How I clawed my way out of debt

Cape Town - Sometimes debt happens gradually, and sometimes it’s an overnight thing. But it’s a train smash when they happen together.

A Fin24 user, Helena Cook*, shares how she clawed her way out of crippling debt to a place where she is debt-free and now has a house that is paid off, as well as some investments:

My story

“I was luckier than most people: at the age of 20 I had a university qualification, and student loans that were big, but not totally crippling.

“But for the first two years I worked in low-paying contract government jobs, the loan repayments took 50% of my salary.

How the debt cycle started

“I suppose that’s where it started: I had to live, and had to pay rent, buy food and electricity, get myself to work and be dressed in a presentable fashion. I had a job, and a credit card. By the time the two years were over, the debt on the credit card amounted to almost three months’ salary. Quite a bit of that was for medical expenses as I had no medical scheme at the time.

“Some things grow when you don’t pay attention to them: and debt is one of them.

“I had never been much of a shopper, thank goodness, but life’s basics do cost money.

“I carried on in this fashion for a number of years – my debt grew slowly, but was not out of control, or so I thought.  

Disaster strikes

“But things spun out of control when I bought a house with my partner, and we split up six months afterwards. It was ugly and messy. Together we could just comfortably manage the bond repayments, but on my own it was all but impossible. It was R100 more than my monthly salary at the time.

“And as with messy break-ups, financial problems took centre stage. I ended up for three years having to pay the bond on my own until a lawyer could sort it all out and the house was finally put in my name – with my father signing surety for the full amount.

"Without that I would have lost the house, as I was simply not earning enough to qualify for the bond. But even with the surety it still meant I was liable for paying the full bond amount, and I had to pay half the transfer costs again. But all of that was still three years in the future. Much hardship still lay ahead.

“I did not want to lose the house, as the original deposit and the transfer fees had been expensive and that would have been thousands down the drain. So selling wasn’t an option, and in any casethe market was in a downward spiral at the time.

One loan on top of another

“What did I do? I borrowed money – on credit cards, on personal loans from the bank and on overdraft. In short, wherever I could find it in order to make the bond repayments.

I knew it wasn’t wise, but I had not anticipated this situation at all. I rented out rooms in the house (unfurnished, as I owned just about no furniture). Within two years I hit a brick wall – I could not borrow any more money and I was two months behind on my bond repayments.

I had a house, but just about nothing else. I could not do necessary home repairs and fell behind on the rates bill. And then, to top it all, the interest rates shot up to over 20%. I really did feel as if the universe was not on my side.

The black hole of debt

“I juggled my creditors from month to month – every month I had to decide who was going to get paid, and who was not. It’s expensive to be poor – once you start paying reconnection fees on electricity and phone lines, and fines for bounced cheques and debit orders it’s like being sucked into a black hole. I bought not one piece of new clothing for over three years, hardly ever went out, and did whatever odd jobs I could find. I taught extra lessons, I did freelance editing, and whatever came my way.

“The stress was incredible. I jumped every time the phone rang (when it wasn’t disconnected) in case it was one of my creditors, and the anxiety I was feeling certainly started to take its toll.

Turning the corner

“Then very slowly my luck started changing. My job (still not paid well, though) became full-time, I got a housemate who always paid his rent on time, contributed to the other household expenses generously, and the house was put onto my name a few years later after some legal wrangling.

“I still lived like a church mouse, but disconnections and returned debit orders slowly became a thing of the past. Come month end, I could pay my debts –but still only just the minimum repayments.

“If one hasn’t been there it is difficult to explain to someone quite how much stress it causes and how vulnerable and defenseless it makes you feel when you have no savings, and something suddenly goes seriously wrong.

"It’s one thing not being able to buy new shoes and quite another not having the money for transport to work, or to buy food. And you can’t really tell anyone: most people think if you own a house you have to be wealthy. Not so. You could be rich on paper, but have nothing at all in your purse.

“I no longer made new debts just to survive, and slowly the staggering amounts on overdrafts and credit cards started becoming slightly less alarming.

“Then a few years later I changed professions, and my income increased by about 15%. It doesn’t sound like much, but it was enough to make the crucial difference. I realised I had been horribly underpaid for many years, on top of having crippling overheads.

Extra work

“Freelance work started coming my way and within a few years I had paid all my debts. And no, I was not one of those people who always lives at a rate of 10% above their income. Money started to accumulate in my account. I could draw cash from the ATM two days before payday for the first time in years.

“I cannot describe the joy of knowing that I had a buffer of a month’s salary in the bank for emergencies. I had lived on the financial edge (and beyond) for so many years. For more than 10 years a slight mishap such as a blocked drain or a ruined tire could mean disaster. That was no longer the case.

“The tide had turned. Now, many years later, the house is paid off, I have an emergency fund and I have no debts. Bank managers no longer scare me. I have a credit card with a naught balance (it is truly only for real emergencies). I have some investments. I sleep at night.

“Yet the fear of debt still haunts me. Shopping centres still give me the creeps, I have not one shop account, and I work mostly on a cash basis as people did in the years after the Great Depression in the 1930s.

“And no, despite being asked regularly, I do not want to increase the limit on my credit card. Not now. Not ever."

*Not her real name

*Add your voice by sharing your debt  experiences, debt-busting tips and insights. Have a question? Ask our experts.

Disclaimer: All letters and comments published in The Debt Issue have been independently written by members of the Fin24 community. The views are therefore their own. Fin24 cannot be held liable for any decisions made based on the advice given by Fin24 users and debt experts. Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.

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