (but we don’t argue 🙂 ). My fundamental disagreement is that some people do not ask their bank if they can go overdrawn – borrow money without agreement, an unarranged overdraft. That does not give the bank the opportunity to decide whether they are a good risk or not. I also criticise the banks for allowing this to happen and, yes, using it to generate income. I simply believe we should ask before borrowing money.

I have been very lucky. I received a grant for all my college life (selling ice cream in the Summer) and was able to move into work that paid a good wage. When I came to buy a house I was in a position to get a mortgage. During my working life I have taken out loans for major items but the interest rate on these was low and easily repayable from income. I do believe that good housekeeping is key to good finance. Anticipation of expensive periods means that one can cut back on inessentials in time to cope with these and meet emergencies adequately. Life style choices count too and I would still struggle if I looked to fly first class to Australia or embark on a world cruise. Some can do this easily, some find a holiday of any kind out of budget. Earlier on I itemised every expenditure, anticipated what that might be next time and drew cash to live, writing cheques for utilities, rates and car items. I knew each month what I was worth. Now I look at bank statements and note what has come in and out. If the out is excessive I want to know why and how to compensate. Cash is still important and its rapid disappearance from the wallet is a wake up call about what I am doing with it.
I have a great deal of sympathy for those, for what ever reason, count every penny and then still find themselves in debt what ever they do. Poverty is psychologically draining and occupies time which should be spent on quality of life. It is wrong to make a blanket judgement about these people. Though hard work and prudence has helped me, I still feel lucky to be where I am and dislike the injustices that make our society as it is.

We were lucky getting grants to go to university, Vynor. Nowadays, most students have student loans and graduate in debt. It promotes the idea that debt is normal.

I agree we were extremely fortunate. I had total grants for both my universities, including accommodation, fees and extras and our local authority made extra grants available for the holidays for those of us who had to work at our chosen subjects during the vacations.

However, none of this addresses what I believe is a basic flaw in this entire topic: the header title, which reads Using cash got me out of more than £50k of debt. This is sending the wrong message to those reading it, firstly because it’s patently untrue and, secondly, because I believe Which? has a responsibility to be honest and truthful. This is neither, and it sets a very dangerous precedent.

How is it untrue? To paraphrase the story, Katie accumulated debt beyond her income and cash flow. She was able to overcome this debt by sticking to her income and creating a budget around the physical cash she withdrew. Cash is a payment system she understands, so she made it work for her.

It is also worth restating here that this is a guest post, not necessarily the views of Which? (as stated above).
What Which? is advocating for is the freedom to pay and to manage your finances in the way you prefer. (You can read more about that and, if it’s something you agree with, sign our petition: https://campaigns.which.co.uk/freedom-to-pay/).

Ian – It would certainly be better to have said ‘avoiding credit’, but it seems that using cash was one of the ways that Katie chose to control spending and tackle the debt. It is made clear that views are Katie’s own and not endorsed by Which? Usually this appears at the end of articles produced by guests, but in this case it is near the start.

I don’t remember seeing anything offensive in your post.

Katie found a way to get rid of her debt, but did she use cash for everything? House purchase, car, utility bills, council tax, insurances and so on? I think her way of being strict with spending, putting cash into envelopes specific purposes is one way of disciplining your spending, worked for her and well done for succeeding.

However, what she did was to set up a budget and that is the point that was being made. If people were taught when they are growing up the value of things, that money (for most) is limited and can only be used once, and how to construct and operate a budget, we’d have fewer people getting into debt. My first introduction to the need to spend money carefully was at university, making the grant pay essentials, lodgings, food, books and travel, because there was no other source. Working in the hols supplemented the following year’s allowance.

Most – if not nearly all of us – need to use a mixture of payment methods these days: cash, cheques, credit cards, debit cards, direct debits, online banking. Budgeting with money management keeps track of this. I believe that is the general lesson that needs to be promoted. I write in a small book all my spending and put an annual budget together, by month, each year that tracks whether I’m under, over or on target. Easy to do and invaluable when you have little, if any, spare income.

Jon Stricklin-Coutinho says: Today 14:30

How is it untrue?

It’s the title: Using cash got me out of more than £50k of debt. The entire tenor of the following article therefore seeks to expand on and develop that title. So we need to look at exactly what the title said.

Did using cash clear the £50k debt? Or did managing money in a more organised way clear the debt? You see, if the title is to be taken as it stands, the answer to anyone with debts is to use cash. But using cash doesn’t somehow magically clear debts, does it? What does is organising personal finances in a way that monitors cash flow carefully and takes into account outgoings.

Now, I do not want this to be seen as my getting at Katie, because I’m not and I am, in fact, someone who has a record of defending those who find themselves in bad financial situations as many of my posts will attest. So why am I so exercised by this piece?

It’s because I’m genuinely puzzled by what I see as a huge contradiction in the entire topic. Katie attended a university for which, in most courses, a certain degree of intellect and awareness is required. Yet Jon writes Cash is a payment system she understands, so she made it work for her. The clear implication of that is that she didn’t understand other payment systems, such as DDs, standing orders, cheques, credit cards and so on.

So we have a piece here which claims something that is patently untrue – a claim that using cash cleared a large debt when in fact good management did – and then the glaring contradiction to which I have alluded.

I have thus far steered clear of the arguments relating to the tabloid quality of many conversation headers but this particular one would stand proudly in the DFM. It’s agenda riddled, extraordinarily weak on fact and, since I doubt that Katie made up the headline title, does Katie herself no favours whatsoever. All this could have been avoided had a better title been used.

DerekP says:
4 April 2019

Ian, I agree with your comments here.

Thanks, Derek.

Which? do mislead us from time to time in pursuit of particular aims. This worries me because we should see it as an objective, independent and impartial organisation giving the full information to consumers to help them make rational decisions.

For example, in the past:
They have told us that energy providers overcharge us by £1.3 bn; not supportable (in my view) but despite being challenged they never respond nor justify the claim.

They tell us that “Around 3,000 cash machines have vanished from UK streets in the last six months of 2018, fuelling concerns that cash is under threat“. The don’t go on to explain that the vast majority of these are probably duplicates or close to others, that protected ATMs (more than 1km from another) have had relatively few closures ( from the information LINK give, as far as I can see), with alternative cash outlets generally provided.

Now, I am in favour of keeping energy prices under review, and maintaining access to cash through ATMs. But I do not believe I need partial or unsupportable information to persuade me to join the causes.

I expect to be reprimanded, removed, moderated, for expressing a rather critical comment that might be seen as off topic. Sorry.

But I found it worrying that Which? felt it necessary to remove Ian’s original comment (albeit temporarily) because of “the wording”. We see many comments where “the wording” might seem a little critical but most times we take it on the chin. It is a conversation; if we have to continually study the wording of our contributions, reword, rephrase, just in case it might be misinterpreted by some, or appear unsympathetic, then the whole essence of a Convo seems lost.

The Convos on loss of ATMs and bank branches have provided plenty of examples of how life has been made harder for those who live in rural areas. Many of the ATMs have disappeared years ago thanks to closure of branches. Why has it taken years to start to protect an essential service?

In my view it’s time to put the needs of customers ahead of the wishes of the banks. Banks need to be profitable overall but that does not mean that every ATM has to be. I could manage without cash but support the efforts of Which? in trying to help those who would find this difficult.

That was not the point I was making of course. I want to see proper information.

However, I have said before there are very many people who have never lived within convenient distance of a bank, post office or ATM and I would like to see their needs addressed when we look at access to cash. It needs a wider approach than simply focusing on ATMs – they will never be made available near to everyone. https://conversation.which.co.uk/money/atm-cuts-free-cash-machines-interchange/

I have regularly advocated planning so that the needs of communities are met, though I think it is easier to maintain an existing service than provide one that has never existed.

If service provision was done purely on a commercial basis we might find ourselves unable to post here because our service provider preferred to offer broadband services to those who live in built-up areas. I have been told that local action was responsible for the replacement of our dire broadband service with a proper service. Thankfully we are moving in the direction of a universal service obligation and if realised will go some way towards providing rural communities with a service that is vital in the 21st century.

Why has Ian’s original opening comment been chamged with reference to budgets removed? My following comment was in reply.

We moved this temporarily out of public view as some of the wording did not sit well with others. Ian has since reworded this, so we have reinstated it. I appreciate (and do apologize for) the disruption to the comment flow.

As always, please do bear others in mind when commenting – this is a public site and as such one’s comments a wider audience, of more experiences, backgrounds and world views, than many realize. Our discourse helps makes this into a community, so let’s make it so we can welcome many more.

Will Which? look at looking at money management and budgeting tools to help people who find difficulty in controlling their finances?

We already do. This aspect of giving people the freedom to pay the way that helps them has only recently been recognised so isn’t a part of the advice yet.

https://www.which.co.uk/money/money-saving-tips/budgeting

I was thinking of something more like this:
https://www.moneyadviceservice.org.uk/en/tools/budget-planner
The service has many useful tools and much information on its site. It includes this:
https://www.moneyadviceservice.org.uk/en/articles/managing-your-money-using-the-jam-jar-approach

I wonder how much debt is down to online purchasing? Such an easy way to spend money at any time from the comfort of you home. Going to a shop generally requires a purpose and some effort.

I would be surprised if it didn’t. I recently wanted to buy a dress and being short of time I bought it on line but at the same time saw a few I really liked and bought them thinking I would choose one and return the other three. I ended up buying two of them.

Never use a credit card as a means of borrowing, only as a means of spending (in order to earn points, airmiles, cashback etc). And as Martin Lewis frequently points out, you must always pay the bill IN FULL! If you follow this advice, using a credit card gives you the same control over your finances as cash.

I’ve had multiple credit cards since my 18th birthday and I’ve used them only as a means of spending, never as a means of borrowing. The only method by which I have ever borrowed money is on a mortgage, because the underlying asset increases in value by more than the interest rate. I have also borrowed money on low or interest-free credit card deals and deposited the money in savings accounts that offset my mortgage; that’s just arbitraging the interest rates. If I can’t afford something, then I wait until I can afford it.

If you pay your credit card bills by direct debit then you won’t pay a penny in interest. It also gives time to make sure that you have sufficient funds in your current account to avoid going into the red and facing overdraft charges.

Wavechange, you are right. I know people who pay off their American Express credit cards weekly by bank transfer, as they don’t like owing money but want to receive points or airmiles for all their expenditure. Of course, they lose out on interest-free credit, but they don’t care about that.

I can really see how this helps some people budget. I am one of those people who can spend on a card without really thinking about it. I am shocked at how quickly money leaves my purse when I have cash.

Being around the same as Katie I also can sympathise about the feeling of needing the house, the car, the nice things and turning to credit. We grew up in the excess of the 80’s when the messaging of you need stuff felt really prevalent. The percentage of income spent on housing and bills has crept up over the years which doesn’t help.

DerekP says:
3 April 2019

As I see it, all too often, greedy and stupid money lenders prey on the gullible by lending them more money than they can ever afford to pay back.

It has long concerned me that credit card companies put up the credit limit on customers’ accounts. It would be better if this was done only on request and maybe only if the customer was not continually in debt. As with bank overdrafts there seems little doubt that the companies want us to be in debt.

Really interesting to hear about how cash has helped you budget Katie.

Using contactless everyday (it’s on my phone) is something I really relish and enjoy doing, but I have noticed I’m a little more frivolous with how often I scan it on things I’m buying. When I’m abroad, I tend to use the local cash currency and so I become more money conscious and budget my daily spend.

These are of course budgeting skills that you can apply to digital payments, and there are some payment apps that help with that, but I can absolutely see how cash can help psychologically. Thanks so much for sharing your story, which can’t be easy to talk about.

Patrick, cash is one of the most expensive ways of spending abroad. You’d be far better off using Revolut, but it has yet to launch Apple Pay despite saying for three years that it’s coming “soon“,

Good point NFH! I’m off to Spain for a little bit and won’t be taking any cash this time, however, it’s more about the psychology of having a limited number of notes in your wallet

I agree. Psychology is at the root of this in more ways than one.

Thanks for telling your story, Katie, it is very courageous of you, and very well done indeed for sorting your debt out.

I totally understand how dealing with cash makes it easier to budget and to tackle debt. It is something concrete you can see, you can hold, and count, penny by penny, and see disappear. Psychology is indeed important in this, and if this is the way some of us are able to deal with our finances, so be it recognised and defended.

I have diary in which I keep my budgeted weekly expenses after having calculated what I can spend in a spreadsheet, after deducting eg yearly and monthly expenses. This diary is a paper one and I write with a pencil in it. Psychology again, and it helps.

And those free cashpoints that still exist must be protected.

In her introduction, Katie wrote: “We didn’t even have big incomes, but loans were just so easy to get – no one refused us. And it just went on like this.”

Though many of us have managed to avoid financial problems in one way or another – and thus have more money to spend – debt is a major problem for millions in the UK. One of my relations works for Citizens Advice in a wealthy London borough and I’m told that those who seek help are people include people in well paid and secure jobs. Sometimes alcohol is the root of the problem but in other cases, it just seems to be excessive spending.

I don’t know what credit checks exist when applying for a new credit card or loan but maybe making it harder to get more credit could help. One danger is that it pushes people towards loan sharks.

Congratulations to Katie for finding her own way out of the huge amount of debt she found herself in.

There are several reasons why we accumulate debt, some are set out in the following: psychologytoday.com – 10 Reasons Why People Spend Too Much. (Section 5 may explain why cash is preferable for some.)

There seems to be some good advice here:
https://www.moneyadviceservice.org.uk/en/categories/debt-and-borrowing
But how do we point people to such advice? Perhaps when others see people in debt – their bank for example – they can instigate a helpful advice process.

Ann says:
4 April 2019

It’s very easy to lose track of spending when solely using credit cards and contactless payments, those small amounts mount up.
When I retired and was unsure of how my income was going to pan out I stopped using a credit card for my shopping and only used cash. I only took out the amount I had budgeted for and it stopped me from picking up those impulse buys. Yes I did use a list and still do but we can all still be tempted.

There has to be a balance between the two and having the choice of how you spend your money and being able to have the choice to use cash is essential.

I think a lot of the problem is down to a flawed mentality of making purchases based on how much money one has as opposed to whether the goods or services are necessary and good value for money. I would never buy something based solely on having the means to pay for it, whereas those who get into debt with credit cards (where they do not do so with cash) seem to be buying based on having the means to pay.

One of the reasons we do all our normal shopping on credit cards is because of the control it affords us. By doing everything on credit card we get a listing at the end of each month stating what we’ve bought, where we’ve bought it and how much each item has cost.

We can further link that with individual receipts from shops so we’re left with a detailed and itemised list of our entire monthly expenditure. By paying off the entire bill each month, as we do, and entering all the items on a spread sheet, it makes budgeting extremely easy.

There’s no way we could use cash for the same process and still keep a detailed account of what we’re spending and where. I can call up the credit card account each day if I want, to see what’s happening. Best of all I get the protection offered to credit card purchases.