Just 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.
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?