Tuesday, May 15, 2007

Recovering financialphobe

Handbags, shoes, music CDs,make-up… oh and loads of clothes. That’s what my life revolved around in the first year of uni. Finally free from the Catholic girls school run by nuns, I was ready to embark on my new life of fun-filled nights dancing the night away and just living like a normal human being, not worrying about getting awful looks from the headmistress (a nun) if my skirt was the wrong length. Believe it or not, people actually got told off at our school if they wore a skirt that was too long! And I was a school prefect, so that says a lot, and deputy head girl at one point.

Anyway, my years of being mistaken for a businesswoman or a waitress – that does not go down too well when you’re 16-18 and have issues about the way you look anyway! – because of the black and white dress code we had in sixth form were finally behind us. And no more disapproving looks for wearing a light shade of nail polish from our chemistry teacher. I was free to be me and learn to get to know the real me, without all those rules and regulations telling me how to speak, how to sit, how to walk and how to be!

Well, typically, as soon as I turned 18 all the banks wrote to me. Telling me that if I was going to uni – and I was raring to go – I could get a student account with more perks than I knew what to do with. Oh and did I forget to mention the credit card and overdraft? How do these people get away with offering this to young, impressionable people? Obviously, not all students were or are like me – I think now young students are much more astute than I was back then because of all the media attention on student debt.

But for me, giving me access to all this “free” money was literally like sending a lamb to the slaughter. I’d worked part-time during my ‘A’ levels so it’s not that I didn’t know how to manage money. I used to be a damn good saver pre-university! But having a huge sum of money just waiting to be spent seemed criminal. And being newly released from a place where crime was a cardinal sin, well there was only one way to go – spending street.

And spend I did. How easy it was too. My wardrobe was like a Freemans’ catalogue by the end of the first term. By the second, I had moved on to my second bank account, and by the third term, it suddenly dawned on me that I actually had to pay this money back. It might have been interest free, but once you were max’ed out your overdraft and credit cards, the banks don’t see you in the same light again. Little did I know that my every financial move was being documented on a credit report… ahh bless.

I learnt the hard way that overdrafts and credit cards are not free money. And that it’s not money you have extra. It’s the bank’s money! You learn this quickly when you have a shed load to pay back.

I once wrote a feature – and a quiz for New Woman (www.newwoman.co.uk) - on financialphobia; the fear of addressing financial problems. People literally don’t open letters because they are afraid of what they’ll see in bills and statements. I recognised those signs in my younger self while researching for that feature, and it was at this point that I realised the madness I had got myself into at such a young age.

But, I can look back on this time in my life and laugh about it now, because I’m free. I remember having a heartfelt conversation with my sister about it a few years back and laughing really hard about the little tricks I’d used to keep my head above financial shark-infested waters. I had been so ashamed at the amount of money I’d spent – and the fact that after the first year of uni ended, I literally had nothing to show for it – that I didn’t tell anyone until it really took its toll. We sat and talked about spending money and had a real laugh about it. She puts it down to my mad sense of humour, but the therapy I got from that one conversation is worth millions… and I would know about the value of money.

On my journey, I found a good website that helped me sort things out in my head – Motley Fool (http://www.motleyfool.co.uk). Here, I learnt about snowballing debt to pay things off. For a while, I worked at a market research company in Victoria to help me get more cash to pay off the bigger debts that were eating into my happiness. It was such a miserable time for me, but every shift I did after a full day’s work at my main job was a reminder not to get into that same position again. Better to go through this when you’re young, free and single, I often say to myself than when you have a family, so I have to be grateful for that.

I also read a book called A Girl's Best Friend Is Her Money: The Motley Fool Women's Investment Guide by Jane Mack and Jasmine Birtles,
which gave me more good tips.

Then Alvin D Hall who wrote Your Money Or Your Life: A Practical Guide To Solving Your Financial Problems And Affording A Life You'll Love came on BBC2 with his informative financial freedom series, where he literally beat the crazy spending out of people with his money-pinching tips. I couldn’t believe that there were other people out there who didn’t bat an eyelid when spending, spending and spending like me (http://news.bbc.co.uk/1/hi/programmes/breakfast/3051395.stm). But they also helped me sort myself out.

These days there is so much information out there. A decade ago – I feel so old saying that – I was on my own and at the mercy of my debtors. I used to say that once I’d paid off my debts I’d never get a credit card or use my overdraft again. But that’s the weird thing, if you want to build up your credit, you have to use them to show that you can manage your money. If you don’t, the fact that you have no credit also has a negative effect on your credit score. Talk about being caught between a rock and a hard place.

So, am I cured? No! I still find it hard to fight the spending temptation. It’s like what an addict goes through. If I see a nice bag or something that I want, I want it. But the lesson I’ve learnt is that it’s not worth getting into debt over. O get guilt pangs if I think I’ve spent too much money, which is great because back then, I couldn’t have felt an ounce of guilt when I was spending if it slapped me in my face!

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