Personal Confessions ~ How I became debt free

How I became debt freeJust typing how I became debt free is an awesome feeling in itself, I think even more so than the day when I actually became debt free. It’s been over 5 months since I last shared my debt is no small matter post, in this post I shared how I got myself into debt, my struggles, my (then) current situation and the future plans. I also shared with you the motto I live by now “If you don’t have it, don’t spend it“. I will not lie and say I have been 100% true to my motto, there has been a handful of times where I have had to spend when I really didn’t have and as much as I would like to say they were exceptions (which they were in there own right) I could have done with not actually spending but we all make mistakes and sometimes it’s easier to fall off the wagon than stay on it.

I am happy to say I am now officially out of debt and my future plans as mentioned in debt is no small matter 9, I will be sharing posts on how I am planning to build my credit history and start saving. I would also like to add that if I was really frugal and stuck to my guns I would have been debt free months and months ago but I have shared on this blog before that I chose to have a repay my debt but also live my life at the same time because the worst thing about debt is you stop living because you’re only focused on repaying the debt and forgetting to appreciate the present.“debt is no small matter

How I became debt free

I will not lie and say it was an easy process because it was nothing but, I had so many trials and tribulations happening all at once but I was always taught God never permits you to struggle through life knowing you can’t hack it (paraphrased). With that knowledge besides me, I embarked on the debt free journey and pushed through.

Here is how I did it:

Determine how much you owe

It took me a while to sit down and evaluate how much debt I was in, I had several credit cards, store cards, several pay day loans, student overdraft, student credit cards and every day expenses. It was hard for me to figure out how much I owed on each because some accounts had been turned over to debt collecting agencies, some had incurred so much interest it was had for me to know for definite how much I was owing. I decided to write down all of my debt and figured out who I owed and gave them a call to find out the amount for each account.

Evaluate current condition

After I had called all the companies I owed money to and the respective debt collectors, I sat down and evaluated my (then) current condition. I had just started a graduate job immediately after finishing university, I was living far from home renting a room (bills inclusive), I had to commute to work via public transport and add food expenses.

Debt repayment plan

Many people contact debt repayment plan companies to help them come up with ONE affordable amount to repay all the companies they owe at an affordable rate. I did look into this and decided this was not for me because (1) If my greed decided that I can only part with £50 a month then the debt repayment plan company will only take that and split it for all the companies you owe which for me was over 15 companies (that’s £3.33 each) which honestly is ridiculous since I owed over £11k.

Make your own repayment plan

After exploring other options including a repayment plan via a debt agency, I decided to look at my salary, my monthly expenditure (rent/food/transport/phone), how much I owed in total and which was the lowest amount. After I removed my monthly expenditure, I decided to pay 90% of the companies £50 each per month and then the rest no less than £30. I called the companies I owed and explained my situation and how much I could repay back, some where difficult at first but I told them either that or nothing at all and they all accepted what was affordable for me.

Create a tracker

The tracker does not need to be anything special, I created a tracker of everyone I owed (company and/or debt agency handling the case), contact details, account reference, amount owed, agreed monthly repayment date, monthly amount and then the months on. This made it easier for me to keep track and stay on top of my debt.

Stick to the plan

This can sometimes be hard but it is the key to staying on top of your debt and being able to pay it off. I agreed with all the companies that I would pay end of the month, I set-up direct debts with a few standing orders and I was set. I also set a personal order of not touching any money in my account until the 6th of each month, this gives time for all the bills to go through and what’s left if any is mine and I still live by that principle today.

Perform Quarterly Review

As mentioned above, I determined which companies I owed less to compared to other companies and focused on closing them out first. With the quarterly reviews I can tell which account is almost paid off and in some cases I decided to close some accounts early e.g. if I have £100 left to pay off I would pay it all off at the end of the month and in most instances meant sacrificing something from my monthly expenditures like food.

Whilst doing all these things I also ensured I cut up all my credit cards and store cards, I once made a mistake (before I started this journey) of paying off a store card only to incur more charges and found myself in debt within a month of paying the card off. I learn’t my lesson, I love shopping and I have no quarrels about it but for the sake of being debt free I had to cut them up and focus on spending what belonged to me, what I had and not someone else’s money.

You too can pay off your debt same way I did, you just need to follow the steps above and ‘don’t spend what you don’t have‘.

Have you ever been in debt before? Are you debt free?

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  • I am currently in debt and it sucks cant even sleep at night, will follow your advise.

    • I am sorry to hear that and I hope my tips help. Write done everything you owe, be honest about it and see how much you can afford and arrange monthly repayments

  • Really great tips. We’ve known people get themselves into debt and like you said the best way is to approach it head on and look at exactly what you owe x

    • Thanks, I decided to do exactly that and address it

  • Wow well done. I need to think about this method once I finish university

    • Thanks, I hope you won’t be into much debt

  • Well done, I had a huge debt over 14 years ago now and it took me a couple of years to pay it off but it felt really good once I did it. I used the Consumer Credit Counselling Services to pay off my debts.

    • Thanks Sabina, I have not heard of Consumer Credit Counselling Services but glad they helped

  • Good on you being debt free <3 A lot of useful advice. xx

  • Well done. Not many people can say this. I really do believe that credit has been given too freely and today’s culture concentrates too much on the wanting now. There is no time to think do I really need this and more importantly can I afford it

    • That is so true and I couldn’t agree more.

  • Well done on becoming debt free, that is some achievement. With the exception of the mortgage we are nearly there too

    • I think you’re debt free, mortgage is a necessity

  • I was in horrible debt for years. It took over my life and I was barely keeping my head above water. Luckily, a house sale allowed me to clear the debt and (with the exception of a mortgage) I’ve been debt free for six years. Feels so much better!

    • Debt can really do that and it can be so crippling, glad you’re out of it.

  • This is a lovely post. Debt is a horrible thing. I can’t wait to be free of it.

    • Thanks and good luck with your debt free journey

  • I approached a debt charity for help. They were amazing. Can’t wait to be debt free

    • That’s good, I am glad you’re working towards being debt free

  • My folks are in a debt recovery plan and it has really helped them. I think people need to be more open about debt and it shouldn’t be a taboo subject anymore. Well done on becoming debt free! We’re right behind you!

    • That’s good to hear Baby Isabella and so true, it shouldn’t be a taboo no more.

  • Great post and it I am glad to see you got okay response from the companies to whom you owed money x

    • Thanks Rachel, the ok made all the difference in my journey to becoming debt free

  • Some really great ideas! Getting out of debt is so tricky, but so, so worth the work.

    • Thanks, its absolute worth it once you’re out of debt

  • Really informative post, thanks very much. I’m in debt with student loan at the moment so need to plan out a repayment schedule!

    • I think once you have have a repayment plan in place all starts to fall into place

  • Great plan, with lots of useful advice x Thanks for sharing this xxxxx