Why I love debt

Let’s just make this clear: I don’t love all debts. I don’t love yours; you can keep them! But in truth, mine will always have a special place in my heart. This is why.

It’s fair to say that over the past few years, our marital finances have had a rollercoaster ride. The timeline goes roughly like this:

2002 – Student loans finally paid off. Hurrah! At their highest, my student debts amounted to £1,604 exactly. I thought this was the earth! My now-husband graduated about £4,000 in debt. (Note: these sound like paltry figures now, don’t they? They were normal for the UK at this time.)

2002-2005 – Minted & living in London. Fancypants jobs, rented flat, lots of expensive nights out and regular food deliveries from Ocado. Ah, those were the days! But we can’t know what lies just round the corner…

2005 – All change, after ‘im indoors wins a place on a coveted (but expensive) course in the USA. Ker-ching! In the space of two weeks we chuck up jobs. Ker-ching! We get married. Ker-ching! We move to the USA. Ker-ching! Savings all gone, bar the £10,000 I have saved towards a house – which I have stashed in an ISA and ringfenced in emotional titanium. Financial net worth begins its rapid descent.

We rent an apartment a shoebox-sized roachpit in the USA. He’s a full-time student Ker-ching!; I’m working part-time. We are almost skint; we have just enough for a three-month honeymoon (a roadtrip around the States). Ker-ching! Whoopee!

2006 – Return to the UK with nothing but that ringfenced £10,000. He sets up his own business in Yorkshire Ker-ching! I go back to my old job in London, to raise money to pay off our creditors. I miss my husband, but by this stage we owe money to a friend and to a family member; we have also run up a large overdraft. Total debts: around £11,000. We are gifted the Thriftymobile out of pity. And still I will not touch that £10,000, damn it! So we live like paupers and I manage to get a few grand paid off before…

2007 – At the beginning of the year I leave my job in London, move to Yorkshire and we buy a three-bedroomed house! Ker-ching! How we manage to get a good fixed rate deal, on two rather shaky self-employed incomes, is another story. (But hey, I finally get to spend that £10,000.) Needless to say, it’s a decision that I don’t regret for a moment; I mean, crikey, we’d never get a house now! But it is – ahem – another financial setback. Total debts climb to £12,000. Bum.

It is at this stage that our lifestyle gets seriously frugal. Goodbye, holidays! Goodbye, social life! Goodbye, new clothes! Actually, it’s goodbye to a lot of my old clothes too – I sell them on eBay. (But the John Gallianos, the Manolos, the Bibas and other items are in my wardrobe to stay – so don’t feel too sorry for me!)

2008 – Whew! This wallet isn’t just streamlined; by now it is honed and toned. It is *whispers* a tightwad. Large spreadsheets cover budgets and forecasts, down to the last penny. No deal is left undealt.  I get the car insurance down to £25 a month and the food bill (for two people) down to £60 a month.

And everything comes good.

By the end of the year, the debt is all gone. It feels amazing. Friend: paid off. Family member: paid off. Stonking overdrafts: paid off. By now my husband’s business has become profitable, so we are living off two incomes again. We even manage to fund a return visit to the USA, where we have a wonderful thrifty holiday.

Here we are in 2009 and I’ve realised that I don’t regret a thing. Now I’m sure that J.D. over at Get Rich Slowly, Trent over at The Simple Dollar or one of the Dave Ramsay clones would be perfectly justified if they took issue with some of the fruit-loopy financial decisions that I’ve outlined above. Why did we chuck up a secure, spendy lifestyle to plunge ourselves into a debt-ridden debacle? How could it possibly be acceptable to have £10,000 in a savings account, when we were wading through thousands of pounds in liabilities? Should we really have bought that house, when our financial position was so precarious? Er, and where was our “Emergency Fund” in all this? What is there to love, exactly?

So, answers:

Debt: chucking up jobs for student life / part-time work. Then setting up a business with zero capital.

Although I was happy in my job, my husband stepped straight out of university into a career in IT – and hated it. The idea of following this set career path for the rest of his life filled him with horror. When he was in his late 20s, he found something that he adored doing – and for which he displayed a not inconsiderable talent. He won a place on a course that would equip him with the skills to forge a new career in this chosen field.

We thought about saving and waiting, like sensible people would, but realised that the perfect time was upon us: we had no mortgage, no dependents and few financial commitments. We went into debt so that he could take up his place on the course, but it was worth it. Today the debt is no more and his business is doing well, to the extent that he has won awards for his work and appeared in UK newspapers and magazines. Best of all, he loves what he does. He is happy and fulfilled. This makes me happy too. We have lost nothing, and gained everything.

Debt: moving overseas and taking a three-month honeymoon.

Of course, the moving overseas part came as a given with my husband’s course. It was financially draining though; I was working part-time, but this couldn’t support both of us and besides, when you’re an expat you pay through the nose for a lot of things. (Apartment deposit, phone line deposit, car insurance and so on.)

But what an experience! Living in a different country gave us adventure after adventure. In the process we learned lots about ourselves and about one another. It was the best year of our lives. I didn’t mind having to slog and streamline, in order to pay the money back afterwards.

As for the roadtrip honeymoon: despite its length, this was a frugal honeymoon. We already had the car; we stayed in Motel 6s and Super 8s. Our wedding list had been a online affair, with people buying us tanks of petrol, motel stays and “experiences” via Paypal, rather than the traditional pots and plates. It isn’t often that you’re in a position to take such a lengthy holiday, without a care in the world. Best. Holiday. Ever.

Debt: buying a house.

Like I said, we’d wouldn’t stand a chance of getting a house now that the banks have clamped down on self-employed freestylers. In the UK, we have a “thing” about owning your own home. This is why I spent years saving up that £10,000 deposit and why, like a numbnuts, I refused to put any of that money towards our debts. I was a girl on a mission! I love my house, even though it’s a red brick box on a former council estate.

But most importantly, being in debt meant that we had to live on a shoestring and work like fiends to get everything paid off. And this taught us that to be happy, we really don’t need very much. We don’t need the lavish nights out. We don’t need the food deliveries from Ocado. We don’t need the designer gear that I ended up shunting onto eBay with nary a second glance. In fact, when we moved to the USA we lived out of a single suitcase each – and we were utterly, wonderfully delighted with our lives! We don’t need the giant flatscreen TV. We don’t need the swanky motor vehicle.

And guess what? Now that all the debt is paid off, I still think like this. I don’t want these things anymore, because they don’t make me happy. They are pointless. Getting into debt was one of the best decisions that we ever made, because I would never have found this out otherwise.

Five years ago, I wouldn’t have believed that such a simple, frugal life would be for us – but it is. This is how we roll.

Image credit: aussiegall.

Update: This post was featured in the Carnival of Personal Finance.