Women in Debt
You know the feeling – you’re passing a heap of gorgeous shops and your eyes start to wander. Even though you know you can’t afford it you go in to have a browse. It can’t hurt to try it on right? Next thing you know you’re in the changing room. You feel like your life will not be complete without this new dress. I suppose I could put it on my laser… or even my credit card you think to yourself. After all you only live once.
But when pay day comes, the dress has only been worn once and you have to hand over the cold hard cash to the bank, that’s when reality can hit.
For Joanna Murray, 28, a sales executive from Dublin, this scene is all too familiar. Like many other women pre-recession, she got herself into debt when she had a high paying job and her bank was offering to give her loans and credit cards.
“I wanted a loan for a new car so I called the bank,” says Joanna. “When they answered they told me they had already pre-approved me for a ten grand loan. Even though I didn’t want that much they said I could take ten grand and they would lodge it into my bank that day. I believe they made it too easy for me,” she says.
And Joanna is not alone. Thousands of Irish women who were earning high before the recession have now found themselves unable to meet the debt repayments they accrued before the recession.
The pressures on status-conscious young women to keep abreast of the ever-changing world of fashion and celebrity meant spending like there was no tomorrow. Designer clothes and jewelry were all part of the equation, and for some, still are.
“It never feels like real money when I am typing the numbers onto a screen or handing over my credit card in a shop to pay for something,” says Amy, 24, a PR consultant.
“But when I have to withdraw the cash and hand it into the credit card company – that’s when it hits me how much I have been spending on things I didn’t really need.”
“Spending is much easier than paying it back,” Joanna agrees.
“That’s the bit that makes me cringe. It is a piece of plastic you lose the concept of how much you are spending. It’s like free money.”
“I also took out a credit card just to book things online. But because I was earning a lot at the time they gave me a five grand credit card so I just kept spending because it was there.”
“I lost my job and luckily a few months later got a new one. But now I am earning about €1000 less than when I took out the loans. Originally I could afford the payments now I find I am struggling,” she says.
Now life for Joanna and Amy, like many young women who spiraled into uncontrollable debt, is not as enjoyable as it once was.
“I don’t have much money left for myself and I find it very difficult to pay it all back,” says Joanna. “I currently have two loans moved to a third party because I missed so many payments. I don’t have enough money to save and I barely go out with my friends on a night out. I go out about once a month,” she says.
And studies are showing that although five years ago it tended to be young men who got out of their financial depth, now it’s far more likely to be young women who spend irresponsibly.
So what makes ordinary, intelligent women get into debt?
“Debt doesn’t discriminate between men and women” says Sean Tyrer, head of debt charity Myvesta. “There is not a lot of difference between the underlying reason of women and men getting into debt. In the good old days before the recession there was an aspiration to live a lifestyle of plenty. We were influence by the media, and of course we prefer pleasure over pain, so we naturally want nice things. The interest rates were also really affordable, so it seemed logical at the time,” he says.
“What’s happening now is we are seeing women with a change in circumstances. They lose their job and this triggers a debt problem.”
“This goes even further when women take out another loan to consolidate their existing debt. This just gets them further into debt.”
But Sean has advice on how to tackle it. “The only way to overcome this is to get back to basics. Make a budget of your monthly incomings and outgoings. Deduct the cost of rent or mortgage, petrol, insurance, food and all the basics – make sure you’re looking after the family. Then with the rest pay off the debt. Start with the debt with the highest interest rate. If you can’t afford to meet the payments – get in touch with the providers, send them a copy of your income and expenditure and give them an opportunity to help you. Say ‘I can’t afford to pay that much,’ and show them you are trying to deal with it. If that doesn’t work get in touch with someone like Myvesta and we can help you sort it out.”
But for Joanna the end to her problems seems far away. And at 28 she, finds it hard to accept how much she has debilitated her future.
“In the past I loved shopping for clothes but now I cant remember the last time I bought myself something nice,” she says sadly.
“In one year from now I am not going to be any better off financially as most of my loans are being paid off over five years. Hopefully in five to ten years I will have all my debts paid off and not have to deal with the pressure of paying as many bills anymore, and hopefully I’ll have my own house as well.”
“I worry about it all the time. I know now I would never get a mortgage and it worries me as I am 28. Hopefully in a few years I will have managed to sort it out by then.”
But Joanna knows she has definitely learned her lesson about getting into debt.
“I probably would still have got the bank loan as I needed a car, but I defiantly would not have got a credit card and not shopped online either because they give you credit in advance. It’s a slippery slope, and when you end up like me, you realize how easy it is to fall into the trap.”