Emma had a six figure salary, but it wasn’t enough

Emma was on a six figure salary in her 20s, but had nothing to show for it. She’s one of many Australians who suffer from a little known issue.

Compulsive overspenders have shared their stories.

An enviable collection of designer shoes and handbags, a string of overseas holidays, a house full of luxury appliances - you’d expect a compulsive overspender to have amassed a wealth of possessions, and memories.

Yet for Sydney woman Emma, there was nothing to show for the tens of thousands of dollars worth of debt she racked up in her 20s - just an overwhelming feeling of guilt, and helplessness.

The professional woman, who earns a six-figure salary, carried that with her until a decade ago, when she turned to Debtors Anonymous and was able to settle her scores and get her life - and her spending - back on track.

“I didn’t have a lot to show for it. I tended to buy small things which felt good in the moment but didn’t get me into too much trouble, but consequently a lot of the stuff I bought wasn’t good quality so really I ended up with a lot of junk,” she said.

“They were all relatively small loans but it added up over time. And it was because my life was unmanageable, I never saved for unexpected bills or had any contingency, and I had no clarity over where I was spending my money. In the end I borrowed about $30,000 and it took just over 10 years to pay off.”

The people impacted have spoken about the massive debt they have faced.

That “vagueness” of where the money has gone is common to many people who are addicted to spending, which is why one of the first tasks set by Debtors Anonymous is to start listing where every cent is going.

This is a 12-step program where solvency, rather than sobriety, is the goal - where cutting up credit cards rather than cutting out alcohol is key - and as the cost of living crisis bites, more and more Australians are joining up.

Started in the sixties in the US by members of Alcoholics Anonymous facing financial difficulties, Debtors Anonymous follows similar principles - including steps eight and nine, which urge members to make a list of those they’ve harmed, and make amends.

For Emma, it was those closest to her.

“I incurred the debt to my family over about 10 years from my early 20s as a student into my early 30s when I joined DA,” she said.

“I borrowed this money for things such as when my car broke down, or when I racked up a huge phone bill I couldn’t pay, or when I was overseas and I didn’t have the money to repay a credit card bill or another time I relocated interstate for work and then didn’t have money to buy furniture.

“Even the feeling of starting to repay this and make amends was a great relief to me as debt to family carries a lot of emotion and when I finished paying it off, I just felt very grateful and very relieved that I’d stuck with it and paid what I’d owed.

“I’d cleared the wreckage of the past.”

From its small beginnings in the sixties, DA now operates in around 15 countries including Australia where hundreds of members attend some 15 meetings each week based in Sydney and other state capitals.

Most are now online, meaning anyone, anywhere, can join in; though there’s a handful of face-to-face meetings too. The first step for newcomers is to admit that they are powerless over money, and that it’s made their lives unmanageable.

Many people impacted have little to show despite the overspending.

While many of us have mortgages and car loans - DA focuses on those who compulsively incur unsecured debt, or compulsive debtors, which they refer to as a disease.

In Australia, personal debts are skyrocketing. Total credit card debt has reached $41.64 billion, according to the Reserve Bank of Australia. This is down from its peak at more than $52 billion in 2018, but it has again been rising steadily in the last couple of years.

Economics and finance expert, Andre Lot, from the University of Sydney Business School, said the cost of living crisis had led to more people getting themselves into debt.

“There’ll always be a percentage of the population who spend as much as they can, and take any opportunity to get credit in whatever form they can,” he said.

“But now we are seeing people who were previously managing their finances finding it hard to cope, as their expenses - their rent, petrol, groceries, bills - are all rising.

“People are often stuck in their consumption habits - they don’t want to change their consumption by buying a cheaper brand or driving their car less.

“They’re not adjusting to the fact that while their cost of living is rising, their income is not, and they’re getting into more and more debt.”

Social media too is playing a part, with people trying to emulate the lifestyles of those splashing cash around on Instagram and other platforms.

“They’re seeing their friends and family, even people they don’t know, living their ‘best lives’ and they want to keep up with them,” Professor Lot said.

Secrecy around spending, sudden shopping sprees and frequent requests for borrowing were some of the signs that someone you know may have a troubled relationship with spending or debt, he said.

Debtors Anonymous was started in the 1960s by members of Alcoholics Anonymous.

“People are often looking for new debt to pay for old debt - it’s about breaking that cycle,” Professor Lot said. “Monitor your spending, create barriers to spending - maybe that’s using an account with just the available funds and no credit, maybe it’s just withdrawing cash and using that - you can even put a block on your own credit report so it’s harder to get credit approved.”

Reaching out - to banks or credit institutions to talk through outstanding accounts; or to unions, employers or other agencies to see if financial counselling is available - was key to getting on top of the problem he added.

“Don’t less paralysis take over; if you see things are getting out of control, reach out.”

Kate, a stylist from Melbourne, reached out in her late 40s - when a conversation with a client led to the realisation that she had a problem.

“One of my clients who was a senior barrister was saying she and her husband, also a barrister, might have to remortgage the house again as they were always broke,” she said.

“It stuck with me as they both earned extremely high salaries. But it doesn’t matter if you earn $30,000 or $300,000, it’s about your relationship with money.

“And I realised that while I’d worked for 20-odd years, I didn’t have much to show for it. I had no debt but whatever I got I managed to spend.”

Kate was familiar with 12-step programs - she’d given up alcohol through AA, and curbed her binge eating through Overeaters Anonymous. DA was the obvious choice to deal with her compulsive spending.

“I was frittering my money away - I might buy a coffee and muffin in the morning, a sandwich for lunch and pick up some takeaway bolognese for the family on the way home - that’s $25 to $30 a day,” she said.

“I remember one of the first meetings I went to, another member was saying they didn’t spend money every day - I thought ‘how do they manage that?’.”

Her first DA meeting was nothing like she expected - it was full of well-groomed professionals, with high salaries - and high spending.

“I felt sick to my core walking in, I was ashamed and embarrassed, but I came away with hope,” she said.

“I was shown how to start saving - and started saving just $5 at a time; and all of a sudden I had a grand.

“Tiny incremental changes like that had a massive impact on my life.”

John, a graphic designer from Sydney, said his “rock bottom” arrived around seven years ago, with a $20,000 credit card debt, plus three months arrears on rent for both his apartment and his CBD office.

Also an AA member for some years, he was introduced to DA by a friend who also became his sponsor. But first he had to understand how he’d got to where he had.

“I traced it back to when I was a kid - when I started getting pocket money, I’d spent it before I had it; when I started working I’d seek advances before payday,” he said.

“When I hit rock bottom, I had no invoices to send out, no projects on the books, I’d borrowed from just about every friend and family member.

“I wouldn’t answer any number with ‘no caller ID’ or open any mail that looked like a bill. I was suicidal.”

John also admits to shame around his spending habits; how he’d use money to hide his increasingly dire financial situation.

“I used money to impress people, to buy emotion from people,” he said.

“If I went to a restaurant with a group of people, I’d volunteer to pay the bill - on my credit card. I wanted people to think I was doing well.”

Once he joined DA he was all in - attending 90 meetings in 90 days, to soak up the experience of others and discover how they had resolved their issues.

“The simple solution was to stop borrowing my way out of it, and stop hiding from people and institutions I owed money to,” he said. “Over the next six years I paid off all my debts, and I truly turned my life around. I now sponsor others.”

Emma, also now a volunteer with DA, said members come from all walks of life - from those who chronically overspend, to those who underearn, to some who just can’t spend at all.

“We have around 350 active members in Australia, and many of them have got themselves in huge amounts of debt - literally hundreds of thousands of dollars of debt through credit cards, after pay, borrowing off family and friends,” she said.

“There’s also people who have never earned a lot and can’t seem to make ends meet. Then there’s those at the other end of the spectrum who find it hard to spend money at all - they might have received a windfall but haven’t been to the doctor in five years or bought any new clothes - they have a scarcity mentality.”

As with many addictions - there’s many underlying issues. “It goes beyond money,” Emma said. “Money is just something people are using to deal with other stuff.

“Spending money gives you that instant endorphin hit, and they often use that to cope with the difficult things in their lives.

“I’ve had people say to me ‘this addiction, this disease can’t be worse than alcohol or drugs’ - but talk to anyone living in poverty due to their disease of debiting, and tell me it doesn’t have an impact.”

Emma still attends the meetings, and adheres to the free program which she said is “spiritual” rather than religious.

“I now have a contingency and a prudent reserve for all those unexpected bills, and I save for expected bills such as car rego and high utility bills which I never did prior to DA, but best of all I save for fun things like holidays, concerts, art works,” she said.

“Since coming into DA I have learnt to save for the things I want and need, and now I buy less but better quality stuff.

“The best advice I ever got in DA was to start keeping my numbers (that is writing down what you earn and spend) and to keep coming back; you can’t relearn the habits of a lifetime in a few weeks.

“And if I feel the urge to splurge I call someone else in the program who knows what I’m going through to help in that moment.”

Originally published as Emma had a six figure salary, but it wasn’t enough