Financial Rescue: Survival, one step at a time
“I finally realised what deep trouble I was in when, one Friday night, my credit card was rejected at a bar. I thought it was just a technical hitch, so I went to an ATM. It wouldn’t let me take out more than R500. That was a week before payday. I had nothing left in the bank and had maxed my credit card.
“It just sneaked up on me. I had got divorced two years before, but, thinking back, I realise I tried to appease my guilt by giving my daughter, who was a university student, quite a big allowance, plus extra money for holidays and trips. I gave my ex-wife things as well. I was even paying off her credit card. But I wasn’t watching myself or my spending, and whenever I ran short, I just used a credit card I had more than one. I guess I didn’t feel guilty, because most of my money was going to my family.
“Anyway, there I was on a Saturday morning, with literally no money left. And I knew my next pay cheque would immediately be swallowed by my debts. I should have been feeling a bit better off: my daughter had taken a gap year to teach English in Japan, so she was off dad’s payroll. But was I using the extra money to pay off my debts? Not a chance. I just spent more time in the pub. I was drinking quite heavily, in fact; I went out most nights.
“Now I was forced to be tough on myself. To feed myself that weekend, I had to raid the fridge and eat whatever I had left. I emptied the food cupboard and lined everything up; there were tins of baked beans and tins of tomatoes and packets of pasta all over the place. And there was some stuff in the freezer. Some of it had been there for years.
“I divided it all up into the days of the week, so one day I would have a baked potato and beans, and the next it would be canned tomatoes on pasta. Some of it was awful, but some was okay, especially if I used a bit of chilli sauce. I got quite good at it. And I was forced to stop drinking, too, simply because I didn’t have the money to pay for it.
“Then I had to have a hard look around to see what I could sell or get rid of. The first thing was DStv: an expensive way to watch sport. The important thing was to direct the saving straight to my credit card. It was the same with the drinking. I worked out that I had been spending about R100 a day on beer.
“One month, I actually put R200 aside in cash and swore that was all I would spend: R50 a week. On the last day of the previous month I had bought a monthly train ticket, so that was transport to work taken care of.
“With R50 I would buy a loaf of bread, divide it into seven, and that was breakfast for the week. Then I would buy cheap stuff, like pasta and anything that was on special offer. I got through the month.
“There were some pretty boring days, especially at the weekends, but I managed it. I found that I had to keep myself busy: go to the beach, or walk to areas I wasn’t familiar with to look at the old buildings anything that was free. And I found books I didn’t know I had. I got to like early nights. I even switched off the geyser and took cold showers. It wasn’t too bad. Maybe I was trying to see how tough I could be. And you do get used to it.
“I switched from my car to my bike whenever possible; that saved me R300 a week on petrol. I considered selling the car, but then I thought that I’d be out of this mess one day and then where would I find the money to buy another? Anyway, I might need a car in an emergency, so I disconnected the battery and sort of put it in mothballs.
“In a year, I did just 2000km in the car. I went to work by train - or when that was impossible, by bus or taxi. One day, a guy at work asked me if I had lost my licence for drunk driving. He would not believe I was using public transport by choice.
“On Sundays, I would ride to a market that sells household goods cheaply, and I bought all my vegetables from informal traders. And when you have to put everything in a backpack, you don’t buy too much. I also developed the habit of keeping a note of everything I buy. I am a dispatch controller, so I know about numbers and the flow of goods in and out.
“I cut up one credit card and buried the other. Yes, buried it. I thought that there might be an emergency one day, so I wanted to have a card available, but I couldn’t trust myself to just put it into a drawer because it would be too tempting. So I put it in a plastic bag and buried it, making it difficult to get to. Every spare cent I had went to paying off that credit card. And when you get used to living without plastic, you really see how your money is spent.
“I got so organised that I planned ahead for annual bills: TV licence, car licence, car services. I put money aside every month in a new account, so that when those bills arrived, there was no sudden drain on my cash flow.
“It was a crazy time, but it worked. Nowadays, I’ve eased up on myself a bit. Now I can go to the pub to watch sport, but I’ll take say, R100, and when it’s gone, it’s gone ... no credit, no cry, as they say. I haven’t managed to get rid of credit entirely, but I have developed discipline. That’s what it is all about. I wouldn’t have been in this situation, if I had had discipline in the first place - and the willpower to say ‘no’ to people who matter to me.”
LOOK AFTER YOURSELF TOO
Being generous to your family after a divorce is laudable, but it is unsustainable if you don’t have a says financial foundation yourself, says Gareth Leonard, a Certified Financial Planning professional at Netto Invest in Cape Town.
A positive outcome like this is very unusual. So many people - married and single - try to exercise financial discipline and fail. Marcus seems to have taken to it like some people take to dietary discipline or an exercise regime: he treated it as a personal challenge and conquered his problem one step at a time.
That is particularly difficult to do when there’s an emotional context for spending; even more so when children and divorce are involved.
But when it comes to financial choices, it is always important to think of their impact on your own personal financial well-being. You can’t help your former spouse or your children if you are deeply in debt, under stress and have no funds to call on in an emergency.
And even more importantly, you can’t be a good role model for children who tend to pick up their long-term financial habits and attitudes from their parents.
The secret of Marcus’s success was probably that he avoided viewing the problem as a whole - which might have been overwhelming. Instead he focused on the credit-card balance and made lifestyle adjustments incrementally as he progressed. The hard work can’t be done overnight, but, as he says, you do get used to it.
* If you have experienced a financial crisis and survived, share it on this monthly page for the benefit of others. We would love to hear from you. Please email [email protected] with the subject line “Financial rescue”.