In this guest post, Skint Dad, a supporter of our Clean up Credit campaign, speaks openly about his experiences of payday loans spiralling out of control. He shares his story to help others from getting into debt…
Last year, my fiancée and I were both working and doing OK (so I thought) and I was determined to have a good Christmas. I knew we were both due to be paid just before Christmas and I knew we couldn’t leave it until then to do the Christmas shopping.
After checking the bank I could see we were already well into our overdraft and what was left would be needed for food and travel. I knew exactly what to do. Like I had done for the last few months before – I would take out a payday loan.
It was easy peasy – I just pulled out my phone, opened the payday loan app and within a few minutes I had the option to borrow some money. I had paid off last month’s loan so I was able to withdraw my entire limit which was £400. Fantastic.
Blown the lot on presents
That weekend we went shopping and blew the entire £400. But we hadn’t managed to finish the shopping or buy the food. So the following weekend we took out another payday loan for £500 from another provider. We bought the remaining presents, had a lovely lunch in town and did the Christmas food shop that evening online.
In total we had borrowed £900 in payday loans and had blown the lot on presents and Christmas food. Christmas came, we were paid and the payday loans collected almost £1,100 from our accounts.
We had a fantastic Christmas – the look on the children’s faces when they saw their presents under the tree. We sat down for Christmas dinner and it was brilliant. I was so glad that were able to afford to have these amazing couple of days, even if it was with borrowed money.
After Boxing Day we tried to get back to normality – but I realised we had terribly overspent. We had to continue taking out payday loans until we got to a stage where I couldn’t afford to pay them back. I had to pay a fee and more interest to carry it over to the following month.
Breaking the debt cycle
We knew we had to break this cycle but didn’t know what to do. We stopped paying other bills to pay the loans. We started selling gifts that were given to each other that wonderful Christmas a few months before for a fraction of what we paid for it in the first place.
We finally managed to sort it but at a high price. As of today we still owe a substantial amount and the interest is now frozen. From admitting we had gotten ourselves into this situation we were able to break free of this cycle of borrowing to pay borrowing.
We had let ourselves fall into a complete financial mess for a few days of happiness and months of misery. Yes we had a great time but that’s all it was, a great time which quickly passed.
It’s a sad situation to be in when you feel pressured that the norm is buying presents that don’t need to be bought. When you spend a fortune on food for a few days when the money could be spent buying a week’s food shopping and more.
Too much indulgence for just a few days
I love Christmas and I want make my children happy but no more am I prepared to sacrifice months of misery, guilt and debt just for a few indulgent days.
This year, instead of expensive gifts, we are buying things they actually need. Yes there will be a couple of toys but nothing compared to last year. Instead of expensive wrapping paper we will use newspaper and string, or paper bought cheaply in the sales last year. Instead of buying a massive food shop we will be sensible and buy to eat, not buy to waste.
Over the last few months I have realised that money isn’t everything and the love of family beats this hands down. From a carrot and a glass of milk left for Santa and his reindeer to a game of Cludeo on Christmas afternoon. These are the things that are going to make Christmas for us.
Which? Conversation provides guest spots to external contributors. This is from Skint Dad, author of http://skintdad.co.uk. All opinions expressed here are Skint Dad’s own, not necessarily those of Which?.