The financial advisor who wormed her way into £30,000 in debt

At 27, I finally had to confront my reckless relationship with money.

Reclining in a big red chair in the cottage I shared with the man who was now my husband, I was surrounded by about 15 sacks full of barely worn clothes worth thousands of pounds.

A decluttering specialist had me comb through my closet and throw away any items I didn’t wear.

Debt spiral: Money coach Katherine Morgan ended up £30,000 in debt after maxing out credit cards and even personal loans

For years, I’d hit the quiet of the High Street whenever I felt low or insecure.

The dopamine rush I got from each new purchase quickly became addictive and I found myself trapped in a cycle of debt.

At first, I was diving into the overdraft at the end of the month. But I soon maxed out my credit cards and even personal loans. At my worst, I owed £30,000.

I wasn’t into luxury goods. My problem was quantity, not quality, and most of my clothes were from high street chains like Topshop and New Look.

Faced with the garbage bags of all my lost purchases, I burst into tears. This was the first time I felt able to admit I had a problem.

While it may not come as a surprise to hear about a woman in her twenties who is in debt, I am a qualified financial advisor.

I started working as a bank teller at the age of 18 and worked my way up advising clients about mortgages, savings and investments.

It is well-paid work and meant that I was able to buy my first home, in Milton Keynes, at the age of twenty.

By my late twenties I was earning around £50,000 a year. But I’m proof that almost anyone can find themselves in a debt spiral — and that’s especially true now that families are facing a cost-of-living crisis with soaring energy bills, soaring taxes, and soaring inflation.

I knew everything there was to know about money but still couldn’t manage my own.

It is now clear that my emotional spending habits stemmed from my childhood. Like many, I grew up in a home where money was never discussed and I was only responsible enough to take care of small amounts of it which made me feel that if I had it, I should spend it.

As a teenager, I also had terrible self-esteem issues and a negative view of my body. New clothes seemed like the obvious fix.

Retail therapy: Katherine says she developed an addiction to shopping, before enlisting the help of a de-cluttering professional to clear out her wardrobe (pictured by model)

Retail therapy: Katherine says she developed an addiction to shopping, before enlisting the help of a de-cluttering professional to clear out her wardrobe (pictured by model)

So while some people may turn to food or alcohol for relief, I went shopping. But seeing the garbage bags piled high was the jolt I needed to face my demons and take back control of my finances.

My partner Gareth, who also works with finances, helped me and I started to reduce my debt. I’ve used the “debt snowball method” – which involves starting with your smallest debt, to build momentum and a sense of empowerment.

First, I registered with Starling Bank and made it my new existing account by transferring all my debts directly and my income there.

This helped me avoid feeling stuck in an overdraft and didn’t have to see a huge “negative” sign every time I looked at my account. I then started paying off the overdraft in manageable monthly chunks, eventually paying it off in four months.

Then I turned my attention to my credit cards. I downloaded an app called Debt Payoff Planner, which got me excited by telling me “debt-free dates” if I stick to my payment plans.

To achieve this, I focused on cutting back on my spending and inserted cool-down periods before each purchase—the time when I thought about whether I really needed or wanted one.

I’ve also boosted my income by starting a business as a money blogger and creating a community for women looking for support to change their money habits.

But a few years later, my life was turned upside down when my son nearly died five weeks after he was born. Thomas, my second child, had bacterial meningitis and was given a 50/50 chance of survival.

First Steps: I used Katherine

First steps: Katherine used the “debt snowball method” – which involved starting with her lowest debt to build momentum and a sense of control

He survived, but I had PTSD, and that period of serious uncertainty saw me begin to slip back into old habits.

At the age of 32, I found myself once again showing off the clothes that had been hanging in my closet. The cycle was repeating itself – but this time I was more aware of myself.

With psychotherapy, I pulled myself out of the spiral and now, at the age of 40, I’ve been debt-free for five years. Since then, I’ve given up my day job and instead run two successful businesses advising women on how to handle their relationship with money.

I’ve learned that women are naturally less confident about finances than men are.

Those who come to me are either trapped in toxic cycles of debt or have a lot of money but are afraid to spend or invest.

I talk a lot about “money shock” and how chronic financial stress can affect your health.

Taking control of your money goes beyond just working knowledge of personal finance. For me, the key instead lies in addressing the emotional causes behind my spending habits.

Change your emotions, change your behavior.

  • Kathryn Morgan is the author of It’s Not About the Money, available online.

Interview by Helena Kelly

Head out of the red area

  1. Look at your data and identify one area of ​​overspending. Redirect the money saved by tackling this overspending into another pot. If you don’t forward it, you’re not actually saving.
  2. Call your emergency fund a name that means something, like “Future-Self Fund.” My names “Emergency Fund” and “Rainy Day Fund” are very negative.
  3. Have a weekly “financial rendezvous” with yourself to look at the important areas you need to prioritize.
  4. Put some of your savings habits on autopilot. Try using apps like Plum or Moneybox, which aggregate your saved money and keep it for you.
  5. Let go of idealism and focus on small steps, rather than giant leaps that might feel required.

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