Would you tell the world if you were £27,000 in debt?

When Clare Seal started putting everyday costs on multiple credit cards, it began a spiral of fees and charges that would leave her with a serious money problem. She tells Hanna Woodside how it took a frank confession to get her back on track.

Twenty-five thousand pounds of credit card debt. A maxed-out £2,000 overdraft. Zero savings. When Clare Seal, now 30, started her anonymous Instagram account @myfrugalyear in March last year, her family’s financial situation was at breaking point.

‘It was out of control,’ she says. In fact, only a shock call from the bank that same month about exceeding her overdraft limit forced her head out of the sand. ‘I was angry at myself. And so ashamed. I felt completely alone, that I was uniquely stupid for having such bad debt.’

Ever since, the married mum of two, who works as a freelance copywriter in Bath, has used @myfrugalyear to document the ongoing efforts to repay the £27,000 of debt she shares with her 29-year-old husband Phil, a restaurant manager. It was a slow drip of years of overspending that led to the family’s financial difficulties. ‘People hear a figure like £27,000 and it conjures up images of designer handbags and flash cars. But there’s nothing flash about our life,’ explains Clare, who lives in a rented flat in Bath with Phil and their two sons, five and one. When she received the gut-punching wake-up call from the bank, asking why she remained in an unarranged overdraft despite several notifications, all she could say was, ‘There’s no money left.’

Clare Seal debt graphic
This is what Clare owed just over a year ago. She has since paid off £9,000 – but it’s a long process, she says, and there are no short cuts. Image: Ben Quinton/Grazia

Her Instagram account was initially set up as an outlet to share her feelings ‘without the fear of judgment’ – from the worry of checking her credit score, to the pressure of childcare costs, or the guilt of unnecessary purchases. But Clare found herself inundated with messages from followers with similar concerns. ‘People kept saying, “I thought it was just me”. It was like they were waiting for someone else to admit it first.’

Clare now has 54,000 followers – almost all are women – and a new book, Real Life Money, which combines emotional and pragmatic advice for ‘financial wellness’. ‘There’s very little space for women to talk about money and feelings in one go. There’s this old idea that women can’t be trusted with finance, that we are frivolous creatures who spend all our money on shoes. But I think women have been wanting to talk about this for a long time.’

Clare was on maternity leave from her former job as a brand manager for an interiors company when the bank called. At the time their household income was approximately £64,000 a year, but with six different credit cards and a store card, having a clear picture of their finances was difficult. ‘There was an awful lot of incremental spending beyond our means. We just didn’t have a handle on anything,’ she says. The high cost of rent in Bath, ‘massive’ childcare fees, two cars on finance deals, plus the cost of Clare and Phil’s wedding in 2017 (about £20,000 in total, some £12,000 of that on credit) were major factors in the couple’s debt, but Clare admits there was a lot of ‘emotional spending’ that contributed to the problem, too. And it was fuelled by Instagram.

‘Working for an interiors brand, I was constantly looking at Instagram posts of perfect homes. And yet we weren’t able to get on the housing ladder,’ she says. Buying expensive homeware – a £125 French Connection rug, £200 on scatter cushions – was a way to feel better about her situation and as though she was ‘measuring up’, she says. ‘And obviously you desperately want the best for your baby, so if someone says, “These organic clothes are kind to their skin” [she once spent £28 on organic baby bloomers], or “this toy helps their development,” you can be very vulnerable to that kind of online marketing.’

Like many couples, for Clare and Phil, their spiralling debt was ‘the elephant in the room’, she says. ‘It wasn’t a secret but it was something we didn’t really talk about.’ After the call from the bank, Clare made a spreadsheet detailing all their debt down to the last penny (a screenshot of this was her very first post on @myfrugalyear). Fourteen months on, they have cleared their £2,000 overdraft and paid off £7,000 of their credit-card debt, making £500-£1,000 repayments each month. They still have £18,000 to go.

Clare Seal and Phil
Clare with her husband Phil

There are no short cuts, Clare says. It’s a slow, steady slog of making repayments and living within their income. ‘It’s not rocket science. It’s sticking to the principle that if something is not essential and the money is not in the account then it doesn’t get bought.’ Simple things such as changing energy suppliers and reducing food costs have helped; so has unfollowing or muting Instagram accounts that trigger her old envy of expensive home interiors.

After a year of anonymity on @myfrugalyear, the decision to finally reveal herself was partly, Clare admits, to help promote her new book. ‘But the message that this is not something to be ashamed of can only hold water for a certain amount of time if the person saying it is withholding their identity. I wanted to use my own voice, my own face, to say, “I’m a real person in this situation. I am no longer too embarrassed to talk about this, so you don’t have to be either”.’

Clare’s book comes at a time when we’re all facing the financial implications of the pandemic. Phil is furloughed, receiving 80 per cent of his salary. The money saved on his commute and their nursery fees has helped, ‘but obviously we are concerned with the state of the hospitality industry and his long-term job security,’ says Clare. ‘We’re being extra conscious of our spending, and we’ve created a “corona budget”.’

She hopes her advice and experience will resonate with both the ‘technically comfortable but still terribly anxious’ and those who find ‘there’s always too much month left at the end of the money.

‘If there’s a danger of anything right now, it’s people being too proud to seek the help they’re entitled to.’ If you’re beating yourself up for not having six months of living costs tucked away, then stop, says Clare. ‘This pandemic is not your fault. I think that’s really important to remember. If you are worrying about money, now – more than ever – you are not alone.’

How Clare took control of her finances

Money Dashboard app

First, Clare downloaded the Money Dashboard app. It clearly displays monthly outgoings such as bills and childcare fees.

Money Dashboard app

The app’s trackers revealed that Clare was spending far too much on ‘top-up’ groceries so she set a rigid monthly budget of £60.

Clare Seal long term goals

Once she’d started paying down the debt and regaining control of her finances, Clare felt able to make plans for the family’s future.

Clare’s 10 tips for tackling debt

1. Know your numbers

With so much uncertainty ahead, it’s a good time to know exactly where you stand. Make a cup of tea and check the balance of your current account and any credit cards. If you have multiple accounts, you can spread doing this over a couple of days.

2. …And keep checking them

It’s a good habit to check current accounts daily. For credit cards and loans, once or twice a month is enough to keep tabs on interest and repayments. Apps such as Money Dashboard connect all your accounts, which can feel less stressful than logging into multiple banking apps, and shows your net balance so you can see the big picture.

3. Create a ‘corona budget’

A budget is knowing what’s going on with your money, rather than denying yourself things. Do not ‘crash budget’ and strip all enjoyment from your life – it’s not sustainable. Budgeting isn’t complicated: what’s your income, what are fixed outgoings (eg, mortgage), what are variable expenses (eg, weekly food shop)? Anything left is disposable income, which you can spend or save. Use actual figures rather than rounding up or down; discrepancies add up. If you’re still earning, consider putting money aside for what comes next.

4. Don’t panic if your account is no longer in the black

Some people who have never before had to use a credit card or go into their overdraft will have to now, or in the near future, in order to cover living costs. If you’re very anxious about this you’re more at risk of a ‘head-in-the-sand’ mentality. If you have to take on some debt because of this crisis, regard it as something temporary that you can be in control of.

5. Call your bank – they’re not the enemy

If you’re struggling, banks and lenders can help: payment holidays or reductions; freezing or refunding interest; goodwill refunds of fees and charges (they can refund up to 12 months’ worth). Before you call, prepare with account details and passwords, and know what you want to achieve. Don’t feel embarrassed: it’s like talking to your GP – they deal with this stuff all the time. If the person you’re talking to isn’t helpful, say politely: ‘I don’t know if you are quite getting what I’m trying to explain. Is there someone else I could speak to?’

6. Recognise emotional spending

In lockdown many of us are stuck at home feeling lonely, bored or frustrated. If emotional spending is an issue, before you hit the checkout ask yourself: how am I feeling? Am I trying to fix a bad feeling by buying this? Will buying this solve it? Can I afford it? For example, you’re feeling anxious and looking at a pair of pricy cashmere jogging bottoms. Will buying them help you feel better? Or will you feel the same in a different pair of jogging bottoms? It’s about making considered purchases.

7. Beware of buy now, pay later

Be wary of anything that separates the pleasure of buying and the pain of paying, such as Klarna or Paypal credit. For big-ticket items such as new appliances, zero per cent payment plans can be helpful. But if you don’t have £80 for that new top, and have to spread it over three payments, ask yourself if you can afford it – if you default or forget to make payments it can go on your credit file for six years, and you’ll be at risk of a bad credit rating.

8. Talk to your children

Older children may be worried about money right now. Try bringing up the subject without telling them what to do. Lead by example – show them how your own ‘corona budget’ works. So many families don’t discuss money, but if you talk openly, it will help them feel comfortable about managing their own finances.

9. Consider consulting a financial adviser

If you have a clear picture of your finances, a session with an adviser who can help you achieve your financial goals is helpful (but if you don’t know what those goals are, it may not be worth the expense for now). Finding the right adviser is like finding the right therapist: they have different specialities. Some will advise on pensions and hedge funds, whereas you might need a financial coach who helps you change your behaviour around money.

10. Seek help sooner rather than later

StepChange (stepchange.org) and National Debtline (nationaldebtline.org) have free, practical advice about coping financially with coronavirus – including what to do if you can’t pay bills, changes in regulations that might help, and what assistance is available from creditors. They can help you set up a debt management plan, too.

Real Life Money: An Honest Guide to Taking Control of Your Finances by Clare Seal is published by Headline, price £14.99. Order a copy for £10.49 (a discount of 30 per cent) until 14 June at whsmith.co.uk by entering code YOUMONEY at checkout. Book number: 9781472272294*.

*Terms & Conditions: whsmith.co.uk