Credit: money words series

I remember almost screaming at the bank – “It’s not my fault I did not understand the difference between debit and credit – why couldn’t they make it easier?”

My mind used to blank anything numbers related: maths exams, insurance documents, interest rates, taxes.

I have done courses in economics, bookkeeping and statistics. I have sat their politely listening without hearing a thing. I would leave the classroom as clueless as when I went in. I had no context of these questions on the one hand and huge resistance on the other.

I might know what a percentage rate is, but if I don’t know how to apply it, I might as well know nothing.

Part of taking out no further debt and getting rid of my credit cards was dedicated to learning a few basic financial terms: secured debt rather than unsecured debt, credit is actually very expensive money, APR and investment? These words are bandied about freely and yet very few of us know what they mean.

Now I know exactly what compound interest is. It's fantastic, but can I do the maths? Can I heck. I try and work it out again and again but it's not gone in yet. So am still getting others to do it for me. But I will get there now I have understood the principle idea.

Here is another one: ‘growth projections outlines in the budget’. I could tell a child what each word meant but if they wanted the whole meaning– well I would distract them with a biscuit.

There is a big move, which I wholeheartedly endorse, to teach better financial education in schools. But you don’t need it to stop getting further into debt. All I needed was a pencil and paper to write everything I spent – and no access to more debt.

How can I be offered credit as if it’s a good thing when I am unemployed and deeply in debt? Would you offer someone who was dying some poison? Credit can be great if used by those who know what they are doing, but in the hands of a junky, it's lethal.

I need to understand the difference and until I do, I just say "no". Whether it’s a friend at the restaurant offering to cover the bill, or the partner suggesting paying for the holiday on a credit card, it's all debt.

Two years behind on rent, my only income from social security, and in my worst debt ever, I found I had credit cards with about £8000 of credit on them. It had been suggested to me that I tear them up – an outrageous idea. Or so I thought.

But when I totalled the amount up on the six cards I was terrified. Instead of seeing them as my escape and safety I now saw that them as the opposite. They called to me to go and buy a car, escape the country and all my debt. But I knew I would just do the same elsewhere, as I was the problem.

I lit a candle and after cutting them up and I burned them to obliterate the numbers on the cards. I then wrote to the companies telling them never to replace the cards or even offer me new ones.

Credit is also debt, but credit is also savings? Confused? Me too. I still don’t know why we have the same word but I am not going to wait until the world has changed the English language to suit me. Companies tell me I have loads of credit now and I can borrow loads of money. Now that I have no debt and a lot of savings, I don’t do unsecured debt and have not done so for many years. And you know what? I am richer than ever.

I get asked all the time about ‘Credit Ratings’. Another two words that don’t mean what we think. The myth is that if I use a lot of credit cards my credit ratings will go up – so that I can get more credit cards? If I have no credit cards so the story goes I can't borrow anything ever again.

Well I don’t want to borrow ever again so that suits me fine. And now I have healthy assets worth a lot of money my credit ratings are excellent. But I won't use them as I don’t need them – weird that.