Get debt free on very low income?

theboakster

**sorry for long rambling post!!**

I quit my 9-5 job in January, as it was making me very stressed and I wanted to simplify and downsize.

I've got rid of Sky, got rid of my iPhone contract when it ran out and went to giffgaff, have swapped onto value food/bulk buying and have really slashed my outgoings to mostly basics (more on that later). I'm also selling lots of our stuff on ebay.

My OH has been paying for food, rent and social activities which has helped a lot. I would REALLY like to become debt free.

I have bits of money coming in here and there - a bit of freelance work, tax credits, child benefit - but nothing consistent until Aug/Sept, but even then I'll only be earning about £9k p.a. At the moment my income looks a bit like this:

Monthly income:
Child benefit £81
Tax credits £200
Freelance work £250
Ebaying £150-£200 (not for much longer)

I can survive on about £700 a month I think, if my OH continues paying food and rent. However, I'm running out of stuff to sell on ebay!

The other main problem is that I'm paying £300 per month servicing debts, and I'm only currently paying minimum payments. Yikes!:eek:
I can't get another credit card, as I have a rubbish credit rating - have tried, so am stuck with ridiculous interest rates of 20% or over....

Can I really become debt-free on such a limited budget? I can't really take on much more freelance work at the moment as I'm trying to finish my PhD, but come Aug/Sept I will have a bit more coming in.... maybe just keep up min payments until then?

Here's my outgoings:

Monthly outgoings
BT Phone/broadband £65 (can't change this as I live in the middle of nowhere and no-one else can give us Broadband/phone line)
Contact lenses £7
Website hosting £8 (through which I do work)
Credit card 1 £50
Credit card 2 £50
Next account £190
Mobile £12
Electricity £78 (cheapest I can get, have swapped recently)
Car insurance £32
Petrol/other travel £20
Council Tax £70 (OH also pays £70)
Trumpet lessons £48
Gym £55

I can see three possible changes here, but I'm a bit reluctant to do them... but if I want to be debt-free, I might have to:

i) get rid of car. this is probably most possible. I don't use it much and my other half has a work truck. I can get buses/lifts if needs be

ii) stopping trumpet lessons - this is my ambition, to become a brilliant trumpet player. I think if I stopped this, my dreams would die!!

iii) stop going to the gym. I do this with a friend and have kind of replaced my social life with this, as it's good for me. It feels healthy, but it is a big chunk of money. I *could* exercise at home, but then I'd never leave the house... I'm here all the time...

Debt totals are as follows:
Credit card 1 - £1,500 balance, min payment £50, 28% interest
Credit card 2 - £2,400 balance, min payment £50, 20% interest
Next account - £2,000 balance, min payment £190, 25% interest
TOTAL DEBT £5,900

Any tips, thoughts, ideas? I would REALLY like to be debt free

savingmummy

Hi and welcome.

Its definitely doable I`m a sahm and have been debtfree before, and currently getting debtfree AGAIN!!

It is a case of cutting right back, losing luxuries and being very strict.

I did a lot of things which helped me get debtfree, and it was all worth it and paid off in the end.

theboakster

Thanks savingmummy! It's a bit daunting, even though I know I don't have as much debt as some people...

Tink_04

I'm on a very low budget and have plodded on and we are getting there. It's realising the little payments add up. Why not try the payment a day challenge or 1 debt vs 100 day? Or even a target of your own to work towards, I find this really motivated me. Also read some diarys I found white iris - learning to live on less a great inspiration for a family/budget/eBay sales. Good luck!

FinanciallyUnsavvy

Hi Boakster, and welcome.

It's a fine line. You're in a good position that your OH is willing to take on the rent etc., but looking at your outgoings there's only a couple of obvious things you can cut back on.

If I was you I'd cut the trumpet lessons out, just for now. £48 a month is quite a big chunk right now. Presumably you own your own trumpet? So you can still practice in your own time. Try looking online - YouTube is amazing; you'll find lessons and tutorials on there free of charge, I guarantee it.

Again, the gym is a lot of money. Exercise is free, and it can still be social - meet your friend to jog around the park, take it in turns to go to each other's houses to work out to an exercise DVD. Are there no other gyms nearby? There's lots of these £10 a month gyms popping up all over the place. PureGym, Exercise4Less, etc.

Those two gone is over £100 a month, and that £100 a month will mean your debts will have a realistic end date in the near future - continuing to pay the minimum means you'll be looking at 10/15+ years.

If you could get just a bit extra income in it would help you massively. If you managed to work full time just a few months ago, surely another couple of hours freelance work a week wouldn't be too unbearable?

If you got rid of the car, is it worth anything? Would you get a lump sum from selling it?

Good luck to you! The simplifying and downsizing is very admirable. I hope you can work it out to suit you and your family. You do sound like you have your head screwed on right and appreciate what is possible and what isn't!

theboakster

Thanks Tink_04 - I'll have a read, and definitely think a challenge would be helpful.

FinanciallyUnsavvy - I think that's great advice, and glad you were honest about it. £100 is a lot of money, isn't it. I have realised though that I *would* be ok giving up the gym, but really am resistant with the trumpet. I just got my Grade 6 and it's going well, and there's no way I'd get Grade 7 without a teacher... the music is just too difficult to do alone.

But saving £55 on the gym is a good saving I think. I like the idea of alternating at each other's houses. I actually do have some weights and an exercise bike at home (just ebaying the rowing machine! need that money!) and have yoga books and stuff.

10/15+ years puts it all in perspective, doesn't it.... woah, that *is* a long time...

savingmummy

theboakster - your going to be just fine!
ALREADY your setting a compromise and thinking about dropping something important to you.

SO many can`t bare to even think of dropping sky, phone or something they enjoy!

When it comes to it you have to be STRICT! You have no choice but drop things you can no longer afford.

Hope this is an example just how strict I got with myself
(copied from my diary from 2010)

So people can have some ideas on how i become df quick i am going to bore you with what i did and how i did it.

* I got rid of my mobile - didnt miss it and still dont have one!!
* I cut my childrens hair and DH`S. My hair i get done once a year (treat from mum).
* I stopped using buses - walk everywhere despite living in rural area!
* Groceries i stick to a strict list of what we NEED, dropped brands, used vouchers, bogof`s, halved my meals and used other half to feed 2 children so in reality only cooking for 2 adults, soup before main meals, bulked food out to make it go further, have 2 meals a week at parents, NO meals/takeouts - we spend £150 a month on food:T no extras inbetween food shop days!
* Started earning from surveys - used these for xmas/birthday for DH he gets a cd for each occasion lol! He loves it though especially it being FREE!! i only buy for children noone else and spend £20 each!
* I don`t buy clothes for myself or DH we use what we have, get clothes for birthday/xmas off family, get donations for DD from nursery friends and so only buy for DS (his wardrobe consistes of 3 trousers 5 tops) about £20 every 6months we spend on him. He does however wear PINK pj`s :rotfl:
* Saved on electric by being careful, candles at night, reducing tv/pc time, turning everything off at main switch, charging DH`s mobile up at work, reduced tumble drier useage, hand wash when appropriate, ES lightbulbs.
* incoming calls only on home phone so only pay line rent no call bills.
* make my own bread, yoghurts, biscuits, cake - kids enjoy it too!
* DH saves on petrol by only using it if he HAS too - mainly to and from work! cycles to shops etc.
* Don`t pay parking, park where its free and legal.
* No shopping trips out - can`t remember the last time i visited a mall.
* NO holidays. We just have days out which are FREE!
* DH takes his flask and lunch into work.
* NO newspapers/magazines - use online
* Got DD clean day and night :j
* Stopped sky
* Stopped birthday cards and just send email!
* Sold on ebay - this alone paid one of my debts in full!:beer:
* Carboot last summer - paid part of our water bill!!
* Used spare paint family had to decorate 2 rooms indoors.
* Asked for money for xmas/birthday:rotfl:it worked!

Wee_Pilsbury

theboakster wrote: »

**sorry for long rambling post!!**

Monthly outgoings
BT Phone/broadband £65 (can't change this as I live in the middle of nowhere and no-one else can give us Broadband/phone line)

Hi there

I appreciate you can only get BT phone and broadband but that price seems way too high. I have BT phone and broadband and pay less than half of that? Worth a phone call to them I think or do you have extra things in your package over and above the phone and the internet?

Other than that the obvious ones are cut the trumpet lessons (I know, you really don't want to :cool:) and the gym.

It is possible to do this on a very small income but it will be tough - sticking around on these forums will help though :T

National_Debtline

Hello there.

You have two ways that you could potentially approach this.

The first is to try and cut back on everything and give up on the gym and trumpet lessons to see if you can find a way to meet the contractual minimum payments. The benefit of doing this is that you are likely to keep your credit file in good order. To help you with this you are in absolutely the right place. Plenty of folks on here are very savvy when it comes to living on very little for a while, it's very inspiring!

The second is to complete a more realistic financial statement, allowing for the hobbies and reasonable amounts towards bills, housekeeping and the other things that you are likely to need to get through the month. This is likely to mean that you would need to offer your creditors reduced payments, this is likely to affect your credit score.

There are a couple of good pages on the excellent Debt Camel blog that discusses the choice you have to make in more detail:

http://debtcamel.co.uk/hard-choices/how-far-to-cutback/
http://debtcamel.co.uk/hard-choices/skinny-snowball-vs-comfy-dmp/

Do take time to read both although I'm not certain that a Debt Management Plan (DMP) [as mentioned on the blog] would be right for you - it's the general principle that I'm more interested in. Given that you are on a very low income it's possible that you might be able to make token offers to your creditors, they may also agree to freeze interest and charges. This would, of course, mean that it would take a long time to clear the debts. Alternatively, you may qualify for a 'Debt Relief Order' which could write-off the debt after twelve months. Being an insolvency option, it does have a big effect on your credit file and your name would appear on a public register for a year or so whilst you have the order in place. There is strict criteria for a DRO, you can find out more *here*.

These options I've mentioned are generally regarded as a last resort although I'm really not sure how sustainable living on the bare minimum would be for the medium to long term. Of course, you may increase your income through your self-employment - and should that happen you could look to take on your hobbies again. I just wanted you to be aware that you do have alternative options open to you.

For more general information about debt management and negotiating with creditors, here's our 4-step guide.

Best wishes,

David @natdebtline

theboakster

savingmummy - SO inspiring! Thanks so much for sharing that, lots of great ideas of how to be frugal.
I'm interested in the walking everywhere thing. I'm about 4 miles from a small town, and about 6 from a city, and I have thought that maybe I should walk there. I often walk 4 miles no probs with the dog, so maybe I should do that. And I could get a secondhand bike easily no doubt, and do some nice cross country routes too...
Ebaying a debt away sounds BRILLIANT. I wonder if I have enough big stuff to sell... probably not for the amount of debt I have!

Wee Pilsbury - I think I should definitely ring BT up, I'll do that tomorrow!

National Debtline - thanks David. I don't think I want to go down the second route. I am more than happy living in a frugal manner (it's totally sustainable if it aligns with your values I think - family and friends are my riches, and there's plenty of free stuff to do!)
I think that I can maybe boost my income a little bit (from Aug/Sept it will be higher anyway) and cut back, which will help in the long run. Much rather pay off the debt and live without it I think

savingmummy

Try freecycle first! someone may be getting rid of a bike, or even ask if any friend's have unwanted ones lurking in their sheds!

I sold almost everything quite literally, if I hadn't used it or looked at it for a month or two it went!
I found things I`d not seen for a long time and when I sold it I didn't miss it at all!
Allow for the fees though, back when I was selling fees weren`t bad, now I find them quite high so don`t use as much.

So you have any hobbies that could earn you pennies? Any craft skills etc?

If you have a facebook account you could have a look and see if you have a selling page for your local area - no fees and cash on collection.

The main thing for me was food shopping and `top up shopping`.
I was spending too much, buying things I didn't need and the top up shop was turning into another food shop!!
Meal planning for me was such a HUGE money saver, I wrote a shopping list and stuck to it.
If you go to the oldstyle they have great tips on meal plans, and recipes.

Remember to watch your OH`s spending habits too!

A lot of my friends thought I was mad being so frugal - BUT it worked and before I knew it I had £50-£100 a month to throw at a debt, more at times.