When 55 year old Foggy took a gamble and paid more than he could afford for his daughter’s wedding, he found himself in debt crisis. He tells us why going through an IVA had made him stronger.
When I took out an IVA in 2009, it was the first time I’d been free of credit card debt in more than 30 years.
I got my first credit card in the late 1970s, just when the consumer credit boom began. I was in my early 20s and I had a good job, so there was never any problem making repayments.
Keeping up with the Joneses
There was a lot of pressure to have the same as everyone else, so when I approached the £2000 limit on my credit card, and the company offered to increase my credit limit, I’d always find myself spending up to the maximum.
To be honest this went on for most of my life. I took out loans for things that, looking back, seem quite frivolous, like new furniture and cars. I sailed close to the wind, and the credit card companies were all too happy to finance this, but I could always manage the repayments, so I never got into any real trouble.
Borrowing in hope of a payrise
The mistake that took me to crisis point was in 2008. My daughter was getting married and I wanted her to have a great wedding- as every dad does. I was due a pay rise at work, so I took out some extra loans, figuring I’d be able to afford the repayments when my salary rose.
I worked as a civil servant, and after eight years of hard work, I was due to move up to the next pay grade- it was our department’s policy.
You can probably guess what happened next- the department changed its policy, partly due to government pressure, and I found myself in a mess. I know some people go into denial at this stage, and ignore the letters from the bank, but it was never like that for me. I realised I was in trouble and I set about finding a solution.
I quickly did some research (unfortunately I didn’t find the IVA Forum until later) and chose RSM Tenon to arrange my IVA. They told me I owed £53,000, which was a huge shock. I thought it was about 2/3 of that, and at the time I was earning £17,000 a year.
My wife also had credit cards debts- nothing like mine- so we went for an interlocking IVA, and it all went through relatively painlessly, but I felt so guilty. I remember when I was a child, my dad took out a loan of £400 to buy a car, and he acted like it was a terrible thing to do, and paid it off as quickly as he could. I was too ashamed to tell anyone we had an IVA.
It might seem like a strange thing to say, but the IVA changed our lifestyle for the better. It was like harking back to simpler times. Money was allocated to all of our outgoings, so we always had enough money left at the end of the month. It was the first time in years that I didn’t go into my overdraft. We did have to cut back a bit- if we were invited out for a meal with friends we’d often say we couldn’t get a babysitter because we couldn’t afford to go- but we always knew the essentials were taken care of. It took a weight off our shoulders.
My six year old son was great. Children are put under an enormous amount of pressure from an early age these days, but he never badgered us for the latest designer clothes or a mobile phone.
As a family, saving money and hunting for bargains became a bit of an obsession, and it forced us to question whether we really needed things, or just wanted them.
I’d advise anyone having money difficulties to stop and think about whether they need something, or just want it, before they make a purchase. If you want it, but you can’t afford it, it’s really important to wait, and save up. I’ve always been really into cars, and one of my main hobbies was buying kit cars and putting them together, or fixing up old cars. I had to give this up completely during the IVA, because the cars weren’t something I needed.
A young lady I know of has a lot of credit card debt, and has recently inherited some money, and she’s thinking of using it to go travelling, rather than paying off her debts. It can be so tempting to reach for a better life, but unless you do it using your own money, you’re just setting yourself up for unhappiness later on.
Spending with care
You can learn to live within your means. It’s painful at first, then it becomes second nature. Less stuff does not mean less happiness, you just have to get out of the mindset of ‘keeping up with the joneses’. I still live the IVA lifestyle now, even though I completed my IVA earlier this year.
Personally, I think going through an IVA teaches you a lot. The other options, such as DRO’s and Bankruptcy, might seem more of a ‘quick fix’, but for me it was important to go through the process of paying off at least some of what I owed. They say that what doesn’t kill you makes you stronger, and this is exactly how I feel after completing my IVA.