Staying out of debt...please share your tips....

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!

sourcrates

Allotrope wrote: »

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!

Would you like to buy some magic beans ???

Ah but seriously, I live within my means, and that's it, don't have credit cards, don't take loans, I have a catalogue account as I am a man and I hate shopping, but I mostly pay it off every month.

Plus I don't want to be insolvent again, which is good motivation I can tell you !!!

GTR_King

Have a CC Pay off in full every month (If you can't do that the don't get one)

Have and Overdraft but only for about £300 to cover you if you need to use it...

Have spending account transfer money to it and once that has run out wait till you get paid..

Only spend what you can afford..

Also you need to save some money as well

gallygirl

Rather than ask for tips you need to look to yourself first. How did you get into debt in the first place? Was it a specific incident that triggered it or living beyond your means?

You've said about saving for holidays etc - I would sort out my pension and savings position first - retiring early makes for a very long holiday . This applies even if you're in your 20's - saving now will reduce what you have to save to get the same result in the future.

Take time to research things then 'pay yourself first' - have all savings taken automatically out of your bank and save what is left rather than save anything that's left at the end of the month. If you've been paying off debt you're probably used to being quite frugal - I'm not suggesting you carry on knitting your own yogurt for ever , but give yourself a reasonable spends budget and then save the rest.

Good luck for the future :T.

enthusiasticsaver

Spreadsheets and budgets are great tools.

I work out all essential spends and pay as much by direct debit as possible. All other spends are then divided appropriately into savings pots for gifts, holidays, house and car and then long term savings for retirement. Spending money for month is separated out for OH and myself and then a joint pot for food, travel,entertainment etc.

moneyonmymindsam

Wow on the debt busting. Congrats on the debt freeness


Start with a new SOA to divide up your estimated living costs and budget and then stick to it , If your really rubbish at Budgeting ( like me ) give yourself an affordable daily allowance like £10 a day or something so once its gone, it's gone but you are still within your budget.


Debt free what a wonderful place to be


Sam x

FinallyDebtfree2017

Find out what got you into debt in the first place and tackle that head on.
Set yourself saving goals, as you say holidays, but also emergencies, retirement etc..

theoretica

Save more than you think you really need - because the car won't last for ever, or the boiler, or the roof, or...

I have long term savings (I hope they will be for retirement, but might be used if I were out of work), medium term savings (for annoying things like the car dying), and spendable savings (for holidays or laptops and the like).

Also be very aware of mentally spending money more than once - you have more money each month, and want to save - if you save the extra then you don't have it to spend that month, and vice versa.

EssexHebridean

Some brilliant advice here already - I'll back up something that has recurred throughout though - budget, Budget, BUDGET!!

If you have a car, work out roughly what you spend on maintaining it in a year - include in that tax, insurance, MoT test, servicing, tyres, and other depreciation. Add on 10%, divide by 12, and that is the amount you need to set aside monthly to cover everything. Likewise, household insurances plus a small fund to cover the Hoover going wrong, or a new kettle being needed. Separate savings for all these things are certainly the way forward as far as we are concerned - we've got accounts for those, plus holiday savings, presents, and a few other things, When the money lands in the account at the start of the month, automatic transfers send the relevant amount to each of those accounts, as well as our own spending money to our accounts. That way we know what is for spending and what is for savings.

The more you budget for things, the less "surprise" spends will come along. Let's be honest, most "surprise" spends aren't really that surprising, are they - with a bit of foresight you can pretty much see that they'll be coming at some stage! In terms of personal spending money, you may find it helpful to ensure that there too there is a cushion for "personal" savings aside from the household stuff.

Know what you have coming in and know what you have going out. If the first equals more than the second, you'll be OK. Review quarterly to see how things are going, and if you have money left in the account at the end of the month, pop it away into savings to avoid frittering.

Good luck!

datlex

I have a spreadsheet and keep separate accounts for bills and spends. Update my spreadsheet every card spend.

louby40

Budget! Give every bit of your salary a job.

I use YNAB and many people who use it end up paying off BIG debts, mortgages, student loans etc much earlier than normal.

I'm still about £3k in debt but it will be gone by next July (except my car loan and mortgage) so I'm hoping to be in a much better position by then, but meanwhile YNAB keeps me on the straight and narrow.

Congratulations on being debt free!