Small debts at a young age became unmanageable

It’s a common belief that if you work hard you will get ahead but a young man who approached Debtfix for help had worked long and hard and yet, debt threatened to take him under.

At Dennison’s most difficult time he slept in the two-seater car that he owed money on because his weekly income didn’t cover his basic living expenses or debts.

The young Aucklander parked close to his workplace to reduce fuel costs, he showered at a gym, and his possessions were in storage for $90 a month. He felt isolated and embarrassed.

However, the young man accepted his financial responsibility and each night he told himself, it was going to be a good night even if he had to run the car to keep warm for a little while.

A pathway to problem debt

At the age of 20, Dennison’s journey into debt problems started when the bank offered him a $2,500 overdraft, which he soon spent and never repaid. The bank extended it to $3,000.

When Dennison got a new job and needed new tools, he approached the bank to discuss transferring his overdraft to a debt consolidation loan. The bank talked him out of cancelling his overdraft facility and left it as a safety net for Dennison and before he knew it, his total debt grew to about $8,000. Frequently, Dennison’s bank account was in unarranged overdraft, which added more fees to his outstanding debt.

“I was in unarranged overdraft for a long time,” says Dennison. “It’s scary when as soon as your pay goes in there, it’s essentially gone. It was scary going from week to week not knowing if I could make ends meet.” 

He admits he made naïve choices throughout his early adulthood, and eventually he was only paying for essentials and he started borrowing money from friends. As soon as he got his pay, he paid them back but then he had no money left and he was back where he started.

“I found myself sinking a little bit and I tried my hardest to resolve everything without getting a third party involved but couldn’t make it work,” says Dennison.

Trying to fix money problems alone

When he reached his mid-20s, Dennison felt like he had “been kicked out the other end of life” and he’d had some fun, made a lot of bad decisions and it was time to turn things around. Dennison looked at all his outgoings and debts and tried to rearrange things so he had money to cover rent, fuel and groceries. He didn’t know which debts to pay first and creditors constantly emailed and phoned him, looking for their money.

“I decided which ones were the important ones and I looked at banks as the higher priority over a third-party credit card. Banks are where you go to for a mortgage and I thought if I kept a good credit history with the bank that was a priority but that was soon out the window.”

He did what he could and stuck to his promises to pay people and tried to communicate with other creditors to arrange something to keep them happy.

“Sometimes it got difficult because three to four people were asking for money and sometimes, I forgot to phone people and then they would contact me. Then I had to sort out that problem.”

He says he is a bit stubborn and does not like asking for help, and Dennison felt his financial situation was his own doing and he tried to keep it all to himself. “That stubbornness kept me going for five years but I just couldn’t keep up.”

His friends were supportive and they knew when they lent him money he didn’t spend it on alcohol or cigarettes but, rather it was buying food or paying his rent. However, it never felt good borrowing from friends or family because he knew it wasn’t their responsibility to financially support him.

When Dennison borrowed money for a car he couldn’t afford, his father reluctantly agreed to be the guarantor for the loan.

“I asked my dad and he said ‘no’, but I begged and eventually he agreed as long as I made the repayments because he didn’t want any family issues over money.”

The car loan created an unmanageable financial situation for Dennison and he moved to a supposedly cheaper flat that wasn’t, and unbeknownst to him, the lease was about to end. He ended up living in his car because he could not afford anywhere else, he had no idea what his future would be and he began living day-to-day. His boss didn’t know but his parents did and Dennison felt embarrassed.

After 10 hours at work he didn’t even have a home to go to where he could have a shower and watch TV. “Instead, I walked across the road to my car where I had nothing to do, no where to go and no one to see.”

Getting sorted with Debtfix

Dennison felt like he was at drowning point when a family member looked at bankruptcy options, and then discussed it with him. On the face of it, bankruptcy appeared to be a good option. The New Zealand Insolvency and Trustee Service (NZITS) told Dennison he didn’t meet the criteria, which frustrated Dennison and this nearly tipped him over the edge. He just wanted everything to go away.

Instead, NZITS recommended he arrange a Debt Repayment Order and he was referred to Debtfix. Dennison decided he had nothing to lose and everything to gain.

The Debtfix Crew acted quickly, which was a relief to Dennison because “when your living week to week, having something take a couple of months to get sorted is very stressful. From the get-go Debtfix was extremely helpful.  I’m now making fortnightly payments although I have to make some alterations because I changed my job.”

Urgent help was huge for him.

“I came to Debtfix with a bucket of problems and essentially, I can now forget about them.”

Dennison is now back in a flat and can manage his living expenses while paying off his debts, with the Debt Repayment Order.

“It would be unfair for creditors to bear the cost of my decisions.”

He no longer feels like he is living from one pay day to the next, and enjoys not seeing the bank balance in the red.

Reflection

Now, Dennison is sorry he didn’t listen to others, and he says when he was younger, he just wanted what he wanted. The worst part for him is that he has nothing to show for the debt he racked up, other than his tools. For years he was of the mindset that to do or achieve anything you had to borrow money.

“If I had to do repairs on the car, the first thing that came to mind was, where am I going to borrow the money? It was never an idea to put money aside each week to fund these things. Instead of having saving habits, I had borrowing habits which was terrible. Borrowing to buy a house is ok. Borrowing to buy an unaffordable car is not.”

Life experience has made him cautious about who he can trust and made him wish he knew more about money and finance when he was younger.

“There is nothing wrong with getting advice and guidance from others.”

He aspires to study, maybe with a career in investment banking and he has a long-term plan to regain some of the things he sold to make ends meet. Also, Dennison wants to increase his KiwiSaver funds, saving for his first home.

There is always a solution and the Debtfix Crew is pleased they could throw Dennison a life buoy to keep him afloat.