Would like to be debt free - whats the best way to go about it?

NuttyBird · 28 August 2005 at 5:47PM

Hi all. I've just got myself a job so I thought it was a good time to sort out our debts and get them paid off. It's not a hugh amount £5200 on a 0% card for nine months. We always plan to pay it off but then something comes up (usually a tax bill from the tax man!) Then we end up using our holiday savings to pay the taxman and put the holiday on the credit card (very bad I know) I've done the budget and we do live within our means but we are always over drawn at the end of the month, and this is something I would also like to sort out to.

I have opened some extra savings accounts (high interest, of course!) to put away the tax money, holiday money, car expenses, and christmas and birthdays.

What I want to know is do I start putting money away now for the different expenses or do I pay the Credit Card debt off first? I know that come January the dear old tax man will be knocking on our door again - and it would be nice to have the money there waiting for him

Please don't say that I'm not allowed to go on holiday because it's already booked! :rolleyes:

Thanks

Nutty Bird

nearlyrich · 28 August 2005 at 6:35PM

You need to put away the money for the taxman etc but you also need to make a plan to clear the debts once the 0% finishes. You say you are living within your means but you have an overdraft, can you cut back a little more or use your earnings, which you haven't had upto now, to pay off the overdraft and then save in a high interest account to pay off the credit card when the deal ends?

You are allowed to spend you money however you like,enjoy your holiday but if you are serious about clearing you debts you have to take the bull by the horns and sort it out. Good luck.

skintchick · 30 August 2005 at 1:15PM

Hi - why don;t you post your incomings and outgoings so people can offer advice on what you could get cheaper, and then the money saved could go towards your debt.
I know what oyumean about wanting a holiday, and as it's booked it's a moot point, but really if you have debt then going on holiday only adds to it.
Ref birthdays and Christmas, try buying little things every so often and storing them in a cupboard to use as presents, and also be ruthless - only buy for who you REALLY need to, and don;t spend loads of money - I budget £20 per person for Christmas, and rarely spend more than a tenner for birthdays unless they're special ones. It sounds tight, but the debt has to be dealt with first, then when you;re flush again you can splash out.
But do post all your incomings/outgoings and we'll all do our best to help you.

margaretclare · 30 August 2005 at 2:13PM

Your basic question 'what's the best way to go about being free of debt' - very simple: spend less than you earn, anything surplus is used to pay off the debts.

Why not read Martin's book or read some of his articles on this site? He's expressed it far better than I ever could.

The ONLY way to stay out of debt in the long-term is never to spend more than your income, and always have some savings for those unexpected events whether disastrous or not! You know about the taxman, so that's one essential spend that you need to allow for in your budget (did I mention that drawing up a budget should be your first step?) See above for help.

Best wishes

Margaret Clare

Would like to be debt free - whats the best way to go about it?

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