As a child at school through a 90’s curriculum, I was well-versed in Pythagoras’ theorem, algebraic equations and multiplying fractions. Sitting at the bottom of the list of priorities for the Secretary of Education at the time was financial literacy. It was so far down, in fact, that it was non-existent. Nobody ever mentioned the words ‘interest rates,’ ‘tax’ or ‘credit score’ to me at high school. Not once.
Looking back now, it seems quite unfathomable that government officials would think it was a good idea to let generations of young people leave educational settings completely unprepared for the real world of bill paying that awaited them. And yet, here we all were, on the cusp of adulthood, about to start earning money of our own for the first time. And two years after I left school, I was applying for credit that let me spend twice as much as I earned. It wasn’t helpful that my parents were not financially-savvy. Catalogue payments were commonplace; if my parents couldn’t afford something, it didn’t stop them from buying it anyway and worrying about the repayments later.
Almost as soon as I turned 18, I walked into the Toyota car showroom and took out my first PPC on a black Aygo. The first car I went to look at, and I was signed up in the day for repayments of £150 a month for the next four years. You know when a salesperson just sees you coming? Well…that was me. I didn’t have any concept of what a PPC was or what it would do to my credit score.
I wouldn’t have cared much at the time either, I barely acknowledged the fact that unless I managed to save up an additional £3,500 for the balloon payment, I would never even own the car. Being so naïve, I only cared about getting behind the wheel. It’s quite rare to see an 18-year-old driving around in a car straight from the showroom unless they come from money, but this was quite the opposite of my upbringing. The world of borrowing beckoned and it offered me a lifestyle way beyond my means for someone working in a restaurant. It seemed like a good idea around this time to get a joint loan out with my friend for £6,000. The money was soon spent, with nothing much to show for it and for the next few years, I continued to take out loans and credit cards for non-essential items.
The more I could feel the cloud of debt hanging over me, the further I pushed my head into the sand. But debt will always catch up with you, it follows you around until you are forced out of your state of denial and you have no option but to confront it head-on. Feeling the squeeze when I moved into my own rented apartment, I made an appointment with the bank and told them I couldn’t afford the mountain of repayments I had. You might think this is the point in the story where someone stepped in with a strategy to help get me out of debt. Instead, the bank advised me to consolidate the whole lot into a loan of £10,000. The loan wasn’t including my car finance. Again, not doing my own research, I took the advice and left with another five years of repayments to look
Fast forward another four years and I reached crisis point with my finances. Unable to make the repayments I had racked up over the years, taking out loans to pay off other loans and being so far in my overdraft I couldn’t see a way out. With massive interest rates meaning I was never going to pay off the debts on a £21,000 a year salary, I sought the help of StepChange, a debt management plan. I felt embarrassed and ashamed, knowing full well my credit score was going to be at 0 for the foreseeable future, and that any financial help would be denied from lenders who wouldn’t see me as a responsible borrower.
The timing of contacting StepChange coincided with me starting my own business, Fusion Surfaces Ltd and again, I naively didn’t consider the amount of money it takes to start and run a business. We were, however, able to get a Start Up Loan through my partner’s application and I made a promise to myself that I was going to give myself the education in finances that I had never been taught.
The first year in business is always the hardest. But I made it. I brought in sales, lots of them. I estimated projects, which didn’t always go to plan but it was a steep learning curve. I took over the bookkeeping and then invested in an accountant who took the time to explain things to me. Not the cheapest accountant out there, but worth the money ten times over.
Our business model wasn’t working, so I cut our overheads down to the necessities. I had no idea about cash flow forecasts, so I asked for help. One of the biggest surprises to me was how many people are willing to help you, and all you have to do is ask. There is a great community of people on LinkedIn, full of knowledge and expertise and they have supported me through the rollercoaster of being a business owner with debt.
I still work a part-time job waitressing some evenings and weekends. I’m still not yet at the point where the debt is repaid, but I’m on track to pay it off earlier than I planned. It might feel embarrassing to admit that you’re in too deep, and there are a lot of downsides to having a ruined credit score. I won’t be able to get on a mortgage for a while yet and there are a lot of things I have done myself because I couldn’t afford to outsource them earlier on.
But without a doubt, my drive to succeed in business has come from wanting to rid myself of debt. Nobody is going to work harder to make something work than a person who’s been at rock bottom.
Jade is the Co-founder of Fusion Surfaces Ltd and fur mum to two crazy sausage dogs. She is on a mission to make our wrapping solution a key part of refurbishment projects, providing a cost effective solution without compromising the design element.
You can connect with Jade here.