Paid off £30K, about £6k more to go!

muffin74

Just joined the Forum and thought I would record some of my experiences and thoughts here. Maybe they will be of use to someone else.

I am a 35 year old woman and I have sadly been in some form of debt or another for most of my adult life. I am determined to be 100% debt free by this time next year and I want to spend the rest of my life EARNING interest on my savings rather than paying interest on my debts.

Money was tight ever since I can remember. I went to Uni and can remember worrying about money and it being in short supply then. However, I had various part time jobs and a small grant so left Uni with only a £500 overdraft which I paid off quickly. I spent the summer after Uni living with my parents so spent hardly anything but moved back to London in late 95 and started working. Rent and bills were high, salary was low and it was then I had my WORST IDEA EVER - I got a Credit Card.

I think the initial credit limit was something modest like £500. Ever since then, I have had some form of debt.

After working for a year, I went back to Uni to train to be a teacher for a year. By the time I had finished that year I was a few thousand pounds in debt. Later on in my 20s I did an MA and I borrowed another few thousand to pay for that. In my mid 20s I owed about £7,000 or £8,000. By that time I was used to the world of debt. I used my credit card regularly and took out loans. The debts grew and grew. I was borrowing faster than I was paying it off. I spent my 20s getting into an almighty mess about money.

Then I turned 30 and it was time to grow up.

My mum took me on holiday for my 30th and as I sat there by the pool I realised that I had to face my debts and work out how to pay them off. I realised that I was older and I was earning a decent salary so I could not use the excuse that I was young and had just started working. I was also living in an affordable flat after years of paying rip off rents. I had no excuses. Now was the time.

I went home and started the long process of waking up and learning about money. I took out all my loans, credit cards and overdrafts and added them up. I had over £35,000 of debt, some of which was at eye-watering rates of interest. This about the same as my gross annual salary so I was in major debt crisis. I knew I had to take this seriously and make big life changes.

To cut a long story short, this is what I did:

1. I cut up my credit card and vowed never to use debt again unless I was in a dire emergency.

2.I did not buy anything unless I needed it. On the few times I did go shopping, I went to cheaper places like charity shops, Lidl, Primark and local markets.

3. I got a notebook and wrote down EVERYTHING that I bought, every day. At the end of each week and month I would add it up and also look at my categories of spending so I could understand just where all that money was going.

4. I did whatever I could (that was legal and ethical) to earn extra money. I sold stuff on ebay and did part time jobs.

5. I applied to have bank charges and PPI refunded (using the advice on this website). I was successful and received over £5000 in refunds.

Five years later, I now owe just under £6000. I have managed to pay off £30K plus interest in five years. It was not easy. At one point half my take home pay was going on debt repayments alone.

I have also taken other steps for my future. I have taken out private medical insurance and pet insurance. I am contributing to a pension (after 10 years opting out). I am saving £50 a month - not much but it is a start. Once my debts are paid I plan to save at least 10% of my salary every month.

Now I am getting ready for the final push. The last £6K. And after that, a debt free life with regular savings and wise financial choices.

I want to spend my 40s, 50s and 60s living within my means, saving for my retirement and also enjoying life. I want to visit the countries I have read about and dreamed about. But first I have to get this £6K paid and the word debt out of my life FOREVER!!

hypno06

Well done on such excellent progress! and welcome to the boards!

That last 6k will be gone in no time, and from then on all the good habits you have learned over the last few years will stand you in good stead to stay debt free!

:T

wantabetterlife

Well done on your amazing progress so far :j:j. I have now subscribed and look forward to reading your final chapter in becoming debt free

Primula

Well done, what an acheivement, I'm sure you will be an inspiration to many people on here, keep posting.

muffin74

Thanks everyone for your kind feedback - I wish I had discovered the MSE forums a long time ago! This will give me the support I need to become Debt Free!

bomechina

Thats amazing. Well done you :T.

savingholmes

Well done that is amazing :T:T:T- thanks for sharing. Look forward to seeing your journey on the last stretch

FortunePig

Congratulations muffin! Your story is very similar to mine. You're a great inspiration and giving me hope that I can deal with my own debt. Keep posting and I'll keep reading with interest! *subscribed*

muffin74

Thanks!!!

I am really keen to gear up for one final push. In the past year or so I have let some of my penny pinching ways slide. When my debts got less scary I began to ease up a bit - a few magazines here, the odd Costa Coffee there. I continued making my regular repayments and continued living within my means but I was not 100% dedicated to making the most of every penny. However, I feel I am starting to waste money on little bits and bobs so I have decided to get tough again. I am going to be strict until my DFD. I can treat myself to mags and Cappuccinos when that debt has gone!!

A couple of things I have done this week:
1. Joined the forum!
2. Started doing private tuition and checked with the HMRC how I should pay taxes on those future earnings.
3.Queried an item on my credit card statement. (I have about £3200 on a Nat West credit card which I am paying off.) I noticed I was being charged £3 for something called "Your Points". I phoned them up and said I do not want it so they are going to stop it and refund the last 5 months payments = £15.
4. After reading about it on a post from another user, I went to a website called MusicMagpie and arranged to sell some of my CDs and DVDs. (I used to buy CDs a lot before I had a computer but I just listen to youtube or Spotify now). Hopefully I should make about £40 from that.
5. Listed a couple of items for sale on Amazon.

I am going to restart my spending diary. Another thing I am going to do is take up is the "No More Buying Books Until I Have Read the Ones I Already Have" challenge. When I started paying off my debts I got into the habit of buying books at Charity Shops to save money. Unfortunately, I have managed to amass quite a few which are as yet unread.

Ok, that is it for today. Looking forward to a frugal Friday tomorrow!

boredofbeingathome

Well done on clearing so much debt. I have also found that i relax when i think things are under control. I am sure you will soon clear up the rest of the debt pretty quickly now.

Try breaking it down into monthly chunks then weekly chunks, finally looking at a daily payment. That 6000 could work out at 500 per month, or £125 a week, or even £17.80 per day -round it up to £18. Then think of ways to make the extra £18 per day. That could easily be tuition or through budget or through mystery shopping. Simples-errr well you know what i mean. It doesn't seem as daunting that way. lol.

Good luck. Bob x

muffin74

Great advice. Breaking it down into daily, weekly or monthly figures does help. I will definitely keep those figures in mind.

I ended the day yesterday with a bit of bedtime reading. As I am putting 100% into moneysaving and debt repayment, I chose a book about my current favourite subject, money. As I said earlier, I have been struggling with money for years. I have bought a few books on the subject over the years to try to help me out. Some of them have been useful. I wonder if any of you have read any good books on personal finance.Which books/ personal finance writers do you recommend?

Of course, I am a big fan of Martin Lewis as gives such excellent, practical advice and tips. I also have enjoyed reading Suze Orman and Alvin Hall. Other books which I have found interesting are Money Drunk Money Sober, The Complete Cheapskate, Your Money or Your Life (excellent book) and the one I started to reread last night, The Richest Man in Babylon. Others include The Millionaire Next Door and Rich Dad, Poor Dad but those last two are more about building wealth rather than dealing with debts and poor money management.

I am going to reread these and keep reading the MSE site and Forum and hopefully they will give me the inspiration and reminders I need. If you have any recommended money reads, please let me know!