From £19k debt and no income to (hopefully) debt free within 2 years

anonymousjohn · 15 August 2020 at 10:46AM

Where to begin?
I'm 29... I spend the majority of my 20s in education and living out of my means. I acquired fairly large amounts of credit for someone who had virtually no income in this period. At first it was manageable, swaying between £3-6k and I'd meet repayments mostly due to cushy 0% interest periods on large portions of debt. In July 2019 things started to spiral out of control - interest free periods ended, my debt spiralled over the next 6 months and I hit a period where I was truly rock bottom. Despite being recently married I had lied about my financial security, and continued to hide this until things came to the fore in February 2020. I can only thank my lucky stars that my wife saw it within herself to support me rather than just walk away, which she would have every right to do. She'd already bailed me out to the tune of around £3k many years ago. Enough was enough, I needed to get on top of my spending and my financial viewpoint as I would never get another chance.

Another piece of good fortune was that I finally left education and got an income - I work as a junior doctor so at least have job security and a decent wage. I appreciate how incredibly lucky I am that this came at the right time; another year and I would have been bankrupt for sure.

I sought advice from Christians Against Poverty who I'd heard good things about (despite the fact I'm a staunch atheist they are very hands on and supportive). This appealed to me because StepChange were less hands on and would arrange the basics, but from there I'd be on my own. I knew I couldn't really trust myself enough to do that. CAP were amazing - they have gone through all my priority debts and secondary debts and came to a Debt Management Plan with my creditors. Interestingly they tried to make me do a joint repayment plan with my wife - but having researched heavily into this despite our marriage we had no joint financial products and therefore the debt was my own. This means that only my income is assessed towards the DMP and my wife keeps her entire income - a huge help. I would urge everyone to double check the advice given as it could have been catastrophic for my wife if I hadn't corrected CAP on this point.

Fast forward to August 2020 I have reduced my debt burden by around £2k - sadly most creditors did not agree to halt interest so the progress is slower than hoped. Nevertheless the balance is trending downwards! I've had a bit of income fluctuation in recent months for complex reasons and therefore pay around £350 towards the debt at the moment, with the rest going into savings until I have an emergency fund. This should increase to £1000 towards the debt by September and I can start making real headway towards becoming completely debt free.

In the meantime I've learnt to live within my means again, I no longer seek expensive items or want to take out expensive phone contracts. I, infact, have become quite obsessed with saving and learning how I can maximise my earning potential over the many years to come.

No doubt I have been incredibly fortunate to have good support and have the right things happen to me at the right time. I dread to think what would have happened if things had even been slightly different.

I'll try and do at least a quarterly update here or post any major events - mostly for my own memories down the line, but I hope someone finds it interesting and helpful too!

John

Bizzywizard · 15 August 2020 at 12:44PM

Hi John,
Good luck on your debt journey!
Just one thing that stands out to me is, you have savings. You really need to read Martin Lewis's main web page about debt verse savings. Basically savings are not earning any interest, but your debt is interest baring, so you are loosing money by keeping savings and not paying down the debt first. This is only different if you have everything on 0% cards. Martin explains it far better than me so go and have a look. Others on the forum with disagree with me, but its Martins advice I have taken and have reduced my debt from around £20k (last May) to just under £3k today! I have £300 in savings as everything is 0% as my focus getting the debt gone for good.
Hope this helps!
Bizzy