Try to move away from debt and get closer to saving

Debt is money you owe for something. A product and or service.

You purchase something on the agreement you pay what it owed over a defined amount time with interest added.

Debt does seem like a dirty word and it is strange how everyone is okay with that.
 
Debt isn’t all bad and if managed well helps with your financial status by means of credit scoring and shows other lenders you are trustworthy to lend to.

Given the opportunity everyone would avoid debt, even the good stuff. Paying for something outright is always better than owing someone else for it. While you owe someone money you are effectively bound to them.

There are arguments for spreading the cost in businesses but this is more about personal finances. It could even be debated that paying outright for something like a car is not wise, but for the majority of people, the option of a life without debt would be preferred.
 
Bad debt is a different league and can cause so many issues within our lives. Repayments that exceed income are devastating and often have knock effects with general health and well-being. The worry of not being able to pay back what is owed and the potential threat of repossession and financial destruction does a lot of harm to people.
 
Money is a taboo subject in the UK, it is not something spoken about directly. This is especially true when financial problems occur. There is a shame stigma attached to debt. A real sense of failure.
 
Look around the towns and cities and you will see many people with very nice material items, expensive clothes, logo embossed bags, ultra premium smartphones and luxury brand cars hot off the showroom floor. In the UK we signal status by the items we own.
 
How we get these things that display our status can tell a different story.

A large majority of vehicles are financed, clothing and furniture are bought on store cards and mobile devices are bought on contracts. All to “spread the cost”.

The monthly wage is being signed away and committed for multiple years, bit by bit.

Once this cycle starts it is very hard to break it. It is easier to just renew that new contract or lease.
 
All monthly income is tied up with purchases leaving no space to save, meaning other purchases are added to a credit card, that in turn adds to the monthly burden.
 
A brand new car passes by on the street, you notice it. You may not particularly care but subconsciously you were aware of that drivers status. You rank them.

You reflect on your situation and wonder how on earth they afford such a nice car. They must have a high paying job. They are doing alright for themselves. You want that. Browsing the internet the dealers can offer you a new car for seemingly reasonable monthly prices.
 
This reality of credit to get things, is all to common and that person in the nice new car is likely to have acquired that vehicle with monthly payments. This actually means to opposite to doing well, its unlikely they have a high paying job. The only way they could afford such a vehicle is paying for it on the never-never.
 
Our times are defined by what we own and we are urged to buy the latest, greatest, shiniest and newest of everything. Terms are given that seem irresistible meaning people can attempt to afford such nice things.
 
When the going is good it’s great, a steady job, stable income and all the nice things we could want.

The only problem is when things change, just like they have done in recent times.

Nothing ever stays the same.

The cost of living has increased heavily and is continuing to rise, basic food stock costs more than it did a few months ago.

The banks are increasing interest rates all the time. Everything costs more. Peoples wages are not increasing.

The monthly burden of all the payments are now starting to cost more than peoples income.

Good debt turns into bad debt in the blink of an eye.

When it comes to owing money that only ever changes by the cost increasing, it is rare that a debt will cost less. Paying in more for debt is how it works.
 
We have been conditioned to buy everything, we are entitled and deserve all these things. The way we evaluate what we buy is all screwed up.
 
A £10,000 second hand car will get you from A to B exactly the same as a £40,000 brand new car. We convince ourselves that buying new is better, but is it £30,000 better?
 
The latest smartphone costs anything from £800 to £1200. When your renewal comes round does that smartphone actually need replacing?
 
Do we need to buy the latest TV and music packages with all the channels and on-demand streaming services. Is there enough time for us to watch and listen to all of it?
 
The family deserves a holiday, but if it is costing £15,000 to £20,000 for five of you to go to Disneyland in Florida for two weeks and you spend the next four years paying it off, is it really worth it?
 
The weekly food shop is increasing. There are just some brands you can’t live without, but they are costing far more than ever, would it hurt just to compromise on the own brand version?
 
When a new household appliance like a washing machine is required do you need to spend £500 on it and buy the extended warranty? There are plenty of outlets that sell much lower priced units. They all do exactly that same thing.
 
Some of the above may be important to keep, but there is room for movement and ways to save cash. Spending money is required and we are actually entitled to buy that nice bag or go on that amazing holiday. In order to achieve these things acquiring the funds first is advisable or at least get a good amount banked.
 
Once you have £15,000 in your bank, you are likely to make better choices on the holiday you will take or the car you will buy. The attitude to spending will change. When it is on credit, the tendency is to over indulge. Lenders want you to over indulge.
 
The mindset of saving should be the number one priority, it is something we have forgotten and can be hard to take up. Starting small is key. Build a habit. Try to build up £100, then £500, then £1000 and so on.

That becomes an emergency fund, it will stop the constant need to use credit cards.

When saving starts it does become addictive and the want to carry on gets easier.

Being mindful of how money is spent is key to being able to save.