Debt free almost....how to stay this way

Sharon87

Best way to stop being in debt is to budget. Budget for all expenses, monthly, annual, very rare expenses. Then work out how much they cost per month and put money aside for them. I'm in the process of becoming debt free, but I do have a £1000 emergency fund, when I'm debt free I will put more money into this.

Credit cards can be useful if you have self control, if you don't they can be temptation. I have started to exercise self control so I have an AMEX credit card I use to pay for my monthly spends like food and pay it off in full every month. I get AVIOS points for my future travels - so that's a bonus. But if you have self control issues then cut up cards - except for one with a small amount on for section 75 protection for large purchases only.

I used YNAB to budget for everything and it's shown me how much of my income I actually use on essentials and not realise it because some bills are annual or every 2 years.

Andyjflet

Cut your cards up, don't have them lying around, why would you want to ? The limited benefits on them dont mean a jot, look up Dave Ramsey and listen to his podcasts, plastic surgery (cut them up) is the only way. 

lantanna

Shift you focus from spending to saving, pick something to save for that you really want and put your energy into that. You ll get more satisfaction seeing your savings grow than spending ever gave you. Have a look at ISAs or regular savers where the £ is locked away.

Fireflyaway

I'd say 3 things will help. Most important step is to decide never to borrow again (with the exception of a mortgage). Once you truly learn to dislike the thought of always owing someone, it's easy to not borrow. It becomes more satisfying to know that x truly belongs to you and not the credit card company. Dont just cut the cards up, close the accounts. Secondly do a budget (and stick to it) so you don't accidentally spend what you don't have. Thirdly be prepared for the unexpected. If you have a cash emergency fund you don't need a card. 

BabyStepper

Congratulations on your almost debt free status! That's great!

I agree with other posters who say you need an emergency fund and also a budget that covers absolutely everything. Start your savings pot now. It will slow up your debt free date but you seem to have everything in hand so try not to worry too much about that.

It takes time to adjust your mindset. My credit cards were always my emergency fund. Even once the fund was in place I used to reach for the cards and had to stop myself and think no, this is an emergency, use the emergency fund. It takes a while but your confidence will build as you have this fund and you begin to realise you're more capable with money than you used to be and you're not going to spend your EF on a holiday or any other daft thing. The peace of mind your EF brings is absolutely priceless. 

Good luck!

MrGorsky

Well done on your debt free journey. As others have said, an emergency fund to avoid unplanned debt, and saving planned items such as holidays and cars.

Future debt:
I would like to add though, that debt shouldn't be something that is avoided at all costs. Having a good credit score (in principle) and using debt responsibly should be something that enables you to live a fuller life. I became debt free (from £59k + £25k) in the past with the help of this board, and went back into debt in order to renovate our family home. And this is something that I don't regret doing, as it has improved our life immeasurably (we couldnt wait to save up as we'd miss the magic years in a lovely family home for our children to grow up in, and the house we could afford on mortgage was unlivable without major renovation).

So just consider that, and don't be too frightened of future debt, if it is planned and will help you enjoy life. That's what it's all about.  ..

.....that said, with the house done, I can't see me going into debt again, unless it is an investment with a good payback (BTL investment and dooer upper? as a hobby maybe in the future?)

BabyStepper

Just to add, getting rid of the debt is just the first stage in your money management journey. Read some books (Rich dad, poor dad, The Millionaire Next Door, etc) and make some plans. What are your goals? How do you want things to be? What can you achieve? In my experience, the thought of taking on debt became more and more alien the longer I continued in my debtfree journey, and beyond. I have a much better idea now of what I can and can't afford, what is possible in my lifetime, etc. Look at the big picture and try not to get bogged down in the daily 'I want'.  It's good for us all to take charge of our financial future, the peace of mind is amazing.  

notes1

Its been a while since on here last. In fact so far back I was registered on my old email account so i can't access here now. So starting a new username up. 

I have been in the same situation. I was in debt a fair amount, then met partner and that debt increased more between us due to life's necessities. 

We budgeted and created an in depth spreadsheet and followed the rules on here....and using all available cashbacks and other ideas......and went from about 30k debts to now having 75k savings and having a house with only 100k mortgage left on it. I got lucky (and/or hard work) and have had a seriously well paying job now for last 3 years. But even before this we managed to save very well and not waste money, even once the debts had been paid off. 

We have never really used any of my pay rise other than the occasional nice holiday each year, and all the extra has just got transferred to other accounts so we not really missed it. Whilst we would see others would spend on luxuries, we just carried on as if we were still in debt (I suppose we are as there is the mortgage) and always made sure we did our monthly checks on accounts to see how much we spent and how much we saved. If we didn't save much then the next month would be more careful. But that's not to say we don't eat out and buy luxuries and holidays as we do. We just stick to the monthly need to make sure we save something rule. After all these years its become addictive as well, and i project these numbers forward to see when we will be mortgage neutral, or when i could retire etc.

So just make sure you account for your finances each month so you can see if overall you have increased or decreased. Don't assume that now paid debts off can now go back to spending. That happened to me several times in the beginning.

With regard my scenario, I don't know what i am doing next.  I don't want to pay mortgage off as I want the spare cash in various short and long term investments as life will guarantee that at some point something will happen and you will need to rely on it.

dazzaofdagenham

Thanks for your messages.

my main fear was my main card for the last few years ( vanquis ) has now a zero balance and a 4K limit. I wanted to keep it open in case of emergency etc...but I found myself looking at the Apple website for a new iPad Pro..I knew then that I could not be trusted..so I’ve cut it up and closed the account.

to be honest I feel quite liberated at this. Knowing that I can’t spend on it 

Andyjflet

dazzaofdagenham said:

Thanks for your messages.

my main fear was my main card for the last few years ( vanquis ) has now a zero balance and a 4K limit. I wanted to keep it open in case of emergency etc...but I found myself looking at the Apple website for a new iPad Pro..I knew then that I could not be trusted..so I’ve cut it up and closed the account.

to be honest I feel quite liberated at this. Knowing that I can’t spend on it 

Thats brilliant, this is an important step in the road to freedom.... you will end up not buying anything.