Staying debt-free? Being sensible and not letting it build up again?

Jlawson118

Hi All,

I'm looking for advice on staying debt free, as well as sharing my story of the situation and where I want to be

I've shared a fair bit lately that I'm currently in the process of selling my flat after moving in with my grandma to help her more around the house due to her ill health, and decided that the equity within it will pay my debts off and still leave me with a fair amount to save. It's nice waking up every day seeing more and more light at the end of the tunnel! Not that I'm in a crazy mess with debt but it's unwanted.

Growing up I was often good at saving money for things I wanted. My family always advised me about debt, they never steered me away from it completely but more advised me to never be silly with it, always get one thing at a time, pay it off and move onto the next if need be.

Unfortunately once I moved into my own place and became independent, I started off with that mind-set and didn't finish with it. Just kind of seemed everything would break or cost money all in one go. I've always had a decent credit report (And still do despite debt) so I've often been flooded with 0% offers that always sounded appealing. Being paid weekly at the time I used to work out the payments I needed to pay off quickly, and I never did.

Before I knew it, I'd have borrowed a few hundred pounds on new tech on my Curry's account where the 0% offer would run out in a few weeks. But this was round about the time my 6 monthly leasehold payment on my flat was due, that I hadn't managed to save for either  
Oh, but no problem, Virgin Money is offering me a cheap money transfer that's 0% for 12 months. I'll take £500 for my flat's service charge, £300 for the leasehold buildings insurance charge in a couple of months so it's there and ready and £400 will pay off what I owe on my Currys before I get charged for the interest rate in a few weeks. Might as well round it up to £1500 too for a bit of spending too, I won't notice over 12 months.
So £1,500 over 12 months works out at £125 a month. I can afford that, I work full time. I get paid weekly that's £31 a week when divided into 4 weeks. Yeah that's affordable.

Then paying the minimum payment to try and save up for six months time of my service charge, or more things broke in my flat would break, next thing I'd barely paid the last service charge, bought more things at Currys that were expiring and needed to borrow again. Just seemed this constant viscous circle with my finances that I just couldn't save or escape. I've also borrowed personally to try and start my own business, which was going well during the pandemic but slowed down as of Summer this year. 

I've never missed payments and still have a positive credit report, but I've just gotten out of control with it all. And once paid off when my sale has gone through, I really want to get back to my old-self, of being able to save harshly and be sensible with borrowing (If need be) I've had to borrow this Christmas as I'm still paying bills on my flat whilst not even living there, and having my debts alongside. But I've said it'll be such a relief getting to next Christmas whereas I should actually have money in the bank to buy gifts and not borrow. 
Living at my grandmas I still contribute towards bills but it's split between three of us (myself, grandma and girlfriend) meaning I'll be able to save harshly. I've already slowly started and it feels so good! 

I will just add that I do also have car finance which is a secure loan on a low interest rate. I know this is still debt but it isn't causing me any problems like my 0% cards are starting to. I see my car as something that I'm paying towards keeping as a long-term investment, but if I was ever to lose my job or anything unwanted happened like that, then the car could be handed back and there's still equity within it to pay the debt off. Whereas with loans and credit cards it's a bit more difficult to do that. 
So I do class being debt free as clearing my other loans and credit cards

My plans to remain debt free involve;
1. Closing unwanted credit card accounts down;
I currently have a combined credit limit of nearly £40,000 which is scary, considering I barely use a third of it to be honest. 

2. Reducing my credit limits on accounts I'll keep open;
I know short-term this might affect my report suggesting I can't handle a lot of credit, but long-term I think it'll show I have control and don't require it. 

3. I'd like to maybe keep my highest limit to £5000?
Just to keep some form of credit on my account and as I've said above, if sensible and one thing at a time. It shows to companies that I can be trusted with credit and would also fall as a safety net, but as I said earlier I'd also like to be able to use savings first before credit.
I do have two Amex cards that I spend on to earn rewards but I always pay these off in full, they aren't involved with my debt but obviously also do sensible spending and paying back on my credit reports

4. Reduce having multiple accounts;
So for example if I want to buy tech on buy now, pay in six months at Currys, again, use savings or take this out on a 0% card, instead of having an account with them as well as other credit

I know those five points are all kind of similar. But what else could others in my situation recommend for a good, healthy financial future?

RobM99

Firstly - Do you need this item? OK fair purchase.
Do you want this item but can survive without it? Maybe not a good buy.

Look at all un-necessary buys. I gave up booze, coffee out (not all but most), breakfast out - saves me £50 a week at least, for example. Gym -  I moved from anytime to afternoons only - £30 a month less.