Ever Increasing Circles. (Financial advice - birth to death)

Member Name: beckstrous

Product:	Financial advice - birth to death
Date:	08/07/02 (23 review reads)
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I really wanted the car.

I thought that if I tried hard enough, I could probably convince myself that I needed it too. I was always good at that sort of thing. If you think about something hard enough, and for long enough, you can start to believe that a bad idea is a good one.

I didn't need the car.

I probably could have done with a new one, but not one that expensive. In October 2000, my old VW Golf had been broken into after series of minor mechanical mishaps. I'd been on holiday at the time, and the thieves had smashed the windows when I hadn't been around. It was raining that night and the upholstery got soaked for a day and a half. My car stank.

The break-in proved to be the excuse I needed. I could justify getting the new car. I told myself if would be okay to request the brochure from the dealer - that wouldn't do any harm, would it? So I did. And I guess I fell in love with the glossy pictures inside ... this would be the best car I'd ever had. It wouldn't smell, and it wouldn't break down at inopportune moments. I needed it, right?

But I was only looking. Out of curiosity (or so I told myself) I thought I'd go to the bank and ask about loans. They were disarmingly co-operative and very keen to lend me money. £16,000 - whatever I wanted. I had a reasonable enough job, after all. I was a good customer. It seemed so easy.

I didn't think it would do much harm to take a test drive, either. You didn't have to pay for those, after all. So in January 2001 I made my appointment, and when it came I slipped into the driving seat and edged nervously out into the main road.

Heads turned. I knew they would: it's a novelty sort of car. The reason I liked the New Beetle so much was its character and the fact that it didn't really look like anything else on the road (apart from the Old Beetle, perhaps). At traffic lights people stopped and pointed. I even got
flashed by another Beetle. And it was so, so easy to drive.

Before I knew it, the car I'd test driven was mine. And so was the debt - all £16,000 of it. The car had only cost £13,500 but I'd borrowed the extra to pay off an existing debt (the loan that paid for the old Golf).

I loved my Beetle. Not that I used it much, working in central London and living in Ealing as I did at the time. I only really drove at weekends. Like I said, it all seemed so easy at the time, but four months down the line it dawned on me. I had an expensive piece of machinery parked outside my house that was of little use and a constant, massive drain on my bank account.

Before long I was £1000 overdrawn and my lifestyle was increasingly expensive. After work we would often go out for drinks, and it was the norm to pay £20 for a round even if you were only having a Coke. We'd eat out at least once a week, too - and you just had to join in. I was living with a guy I worked with, which made it worse.

My overdraft grew and grew. It wasn't long before I got to the stage where pay day took me up to just below zero, and the debt continued to get bigger. When you reach that stage you care less and less about money, so I spent more and more. "I'm already in a mess," I would think, "so what difference is an extra £300 going to make?" What was the point of trying to claw my overdraft back when things were so bad already?

I needed money to pay the bills. The bank extended the overdraft, and where happy to do so. They even offered me more than I wanted, which was gratefully received. I spent it all. In hindsight, I think they were perhaps a little irresponsible - but then I was stupid at the time and shouldn't have listened to them. I was old enough to know better, you might say (and you'd be right).

The final straw came when I had to renew my car insurance in May 2001 and couldn't afford it. I wa
s humiliated when I had to ask my parents for help. I was 25 years old and earning more than my younger sister, who had savings, a pension and all the things a sensible twentysomething ought to have. She drove a modest second-hand car and never had to ask to be bailed out.

My dad had worked since he was a teenager and has never been overdrawn in his life. My parents always lived within their means and eventually forged themselves a comfortable existence through hard work. My sister seemed to be the same. Dad always told me not to spend money I didn't have, but I never listened.

Why couldn't I be like the rest of my family?

Eventually I could not afford to pay the rent in Ealing anymore. I had to move home with my parents and luckily they agreed to have me. Finally I got my head above water again and out of my overdraft, so I moved back to Ealing again.

After seven months I had still managed to keep my account in the black, but various different debts amounted to around £18,000. They were eating away at me. I couldn't see how I could ever begin to pay them off because at the end of each month all I had was £50 to spare. I couldn't afford to do anything with that and I felt like I was just treading water. I was shackled by my debts; I felt completely and utterly stifled.

Last weekend I moved home again. I pay for my keep and I've drawn up a plan to pay off my debts early. I intend to stick to it. Gone is the rather lavish lifestyle I enjoyed at work, the expensive lunches and the large rounds in the pub. I considered selling the Beetle, but realised it would be a huge loss-making exercise - so I've kept it. It's a great car, but it's caused me no end of trouble. If I hadn't bought it, I could have been on the property ladder by now. Instead I'm living with my parents at 26. Fortunately they're great people and I do enjoy their company, but I wish I'd not got myself into thi
s situation: my sister bought a house recently and is moving in next weekend. At the moment that's way out of my reach.

This is not supposed to be a sob story. Some people get themselves into much bigger trouble than I did, after all. Everything that happened to me was my fault alone, because I did not need the money I borrowed (not even the student loans, if I'm honest).

I do hope that my experiences might serve as a warning to others: I got into debt when I didn't need to. I think it will take me about 18 months (and a lot of discipline) to put things right, and after that I'll keep a very tight rein on my finances. It's so easy to let things spiral out of control during and after university; student loans are very easy to get hold of, then graduate loans ... and once you've got yourself a job, the bank is almost desperate to lend you money. Debt seems to be the norm.

If you're considering a loan like I did, think carefully about what it's for. Ask yourself if you really need one. If you take one out over a long term like me (5 years), remember that it is a big commitment.

I love my Beetle. It still gives me a buzz when another Beetle waves at me or someone stares at the car when I drive past. It's great to drive and a lovely car to own - but it's the biggest mistake I ever made.

[I hope this op was useful to someone. If you find yourself in a mess like I did and don't know where to turn, you can get brilliant impartial advice at www.fool.co.uk]

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