Paying off debt when you’re already struggling to get by can be overwhelming.
There’s lots of advice out there and for debt month, we’re guiding you through it all. But some of the best advice comes from people who have already done it. From tips on how to cut spending to where they went for support, we asked some people who have paid off debt for their top tips about what worked for them.
Rhiannon Llewellyn, 31, London In 2015, we were in about £30,000 of debt, although I never sat down and figured out exactly how much. Now, four years later, we have totally paid it off and have saved about £30,000 towards a house deposit.
Throughout that time, our gross annual household income has varied between about £40k to £65k. Before we started paying off we didn’t think we had any debt at all. Our debts were about £24k on a car, £2k on a sofa and about £4K on credit cards and overdrafts but we saw it as just a car payment, a sofa on 0% interest free credit and a few overdraft hangovers from my student days.
Rhiannon has paid off her family’s debt and saved another £30,000 for a deposit We decided we needed to sort it because my husband was a chaplain in the army, but I knew he’d be leaving in a few years to be a regular Vicar and that his salary would be 50% of what it currently is.
I am a freelance opera singer so my earnings are very variable. I was desperate to save for a house deposit, have some retirement savings, and be able to treat our son to things like ballet lessons, rugby camp, banjo lessons and a university degree. Now we’re debt free, we are working towards FIRE. Financial Independence, Retire Early.
We both love our jobs and never want to retire, but we aim to be financially secure enough that we can take sabbaticals with our kids and travel the world (by rail!) and be able to give generously to good causes, friends and family. FIRE is the new dream.
For other people I think the first step is to figure out how much debt you are actually in. Face up to those seemingly benign numbers and seemingly harmless interest free credit loans that are EATING your future wealth. Then you need to write a budget. Accept that you’ll get it wrong the first month that you might over spend and forget about some payments. It’s all part of the process. Don’t lose heart. If you’re in debt stop eating out, getting taxis, buying things, wasting food and going abroad on holiday. You can still have mega fun without doing any of these things.
You’ll have to work hard. You will come to love the budget. We get ‘pocket money’ each month and can blow it on whatever we like, guilt free, because it’s in the budget. You need to live on way less than you earn. Remember when your neighbour has a shiny new Range Rover, extension and mulberry handbag, you’re not often looking at what they have, you’re looking at what they owe and the material possessions that are actually trapping them.
You can follow Rhiannon at @Thevicarsfrugalwife on Instagram.
It took Carly Thompsett, 30, Cardiff, 12 years to pay off her debt.
I was in about £10,000 worth of debt that I created from 18 years old. I got a few credit cards with £1,000 on, maxed them out, then the charges started, then phone contracts that I would end and get new phones because I wanted them and it grew from there. It’s taken me 12 years to finally be debt-free.
I had tried sorting it once I turned 20 and wanted to live a normal life without debt, so I used a debt company who put all the debt together, I made monthly payments and they dealt with it. I cleared a lot this way but not all of it. When I moved to Cardiff in 2013; I needed internet and all the things for my new house but I couldn’t get anything because of the debt.
I had car insurance from a company I had never heard of and had to pay through the roof, I couldn’t get a contract so had a pay as you go sim! It got so bad that it was sort it out or forever follow me. Used a debt company to help manage all payments worked for me. They take care of everything, you tell them how much is due on which companies and they handle it including speaking with the companies to make it easier for you.
Once I finished with that, I took care of the little bits I had left and I explained to the companies – I am dealing with a few accounts and I am paying them one by one. Debt teams are usually quite helpful and are usually okay to wait a week/month then receive no payment or contact with you.
Always keep in contact with the companies you owe money too. Nothing is worse then not updating them and sending debt collectors to your door or cutting off your internet etc – just talk to them and if you need to talk to someone for support, make sure you do.
Sometimes talking to someone can help take the pressure off. I had to live on the bare minimum to pay as much as possible. I shopped in the discounted part of the shop, carried on my pay as you go phone in a £20 a month deal and I would sit in the library in the city centre to keep warm and use the internet. I used to hate it but I had to remind myself I was the one who did it.
Grainne McNamee, 34, Belfast, Northern Ireland Grainne now blogs about how she paid off her debts.
When I started tackling my finances, my husband and I had £16,000 in debt. We had a car finance deal after walking into a dealership one day and driving out with a brand new car without doing much research. We had borrowed money to finish off expensive renovation work in our first home after being unable to continue funding this through our monthly salaries.
Looking back, we couldn’t afford our lifestyle but instead could just about afford the monthly repayment for it. We gave ourselves a goal of paying it all off in one year, while learning how to live better for less. I tracked all of my progress on Instagram, being completely open about our finances, which helped me to remain accountable throughout.
We paid off the full £16,000 by July 2018. Our debt was stressing me out for a long time in the run up to deciding to pay it off, and it was affecting my mental health. At times, I struggled to sleep with the worry of repaying £410 per month on top of bills, and my daily overspending. A part of me knew we needed to change because we were living paycheck to paycheck, but I buried my head in the sand and continued spending to distract myself.
Then one day, my husband’s job was put at risk of redundancy. At that point, I realised that, if either of us lost our jobs, it wouldn’t be long before we would be in serious financial trouble. With both of us working in good jobs for the past few years, we shouldn’t have been in that situation, and it was then that we started to change.
Within a few weeks, we had put together a plan of action, and started tackling our debt. Our mindset shifted from feeling hopeless about our finances to feeling in control. For example, my husband focused less on his redundancy and more on finding another job, and was offered three new jobs in a matter of weeks.
Once we decided to change how we perceived our situation, it improved immensely. Getting a budget is so important. Once you know where your money is going, it becomes a lot easier to pinpoint where you can make savings, need to cut back, and how much you can afford to save or overpay your debt. For us, when we started to tackle our debt, we realised that we overspent on groceries, takeaways and eating out.
Two years later, we halved what we spend in this area, without sacrificing the quality of our diets, or our date nights. If you have something that you overspend on, tackle it by coming up with creative ways to bring down the costs.
Another good idea is to unsubscribe to social media, mailing lists and junk mail that encourages you to spend. We are constantly surrounded with marketing and advertisements that persuade us to spend, so creating boundaries for how much you are exposed to these will really help to bring down your spending. You can follow Grainne at @Wannabedebtfree on Instagram or follow her blog.
The Secret Debtor – At the minute, I post about my debt anonymously on Instagram. I started with £13,200 credit card debt in April 2019. I am halfway to it being cleared, my new balance is due to be updated on 4 November and I should be at £6,000.
When I realised how much debt I was in and no way to justify it. I have a good job and I wanted to get onto the property ladder but I clearly needed to learn how to manage my finances. This debt-free journey has been more than just getting rid of my debt, it’s been about changing my money mindset. I’m pleased to say that today I am in such a better place with my money. For me, identifying why you are doing this is important. It gives you focus and keeps you going on your journey.
I used to think a budget would limit my spending but I was so wrong. A budget allows you to plan where your money goes. It may take a few months to find your rhythm but once you have, you won’t regret it. I love sitting down to plan my monthly budget and review it weekly. I would also advise getting visual. Seeing your progress is a huge motivator.
Print off a debt-free tracker, and colour it in as your debt decreases. There are a number of free ones online. I got mine from @thebudgetmo
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