'I racked up £5k debt by overspending in my 20s – I was scared to check my bank balance'

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Like many new graduates, Joe, 30, left university in debt, with a student overdraft of £2k and £1k on a student credit card. “I’ve only got myself to blame,” says the learning consultant, who grew up in Coventry and now lives in Brighton, where he studied. “I was surrounded by people who had their rent paid for them or had lots of money. Brighton is very affluent and I’m not originally from here, so I just wanted to keep up and I spent money that I didn't have.”

Joe continued spending beyond his means well into his twenties, until he was in a further £2k of debt, bringing the total to £5k. He was 23 and earning £19k in a customer service job when he decided to start putting his living expenses and £750 monthly rent on his credit card, rent he’d previously shared with his boyfriend until they broke up.

Man sitting on a sunny balcony with a pint

“I had ‘bankxiety’ – I didn’t want to check my account or know my bank balance. I just hoped it would sort itself out, but it didn’t.”

PT sessions (to help him attain a post-break-up “revenge body”) and several holidays also went on his credit card at this time, which he says he had every intention of paying back, but “it just didn't happen”.

“Ignorance was bliss,” Joe recalls of this period. “I had ‘bankxiety’ – I didn’t want to check my account or know my bank balance. I just hoped it would sort itself out, but it didn’t.”

Joe says he never really learned about debt, and he considered it “a future me problem”. He’d push it to the back of his mind and other things always took priority. “I thought, if I just pay the minimum amount off, that's fine and I can keep enjoying my life.”

Once the interest free periods on his credit cards ended and his bank started charging him for his student overdraft, Joe took out a loan to consolidate everything he owed. But needing to repay the loan drastically cut his disposable income – and he got another credit card. “I thought, I'll get a credit card to buy things like tickets or holidays because you're insured if things go wrong. That’s what I told myself at least.”

Soon after, though, the penny dropped. “My dream is to buy a flat or a house and I decided I wanted to clear my debt while I was in my 20s before it became any more difficult. I didn't want debt hanging over me and I didn’t want to have that conversation with a partner. I thought, I need to get it together.”

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 “I’d been putting off the inevitable. It was scary, but it was like ripping off a plaster – you can't start to fix it until you know what the problem is.” 

That was four years ago and since then, Joe has revolutionised his approach to money – he says with help from Monzo. In the three years he’s had a current account, Joe has paid off his £5k debt and saved a further £8k, which he’s putting towards a deposit on his first home.

The first step on Joe’s journey towards becoming debt free was discerning how much he actually owed. “I’d been putting off the inevitable. It was scary, but it was like ripping off a plaster – you can't start to fix it until you know what the problem is,” he admits.

Joe discovered Monzo through a friend who was using it to budget her daily spending. He quickly followed suit – it was the first time he’d regularly checked his bank account. “Monzo cured my bankxiety,” Joe says. “Because I started by transferring money to my Monzo, it meant I was having to go into my bank account and see where my money was going.”

He was surprised by how much he was spending on “micro transactions”, like coffees and “things you don't need from Superdrug or Boots when you're just passing by”. Joe started limiting himself to spending between £100-150 a week, including groceries.

Nights out also changed – pre-Monzo, Joe would wake up the next morning and wonder how many rounds he’d bought everyone. But with Monzo, he’d set a spending limit before leaving the house. “To my friends I probably seemed a little tighter, but I needed to do it because that was one of the things I noticed I was spending a lot of money on.”

Being able to see all his spending in one place was the biggest thing that transformed Joe’s outlook and behaviour, he says. “It’s so much easier to spend when you're not looking at the total going down. Contactless can make it feel like you're not even spending, whereas Monzo tells you everything you've spent, which changed my entire mindset towards money and spending. Knowledge is everything.”

Photo of a man wearing a blue shirt, a rainbow flag behind him

Micro saving techniques help Joe save £1.5k a year

Once he paid his debt off, Joe shifted his focus to saving for the first time. He started by using Pots – one of his Pots is called “savings!!!!!!!!!!”, another is “holiday?”, which he usually spends on other things like entertainment, and his third Pot is called “winter” to cover energy bills.

Joe also started using Monzo’s round up feature – which saves him £40-50 a month and nearly £600 in a year – and has linked his account to IFTTT to level up his saving capacity. He’s taken part in the 1p Savings Challenge, which saved him circa £670 in a year, and the Winter Savings Challenge, which automatically puts £2 into his chosen pot ​​whenever the temperature falls below 10 degrees. These micro saving techniques helped him save £1.5k a year.

More recently, Joe’s money goals have risen to new heights. Thanks to getting a salary increase in the last 18 months, the lack of going-out opportunities during the pandemic and turning 30, Joe is now saving around £600 a month.

“When I turned 30, something switched. Twenties me had an absolute blast and I've got so many fond memories, but he was also quite naive when it came to money. I’m glad I realised in my late twenties that I needed to sort it out because I would hate to be with a partner and wanting to buy a house but still having debt from my twenties looming over me.”

Joe’s monthly spending is unrecognisable from the version of him who spent money without thinking and suffered with “bankxiety”. He still treats himself, but these purchases are well thought out. He’s willing to spend well above average on his monthly gym membership, for example. “I’d drop nights out or meals out if it meant being able to spend my money on that. Previously, I’d have wanted to do both.”

Joe and his partner are currently saving to buy a home in Brighton – ideally a one-to-two bed flat with a garden and within walking distance to the beach – with the help of the mortgage guarantee scheme, which requires a 5% deposit.

“Buying a house isn't out of reach anymore,” Joe says. “My motivation is to be able to say we've done it ourselves. I never felt it was possible in my twenties – it seemed like a dream that would never happen.”