Debt free and want to stay that way! Advice please.

Allotrope

I am in the very fortunate position of having been given a substantial amount of money this week and for the first time in my adult life I am debt free (well almost, I still owe 30k on a 1% interest mortgage but as the rate is so low I'm happy to trickle money into that). I have a reasonably well paid job and am so excited that I will actually be able to put money aside for things like holidays. It's an amazing feeling...last week I was struggling to maintain £20k of unsecured debt and a much higher mortgage!

I know how lucky I am and am determined never to be in that position again. And this is where I need your help. How do I make sure I stay debt free? I have written out a budget and set up a separate current account (one for salary to go into and direct debits and the other for monthly spending.

What now? How best to manage the budget and track it on a day to day basis? How best to stay motivated and not return down the slippery slope of debt?

Any advice would be very welcomed!

Anthorn

I do it with prepaid cards. For example I spend £45 a week on groceries just for myself. So I top-up a prepaid card with £90 fortnightly and stick to that. That gives me the flexibility to spend a little more or a little less but not to any large degree so that I stick to my fortnightly budget. The big benefit is that money for different purposes is kept separate but it falls down if I go over budget and start topping up with more money or worse moving funds from one card to another. Discipline is the word.

robatwork

There's another forum that's right up your street - Debt-free wannabe

http://forums.moneysavingexpert.com/forumdisplay.php?s=&daysprune=&f=76

GTR_King

Allotrope the debit free wannabe forum is your best bet...

but let's say for example you get £1,500 a month after tax..

You need to work out what your outgoings are e.g mortgage tv/electricity bill etc and whats coming in.

transfer some money to your spending account E.G £500

some to saving then leave the rest for bills/food/car stuff etc

once spending account gets to £0 you can't spend any more money till you get paid next..

Works for me

PeacefulWaters

Prioritise saving ahead of spending.

Allotrope

Thank you very much - I'll go post on the other forum

Allotrope

Don't you have to pay for prepaid cards?

Anthorn

Allotrope wrote: »

Don't you have to pay for prepaid cards?

Yes but how much is paid depends on the card(s) and what we use them for. For this we are talking exclusively U.K. P.O.S. (Point Of Sale) transactions and UK POS is free on a lot of cards. For example with Pockit I buy a card for 99p and there is nothing more to pay. But I like Soldo for £2 a month due to its budgeting and security functions. Topping up is by bank transfer which is free too. For this purpose the usually recommended cards such as Cashplus, Tuxedo, etc. are out.

Dobbibill

create a budget (you said you've done this which is fab, a SOA is good as it includes things such as haircuts etc)

give every penny a job......there's no such thing as 'spare' money. It needs a purpose, if it's not needed for day to day spends, then it can go to Xmas, birthdays, holidays, MOT & car repairs, emergency fund etc etc

the hardest part....and this needs will power......is to stick to your budget.

It won't be an overnight fix, it's a change that takes time to adapt. Review your SOA regularly, it may need tweaking.

All the best.

eDicky

Allotrope wrote: »

Don't you have to pay for prepaid cards?

If you use a smartphone the Monzo prepaid has no fees at all (including overseas). Transactions appears on the app immediately and are also categorised automatically as 'groceries', 'transport', etc, which may be useful for your budgeting. It's quite new and still in beta, but works fine in my experience. There may be a waiting list to get your card, which needs an initial top-up of £100 before delivery. https://monzo.com/

agrinnall

Allotrope wrote: »

How do I make sure I stay debt free?

There really isn't anything complicated about it: spend less than you earn. Works for me.