Transcript: I’m in over my head with debt — what now?

This is an audio transcript of the Money Clinic podcast episode: ‘I’m in over my head with debt: what now?’

Claer Barrett
Four years ago, my guest on today’s episode started an anonymous Instagram page called MyFrugalYear in an attempt to hold herself to account. 25K of credit card debt, 2K overdraft, zero accessible savings was how she summed up the challenge ahead of her.

Clare Seal
Most of this was going on completely behind closed doors, and I actually wasn’t even really adding up the numbers myself. By the time I hit a bit of a breaking point, it was just about getting from one day to the next.

Claer Barrett
Her frank confessional posts about turning around her problematic relationship with money have brought her tens of thousands of followers.

Clare Seal
I found it really helpful to publicly talk about how it is absolutely fine to find yourself in a mess, and it’s fine if you’ve created the mess. It can be cleaned up and you can clean it up.

Claer Barrett
Clare Seal revealed her true identity when she wrote a book about her experiences, and while she’s managed to clear her credit card debts, she now faces another looming financial challenge.

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Welcome to Money Clinic, the weekly podcast about personal finance and investing from the Financial Times. I’m Claer Barrett, the FT’s consumer editor.

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In this episode of Money Clinic, Clare Seal, the serial borrower turned financial coach and mum of three, will share her story of how she tackled a mountain of credit card debt, as well as offering practical tips on how to start repaying debts and cut spending. Frankly, even if you’re not in debt, Clare’s insights on developing a compassionate approach towards your finances are universally applicable and may come in handy on a rainy day. Finally, financial problems can and do have a serious impact on our mental health. And be aware that this episode contains a mention of suicide. If you need to speak to someone about how your debts are affecting your life, we flagged sources of help in today’s show notes.

It’s gonna get very confusing indeed, as my studio guest today is none other than Clare Seal, the author and content creator better known online as @MyFrugalYear. Welcome, Clare.

Clare Seal
Oh, thank you so much for having me.

Claer Barrett
Well, it’s our absolute pleasure because the reason we wanted to get you on the show is because people who follow you on social media really value your relatable and often quite therapeutic messages about money. There’s also a huge amount of secrecy and shame about money problems, but through your social media account, you’ve managed to provide a space where lots of like-minded people can connect with you. And one of the messages that you say you’ve received time and time and again from people who follow you is, I thought it was just me, which is really quite harrowing.

Clare Seal
Yeah, well, and I really thought it was just me as well, because people aren’t open about this and that’s not a surprise. One of the things that I say quite frequently is that the shame that surrounds money actually is very much mirrored by a lot of quite vocal judgment around money, you know. And I think we’re moving in the right direction, but people still aren’t really afraid to say what they think about the way that someone else manages their money.

Claer Barrett
Well, let’s start by talking about how your own debts built up all those years ago. What was going on in your life at the time to get to 25K credit card debt, 2K overdraft?

Clare Seal
You know, sometimes when you’re travelling to work and your mind is very occupied and you’re like, quite tired . . . 

Claer Barrett
Always. (Laughter)

Clare Seal
When you get to work and you don’t remember any details about the journey, like you don’t remember tapping your Apple Pay, you don’t remember getting on or off the Tube, you don’t remember getting in the car or what the traffic was like. And that’s a bit what it was like. I graduated from university. I was working quite a low-paid job in hospitality, and I was unexpectedly pregnant at 24. My husband was 23. And we made our best go at it. But I was totally unprepared for the fact that childcare costs were gonna eat up my whole, like, quite meagre salary. I never even considered not working. I was working sort of incredibly hard and also looking after a baby. And I think for me at the time it felt like, oh, this is such hard work that I must have some disposable income. And in actual fact, it wasn’t the case. And I was really naive to the fact that in those situations, lots of people have family help. But you know, I didn’t know that. And a lot of the actual kind of bulk of the debt came from our wedding. We had the place, we paid all the deposits. And then my husband was working in hospitality, so he was hit by, like, recurrent job losses when a restaurant wasn’t doing so well, it’s a really tough industry. And so we were in this position where, do we lose everything that we’ve put down already, or do we borrow and then hope to catch up? And we chose to do the latter. We didn’t have like a flashy wedding, but all weddings are really expensive.

Claer Barrett
But also borrowing money is scarily easy to do. And there’s one line from your book: I absorbed the extra £2,000 of my overdraft into my ideas about how much money I had to spend.

Clare Seal
One thing that I’m really grateful for is that buy now, pay later is not around when I was, you know, having that period of my life because I think I managed to overcomplicate things massively with an overdraft. And I think up to like six different credit cards as far as . . . like panicking and like having to take out another and another because things were due and then it’s fairly common knowledge but wasn’t necessarily to me then of how easy it is to get in over your head and then how difficult it is to get out. So most of this was going on completely behind closed doors, and I actually wasn’t even really adding up the numbers myself. By the time I hit a bit of a breaking point, it was just about getting from one day to the next. And if like a direct debit didn’t bounce, then it was a good day, you know? And I definitely didn’t feel like I could talk to anybody else about it.

Claer Barrett
So, Clare, when you made that decision to make your debt spreadsheet, you shared some of the details on @MyFrugalYear, which then was an anonymous Instagram account. But then by the summer of 2020, you decided that you were gonna go public and put a face to that account. Why did you decide that? And do you ever regret doing it?

Clare Seal
I don’t regret it. It’s been tough. I think that the social media landscape has only got harder for people with a platform in the last few years. There’s a lot of noise. It also meant that I had to speak to people that I knew. So I, you know, had to sort of profess in friends and family. In actual fact, the first kind of reveal that I did was an article with Grazia. I think that it was necessary. I think that at some point the message of, we will need to stop being so ashamed about our money mistakes stops ringing true if you’re still not willing to sort of talk about it with your own face, in your own voice. So that was quite a big motivation behind it.

Claer Barrett
When you told your friends and family, I’ve got more than £20,000 worth of credit card debt and I’ve started this hugely popular Instagram account talking about it, I mean, how did they react?

Clare Seal
Mixed, I would say. A mixed reaction. I think it was strange. My experience was quite unique, though, because I think that most people revealing like a big financial secret like that don’t also have the opposite of, look, how cool is it! I would regret it if I could say so. I think a big thing was because I had already done so much work on trying to fix the problem, and I’d been talking about it even just anonymously for such a long time. I developed quite a good language for talking about it. Some people in my family, I still haven’t spoken to them sort of directly in detail about it. You know, the word just sort of got out through the family. With my friends, like it did cause a couple of ripples. And in actual fact, now it does feel a bit like there’s a lot more openness and grit to talk about money. I found out various financial mistakes that my friends have made that I never knew about before. It’s made it easier for us to say, actually, I can’t afford that right now. So I think overall the effect has been positive. Yeah. It’s never easy to be the one to put your heads above the parapet.

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Claer Barrett
Your posts have helped so many people address and reframe their feelings about indebtedness. But what advice would you give to anyone listening who knows that deep down they have also got a problem they need to face up to?

Clare Seal
It was really, really tough. I would say, the first thing to do is to try and find a good time to arm yourself with all of the information, because the chances are, if you’re feeling that anxious about debts that you’ve got, you potentially don’t know or haven’t really kept track of how much and what the interest rates and all of that stuff is. I found it really helpful to make that a bit of a fact-finding mission myself, so, to get it all down into a spreadsheet. Weirdly, once it was in an external vessel, it stopped being so frightening to me. 

Claer Barrett
It was containable.

Clare Seal
Yeah, exactly. And I really encourage anyone feeling where their debt or their money worries are having a real impact on their mental health and on their self-esteem, which definitely it was for me. I mean, I was a nervous wreck. You have to be really careful. And especially with the link between debt and very severe mental health problems and suicide rates, we have to be, like, careful that we encourage self-compassion within people. I really encourage anyone who’s having that degree of kind of stress or distress about their money to try and make, like a small shift in your language. So I stopped talking about being in debt and I started talking about having debt.

Claer Barrett
OK.

Clare Seal
It just was enough of a shift for me to start seeing it as a problem that needed to be solved, rather than some kind of like, damning indictment on me and everything about my life, and something that was gonna define the rest of my life forever, and something that was gonna be like a shadow over all of the good experiences that I was going to have. Because I think certainly for me, like my brain responds much better to a problem that needs to be solved than it does to feelings of despair, and that I’m a terrible person and I’m so ashamed to be in this position. I think one of the things that I’m always quite keen on stressing is that all of the practical help is so, so necessary. But if you can’t bring yourself to access it, then you’re not gonna get anywhere. I think it’s really helpful, in actual fact, to publicly talk about how it is absolutely fine to find yourself in a mess and it’s fine if you’ve created the mess. It can be cleaned up and you can clean it up.

Claer Barrett
Mmm. Well, you frequently give advice and opinions about things on your Instagram account that people perhaps wouldn’t expect. I mean, I love your posts that start “Whisper it . . .”, for example. And also your views recently on those spend challenges because Instagram is a great place for those, isn’t it? Lots of people jump on the bandwagon of a particular thing, but actually you said no-spend challenges, there can be much more to this than the internet would have you believe.

Clare Seal
Yeah, I think no-spend challenges are really interesting. They seem to work quite well for some people because we really like hard and fast rules, and money is one of the places where it’s easy to implement those hard and fast rules and to feel in control. But I think that if you’re not careful, that kind of getting stuck in a cycle of like really depriving yourself and then, you know, the kind of desire to spend, building up and building up to the point that you fall off the bandwagon, I think you can get yourself locked in like a binge/purge cycle quite easily, and you have to be really careful. And I would say, I wrote about it a little bit in the book, but I struggled massively with disordered eating throughout my teens and early 20s, really until I had my first son. And those cycles of kind of deprivation and then overindulgence in my relationship with food have really been married in my relationship with money. So I think if you’re someone who falls into those patterns easily, I would recommend maybe being a little bit careful with no-spend challenges. But there are loads, I mean, overall, I think social media is a really positive place for money.

Claer Barrett
I agree.

Clare Seal
The recent loud budgeting trend on TikTok, I really enjoy, because it is bringing that kind of willingness to talk about the imperfections in your relationship with money. I’m trying to bust some myths around, you know, on the one end of the spectrum we’ve got being profligate or spending frivolously or overspending, which is really demonised, but then also really demonised is being like tight or watching the pennies too much. And it’s really hard to fall in the right place on that spectrum. So stuff like the loud budgeting challenge where people talk about how they’re saving money and what they’re spending, I think is helpful to everyone. You’ll have to be careful in the comment section, especially on data.

Claer Barrett
I’m talking about the practical tips that you give people. Obviously, we’ve got a long list in today’s show notes of debt charities that people can turn to for help. Very telling statistic, of course, that people often don’t think that their problem is bad enough to ask a debt charity for help, but intrigue me, you didn’t go down that step, even though really £25,000 worth of credit card debt, even if you have less debt that you were struggling, they absolutely would have taken your call.

Clare Seal
Yeah, they would have. And actually some charities have a really great online tool that you can kind of plug all of your numbers and your circumstances into, and they might make a suggestion of what the best route is for you. I think we were maybe six months away from that being our only option, and I . . . I don’t know. I feel so much more compassion towards myself at that time now, you know, five years later than I did. At least initially, I felt like I didn’t want this to be easy. I want this to feel like a punishment. And it wasn’t ‘til a little bit later that I worked out that wasn’t necessarily the right mindset to go into it with. But honestly, even if you’re not going to go into formal debt management it’s really, really worth having a chat with someone. Apart from anything else, you know, I’ve met a few people who work for StepChange and they are just so happy to listen. They are so full of solutions, so full of like compassion and kindness that . . . 

Claer Barrett
And not judgmental.

Clare Seal
No, not at all. And I think it’s a bit like going to . . . I mean, I would say this about people who work for like your bank or your lender as well, is like they’re also human beings and, you know, probably talk to people in this position all the time. It’s like going to your GP with like a really embarrassing problem, right? They . . . It’s mortifying for you, but they see that stuff all the time. And the same can be said of definitely speaking to a debt charity. But also, you know, one of the things that I did with not going down that route was I did like a sort of rung around all of my lenders and (inaduible) if there was anything that they could do for me. And a couple of them refunded charges, refunded interest, froze interest for a month or two and they, you know, I . . . that was five years ago. Obviously, I don’t know what things are like now.

Claer Barrett
I think they do more now with the consumer GC but crucially, you’ve got to ask for the help. You’ve got to be brave enough to put your hand up and say, something has happened. I’m in a difficult situation. How can you help me before this becomes a bigger problem, affects my credit score?

Clare Seal
And it’s worth when you make that call. What I did was I put together a list of things that I was doing to help myself so I could . . . even just for my own . . . 

Claer Barrett
(Inaudible) 

Clare Seal
. . . talking. I was able to say to them, look, this has become a problem. This is what I’m doing, but is there anything that you could do to help me to get that bounce back in the right direction? And most of them said yes. That there was something that they could do. And I think that help isn’t there necessarily unless you ask for it. But I would definitely recommend on that day, make sure that you’ve got some clear time. Get yourself like a drink. I’m just talking about, like, water or a cup of tea. I wouldn’t recommend (laughter) to make these calls. But yeah, make sure you’re there with a drink. Make sure you’ve got all of your login and security details in front of you, so you’re not flopping around for things. Have your list of things that you want to talk about. Write down what you would like the outcome to be. And also you can make yourself a little script if you want to, but just do everything that you can to take the, like, anxiety out of it. Prepare for it. But I would also say, and this goes for any company that you speak to, if you are on the . . . if you try and do that and you’re on the phone with someone who isn’t understanding or isn’t being kind to you, all you have to say . . . most, you know, especially most banks, they’re call centres so, massive, you would never get the same person twice. All you have to say is, I don’t think that we’re really understanding each other here, I’m gonna leave the call now, and you just put the phone down and call back, and you might get someone else who’s not quite doesn’t take sort of “our computer says no” attitude. And sometimes it’s about speaking to the right person.

Claer Barrett
You have really good points there. Let’s move on to the feminist aspects of money and debt. Now, the staggering statistic, which is actually from the UK’s money advice service, is that nearly two-thirds of people in problem debt are women. Does that surprise you?

Clare Seal
Not in the slightest, but I think that consumer debt is like really targeted towards women, to the point where the UK’s biggest buy now, pay later brand is millennial pink, and women are in this sort of odd triple bind when it comes to money, in that we’re not set up well. So there’s still a gender pay gap, we’re still paid less. We’re infantilised when it comes to talking about money. You know, the first aspect of our triple bind is that we’re not well equipped. The second aspect is that we are just relentlessly targeted with stuff that we need to buy in order to be acceptable. The cost of visibility for women, you know, you’re a woman with a public profile. So my, the cost of being able to show up just in terms of how you have to present yourself in order to be listened to and taken seriously is much higher for women than it is for men. And then the final knife in the back is that women are like, held up as these profligate creatures who spend all of their money on shoes and handbags. So, you know, they are still like in a bit of a pickle when it comes to money. And I think potentially, this is a way for women to learn to manage their money and to be a financial success that doesn’t necessarily, like, fit the pale, stale, male model.

Claer Barrett
The other big problem, of course, is maternity leave and the cost of childcare. I mean, you found yourself the shock of being on maternity leave, of your income literally disappearing before your eyes and then having to plough all of your salary, in your case, into paying for the childcare. And lots of followers say that this was the start of their own descent into financial difficulties. For people listening who are parents, who are thinking of becoming parents, what would your top tips be for them?

Clare Seal
So I would say, first of all, you need to arm yourself with all of the information about what you’re entitled to. Lots of people underclaim, say, for things like child benefit, help with childcare. There’s tax-free childcare and obviously free hours. So arm yourself with all of that information. If you’re an expectant parent, check out what your company’s maternity policy is. If you’re planning to have children in the future but you’re not pregnant yet and you’re going for a new job, that’s something that you can bring into your negotiations. You know, especially if your company is not willing to go up on salary, you can push for a better maternity or parental leave package.

I would say, really embrace the preloved economy. Your children are in their clothes and play with their toys for such a short period of time. And in actual fact, you need to spend very little on their clothing in rotation for their first couple of years. Get to know platforms like Vinted. Look at what brands are bought and sold. You know, there’s an amazing amount of money exchanged on some brands of clothing, on some bits of baby kit, things like BabyBjorn bouncers, Ergobaby carriers, stuff like that. And that can really be your secret weapon that can reduce the costs of actually practically having children so, so much. All I would say . . . or you’re hoping to be a parent or you’re currently, you know, waiting for your baby to arrive, all I would say is that you do get through it somehow. You might be like, quite stressed and quite worried some of the time, but you do get through it somehow. If you do have to rely on borrowing a bit, there will be chances to make that office again. It’s not like a life sentence, you know. It’s a great idea to try and be as prepared as you possibly can be.

Claer Barrett
Well, I think it’s gonna be a key election issue. Definitely something that we’ll keep focused on on Money Clinic.

We’re sitting here in February talking about building better habits with money and of course, New Year, New Year’s resolutions. I’m conscious lots of listeners might have resolved to do something in January that maybe hasn’t gone so well. What would you say to them?

Clare Seal
I mean, I would say that I started all of this on the 16th of March. When you start is arbitrary and it’s just about keeping going. If you’ve had a false start in January, doesn’t matter.

Claer Barrett
Learn from it.

Clare Seal
Yeah, absolutely. Just if anything, it’s giving you more information. So have a look at what went wrong. Did you cut too deeply? Are there some changes you were hoping to make that you didn’t quite make? Are you locked in some habits that are actually just making it really difficult for you to change your money management or your relationship with money that you need to address first? I think you can learn so much from a false start.

Claer Barrett
Finally, Clare, when you tell us about this year’s financial challenge, which you’re calling My Frugal Year Two, what’s facing you now?

Clare Seal
We’re due to remortgage this summer. Obviously, I’m really kicking myself for not taking a five-year fixed rate, as I think a lot of people are, but that is potentially going to add a lot to our monthly outgoings. I’m just trying to rebuild my income after maternity leave and so we’re really just cutting back and being careful. Though we have a three-bedroom house and we have three children, and we also live in a new-build development where they are building some four-bed houses. And so we thought we’ll go and have a look around. When we got back, I realised that I was already worrying about how we were gonna afford this four-bedroom house, that we’d literally just gone to go and looked around it. And so in that moment, it was just a really clear no, as it’s a whole expense of a house move and also logistical nightmare of it.

Claer Barrett
Better for the kids to share a bedroom and have happy and financially stable parents.

Clare Seal
Absolutely. Even if you’re trying to keep an eye on it, you do often fall victim to kind of lifestyle creep. And so my whole thing this year is like every decision that I make, I’m asking myself, does this simplify things or does it complicate them?

Claer Barrett
Well, I completely agree with everything you said. Clare Seal, we wish you luck with your frugal year ahead. And thank you very much for talking to me today on Money Clinic.

Clare Seal
Thanks so much for having me, Claer.

Claer Barrett
That’s it for Money Clinic this week with me, Claer Barrett, and we hope you found this episode useful. If you did, spread the word and leave us a review. We’re always looking to chat with people about their money issues for the show, so if you’re interested in being part of a future episode and are looking for some expert money advice, then email us: money@ft.com. You can also follow me on Instagram. I’m @ClaerB and Claer Seal, of course, is @MyFrugalYear.

Money Clinic was produced by Tamara Kormornick and Persis Love. Sound design was by Breen Turner and our editor is Manuela Saragosa. You heard original tunes this week by Metaphor Music. Cheryl Brumley is the FT’s global head of audio. And finally, our usual disclaimer. The Money Clinic podcast is a general discussion around financial topics and does not constitute an investment recommendation or individual financial advice. For that, you’ll need to find an independent financial adviser. That’s all the small print for now. See you back here next week. Goodbye.