This is a follow up to my previous post titled money, money, money. If you haven’t read it, go check it out, it outlines my story into my personal debt problems and some tips as to how I’ m fixing it.
In part 1 I told you all my total debt was originally roughly £50,000! And at the point of writing that 10 months ago my outstanding debt was £15,500.
For part 2 my main update is that my outstanding debt is now £7,500. So in 10 months I’ve paid off at least £8,000 plus any other bits I accrued and paid off in the same time scale. (Sometimes the only way to get out of debt is to add a little more debt temporarily, like I’ve said before debt is relative).
Since my last update, I have managed to get rid of all my bank loans, paypal finance and my overdraft. I currently have 3 credit cards, one is empty, the other 2 are about half full and are both currently 0%. I still owe my uncle £1250 (this started at £14,000) and I owe my mum £2250. There is also a microwave that is currently on 0% finance, but that will be paid off in a couple of months. I have moved some debt around where I could to keep it 0%.
How am I doing this?
I’m going to be honest, I wouldn’t have been able to do any of this if I didn’t have a decent salary (Due to the sheer volume of debts/outgoings I had). I have made sure that my committed expenses are less than my take home pay every month. When you first start it is difficult, things will be tight, you may have to make sacrifices in order to cover your expenses.
Lots and lots of overtime - I take on 4-5 extra shifts per month to make up my salary so I can pay bulk lots off my debt. If this is an option for you then I highly reccomend it. This does come with a warning though, don't do so many shifts that you burn yourself out. I make sure that if I'm getting tired, I take on fewer shifts. We all need a break sometimes, especially when I've personally been working extra shifts for about 5 years. For me the extra overtime is a long-term thing. It's not so bad if you only need to do it for a couple of months.
Frugal living – here are some tips of how to quickly cut your expenses:
Budget for your monthly food expenditure. My rough food estimate is based on an allowance of £8 per day, you can cut this down more, but I find this gives me a bit of leeway.
Meal plan – I try to do this a lot more now, not only does it help with budgeting, it helps to cut out fast food and takeaways, and can also help you to have a heathier lifestyle and potentially loose weight if that’s what you want.
Stop buying coffee on the go, just stop it. Buy a travel mug, make coffee at home and take it with you. Make coffee at work. If you do buy a coffee then it should be more of a treat. This money really adds up over time.
Cut those subscription services. My family all share a Netflix subscription, and we swap the payment between us every couple of years to make it fair. You could do this with a group of friends too. Or just not use it. Anything you aren’t using just get rid of, its wasted money.
Gym memberships. If you arn’t using them, get rid of them, if you do use the gym maybe look at getting a cheaper gym membership or even swapping to home exercise. Now I do have an expensive gym membership, but I am using it (best I can) I also have a personal trainer, but I’ve made enough progress in my finances that I can now afford it, and it’s my last ditch attempt to loose weight.
Swap your bill providers – use comparison sites, see if you can get cheaper rates.
Balance transfers – if you have credit cards make sure you transfer the balance to 0% where you can, there’s no point in wasting money paying interest if you don’t have to.
Money transfers – for the first time in my debt journey, this month I have been offered and accepted a Money transfer, I transferred money (at 0%) from my credit card to my bank account which has allowed me to completely get rid of my overdraft. This is a crucial move, in case you hadn’t heard. From April 2020 all UK banks will be changing their overdraft charges. They are pretty much all going to have a 39.9% interest rate, which is double most credit cards. I urge everybody to stop using their overdrafts asap. If you need extra money (even though you should be living within your means) then it is going to become cheaper to spend on a credit card than use an overdraft.
Manage your money wisely. It is important to prioritise the debts that either have the higher interest rate or that you will be able to pay off quickly to give you more free cash. Evaluate your finances to find out which debt you should personally tackle first.
Confront your debts head on. You won’t be able to do any of this if you don’t admit to yourself that you have a real problem, and you also need to make a list of all the outstanding debts so you have a real figure of the outstanding debts.
I am happy to talk to people individually about this. I’m happy to give free advice, its counter-productive charging people if they don’t have money in the first place…. Just think about me if you do become rich. :P