Jonathan is a young man from a Nigerian family, who grew up in South London. He is divorced, with two children, and lives with a new partner.
Jonathan started getting into debt at an early age, applying for credit even before he turned 18, and is still digging his way out now. He used payday loans from the age of 23, until about 30.
In the past couple of years he has qualified as a teacher and now teaches financial maths to year 10 GCSE students.
“I’ve always been an optimist and a bit of a dreamer, I suppose each time I took out some credit, I just thought – it will be ok, things will get better, I’ll get more money, one day I’ll be rich. That was my mindset when I was young and naive”.
By the time Jonathan reached the age of 23, he had defaulted on loans and credit cards and had a bad credit file. Suddenly, he couldn’t access any mainstream credit.
“It got to the stage where, even though I was working (in a junior job at a national broadcaster), I was spending so much of my pay-check on paying things back, I wouldn’t have enough left for my rent, and I was going to go into rent arrears.”
The only I thing I could do was get a payday loan to tide me over to the next month, initially it was for £200. I didn’t know what the interest was, and to be honest I didn’t understand interest back then, all I knew, was it was going to cost me £350 to pay it back the next month.
“I Paid back nearly double what I borrowed. but at the time I just lived month to month.”
The payday lender Jonathan used did check is salary by looking at a payslip, but there were no checks on the rest of his finances, so they did not know that he was already up to his neck in debt and in financial trouble.
“Based on my payslip, then yes, it looked affordable, but when you look at everything else I had going on, then no it wasn’t.”
Jonathan used so many PayDay lenders he can’t remember what they were all called. He recalls one of them being Mr Lender, and he remembers getting short-term loans from Cash Converters as recently as a couple of years ago.
Jonathan describes falling into a monthly cycle whereby the interest on the previous months loan would swallow more and more of his salary and he’d have to take out more and more loans.
“Eventually it just spiralled completely out of control and I couldn’t pay them off. They were just ringing me and ringing me, sending letters and emails and I just ignored it. They say money troubles is the biggest cause of stress, and I agree it is, but I suppose I just got used to it, and I had to try to not let it bother me. I got used to hiding from people. I just tried to maintain my life”.
Jonathan admits he buried his head in the sand for a long time. He just kept doing the things he loves – music and taekwondo with his son, and occasionally taking the kids of holidays to Butlins.
He wanted to give them a nice life and found it hard to rein in the household costs.
But then a time came when Jonathan realised he needed to make a change.
“It was when I was spending so much on the loans that I couldn’t pay rent, then I knew I had to change.”
“I’ve got kids, and even though I know I’ve got places I could stay, I want a home and a place for them.”
“When I was threatened with eviction, that’s when I knew things were starting to get really serious and then I started learning a bit more about it. My sister helped me a bit with rent and with working out my budgeting, and I trained to teach financial maths.
Nobody ever taught us that at school. Even now, the school I teach at, it’s only an optional subject for a small group of year 10s, the rest don’t do it. They try to talk a bit about finance in PHSE, but the teachers don’t have any knowledge themselves, so they don’t go into any depth.
What I teach now is there is good debt, and there’s bad debt: good debt, is where you use the money for something that will save you money or make you money later. Like if you buy a washing machine on credit, it might save you money in the long run (compared to using the launderette every week).
I also try to teach them to save for things and wait until they can afford it. I realised, it’s time I started to practice what I preach.
Now I’m trying to clear it, but I’ve still got a few things on my credit file. I suppose in a way I’m lucky – I know some people who were given even bigger loans, like their bank handed out £5000 loans, before the financial crash, and that’s even worse.”
“I think I’m lucky they didn’t lend me more than they did”
Jonathan is working his way out of debt now, slowly but surely.
“I’ve got a 5-year plan. Now I’m teaching, the salary is nice - I’m going to clear my debts, get a house, and now I’m more into finance, I’m going to make some investments, build up some assets”.
Jonathan had not heard the news about Wonga and was not aware of his right to claim compensation for interest and fees from payday lenders but would definitely claim if it was easy and – crucially – if it didn’t affect his credit file.
“Yes, it’s great to get some money back, but I’ve looked at a lot of these debt management and debt consolidation things and they all say it damages your credit file. I’m trying to fix my credit file, so I don’t want that. I would claim the fees back but only if I was sure it wasn’t going to harm my credit rating. In fact, what would be even better than getting the money back would be if the payday loans could come off the credit file altogether. If they never should have given them to me in the first place, why should they stay on there?”
In terms of places people like Jonathan would find information about finance.
“I don’t really research things as such, I just read things when I need to. People like me who are trying to fix their file might be looking for things like ‘credit-builder’ credit cards. People like me will find things out on Facebook – or when we’re be searching for things like HP deals for cars, or looking for cheap finance on second-hand cars, if it’s girls it’s cheap holiday packages, they all want the holidays and the fashion”.