My debt free story

dave1961

Hi survivor,
My story is very similar to yours, It started 2003 when I lost my job. I realised I'd been wasting money hand over fist, and when luckierly I got another job, I decided it was time to take stock. Our debts at that time were 43K, loans and credit cards, time share, car, plus 65k motrgage.
I spoke to a friend of mine, who being a bank manager knew a lot about money, he told me about a system where i could turn debt into wealth...sounds like one of those american finance things, I know...It invovled hard work, something he called "the year of pain", but he said I'd be debt free in 5-6 years, and I if i kept it up could start saving 10 - 20 k a year. I thought what have I got too lose! only 100k of debt.

The "year of pain" was just that, not hoildays, clothes, life for one year...2004 was hell, but we got through by watching our smaller debts repaid, and the money saved in interest on each smaller debt going on the next debt, until all but the mortgage were gone.

The mortgage, at the very begining I had taken out a flexiable mortgage and by 2008 was able to pay £2000 a month, you should see how a mortgage can drop with that sort of money paying it off !

Fast forward to today. I've just celebrated my 50th birthday, with a holiday in Las Vegas, we have savings in the bank, and for the first time ever my mortgage company has paid me interest....a whole 19p for february !

So stick in there everyone, it can be done, you have to believe.

jen15_2

Hi survivor

Thanks for sharing your story - it is inspiring! We are definitely at the start of our journey, and the road ahead seems tough but its good to hear that it can be done.

Dave1961 - your story sounds amazing too. What did your bank manager advise you to do that made such a massive difference to your finances?

Thanks guys

dave1961

Hi Jen,
Firstly he was acting as my friend not as a bank manager, so telling stuff to help me, and not trying to keep me in debt or sell me something. That said it was all the usual stuff. So firstly an accurate budget, to see where we really are, and where we could save some money. In my case I could save about £100 per month.

Then a list of debts, which he priortised by which one could be paid off first with the help of the extra £100 per month I'd scrimped together. I think the order was something like, credit card 1, credit card 2,overdraft, loan 1, loan 2, car loan, mortgage.

So then paying the regular amounts for credit card 2, loan 1 etc.. but paying credit card 1 + said £100, until it is paid off, from memory about 9 months, then month 10, credit card 2 + credit card 1 PAYMENT AND £100 = about £275, until credit card 2 paid and so on.

Important point do not add to debt, and any extra cash pay off debts...this is year off pain, as mentioned above, it does get easier after about a year.

So 5 big debts gone in 4 and half years, and a new way of thinking installed, and £2000 a month to bash out mortgage.

I now hate paying interest on anything, I use my one remaining credit card, and pay it of every month, the same goes for my wife's card. And I just bought myself an X type jag, for my birthday...secondhand of course but no finance, I used my debit card.

You have to believe, It may take longer in some cases, depending on how much you owe, how you earn, how much of a surplus you can raise, even if it's only £25 pound a month, which is a cappachino a day...not in London I know... but something, you have to be determined, have a goal, a time, a reason to be debt free, form me it was wanting to be debt free for my 50th and to retire at 55th with some capital in the bank, no mortgage and No debts.

Hope this helps Jen, good luck and believe you can do it !

jen15_2

Dave

Thanks for explaining. Sadly it seems that there is no miracle cure - just the 'usual' route as you say.

Forgive me for asking, Survivor and Dave, but there is one thing I never understand. When you sit down and look at the amount of debt and work out how many months it will take to clear everything (perhaps using the snowball calculator), its usually quite a big number (ie, several years)

But you both seem to have cleared your debts really quickly. In your case Dave you went from a sizeable amount of debt and £100 a month surplus, to debt free really quickly. I don't mean to be nosey but I have read quite a few threads and it seems this is a recurrent theme. How does this happen? Is it just due to momentum, and the fact that once you get started it just gets easier and gathers pace? You both mention the 'year of pain', but I can cope with a year of pain if it means things are going to improve after that. What is harder to think about at the start of the journey is endless years of pain. That's fairly discouraging. Any advice on how to keep focussed on the goal? What worked for you guys?

Thanks again for your encouraging posts!!!! :T

ElmerFudd

I realise this thread was quite a while ago but I just wanted to say that I needed to read this as I was at a low ebb despite all the positive actions I have done this month. I can't wait til things start turning around.

pugzy

Thanks to the OP, great story, great thread and a great feeling I'm sure, I shall join you in the next couple of years hopefully!

dave1961

Hi Jen,

What kept me going, seeing it working, and realising that the sacrifice was all worth it. Your right, as I saw what £100 extra a month could do, so I'd make that my minimum, and look for ways to add to that, such that at the end of the year of pain I was attacking each debt with £500 per month, at the end of year two it was £800, year 3, it was £1200 and so on.

Another little part of the story, during year 2 our washing machine exploded, and as at that time I had a monthly attack fund of about £300, I walked into currys and bought a new one that same day with cash (well debit card) that felt great, no finance, no loan, and it only put me back 1 month.

Seeing it actually working keeps you focused, knowing you can now handle any little problems, so that they do not become a crsis is great.

All you have to do is believe, time passes very quickly as you get older and seeing something is going to take a year is, nothing, really is it ?

Hope this helps.

saorsie

Wow what lovely inspiring stories from both the OP and dave1961 ~ I vote this thread should continue to be bumped up the DFW thread so people can take courage from these very helpful and supportive guys

Thank you both for sharing your debt-free journeys and proving it can be done :A

-s-

Billy-no-Money

I like the 'year of pain' concept - it really mirrors my experience. If you're fortunate enough to get your LBM while it's still possible to meet all your commitments, a year or so of concentrated effort breaks the back of the debt.

It's also good to know that you then actually have a choice of how much to pay, and it doesn't half feel good when you can pay more than the minimum.

I've got a long way to go yet but for those starting out on their journeys, remember it's hardest at the beginning!

(The year of pain isn't just about being very short of money - it's also about adjusting expectations, swallowing your pride etc. That was when I let friends and colleagues know I had a lot of debt - so the peer pressure to go out for a coffee every day vanished - and others then also admitted they were under pressure)

bernie115

What a great post. Thank you.
Can i just ask did you and dave1961 use a spending diary at the beginning?
I love reading success stories