Just over two years ago I woke up from a fairly restless sleep having what was as close to a panic attack as I’ve had. I was overwhelmed with the debt that was starting to suffocate me, and I was worried I’d never get to the other side of it. It wasn’t even just the debt itself, but the fact that I was still renting (at 40!) and wondering how the hell i would ever get shot of the debt AND get to the point I could afford a place of my own, just like all my peers did, and to ensure I was following along in the expected societal footsteps. At that point I had about £17.5K of debt.
Well fast forward to now, and my debt currently stands at £5,585.89. Now, if I’d refrained from my holidays this year, it would quite a bit less, but I decided holidays were more important to me at this point in time. For over 12 months I was aggressively fighting the debt and was saying ‘no’ to a lot of nights out, invitations and trips away to ensure I could clear the bulk of it. I’ve relaxed that intensity somewhat in the last few months, but it’s time to refocus and nail it once and for all. So here are my tried and tested methods for clearing the credit card debt once and for all.
- Save for what you want. I mention this first as I’m writing this on holiday! Since I started my debt journey, I’ve paid in advance for all my holidays/ trips. I’ve done this by saving the money in advance, and though I’ve paid for flights/hotels on my credit card (for payment protection should the travel company go bust), I’ve paid it straight off with savings. What this has meant is that the wages I should have been putting to debt, I’ve put to a holiday instead. I wouldn’t advocate this when starting out – clear the bulk of the debt first – but this year I opted to do both.
- Use different bank accounts for different expenses. My salary is paid into one bank account, and all my regular outgoings (bills) come from there. However, I have other accounts with different banks that I forward money to. I have a petrol account, a monthly spending account and a savings account. The latter is currently empty, but I’ve already budgeted to add a £100 or so each month for the following months to cover emergencies. Using different accounts (or if you prefer, allotting money into different envelopes & not pinching from one when another is empty!) helps you stick to a budget. Which brings me to the next point…
- Write a budget, and stick to it! I have a spreadsheet which I use to plan out my monthly spend (for 12 months), including irregular outgoings such as birthdays, car insurance, road tax etc. I record every single penny spent in the monthly worksheets, and I track my money like a hawk. You can’t keep on top of it if you don’t know where your money goes.
- Use cash only. I’ve done this before and it works a treat. I figure out how much I have a week to spend, take that out in cash and that’s it. It really makes you think twice about buying something you don’t need when you only have cash to fall back on. Once it’s gone, it’s gone, and you need to wait to the following week to get at any more cash.
- Cook your own food. This obviously overlaps into the food priority I mentioned in the last post, but it starts with money. When you cook everything yourself, consequently you don’t spend money on processed foods, so no more nipping to the shop for a quick bite to eat, or a snack, or buying a cake at work etc. Coupled with the cash-only thing, this really saves stacks of cash and gets you healthy at the same time. While you can spend very little on food by buying shite processed stuff for a couple of quid, it’s neither healthy nor financially viable in the long term. Sticking to cash & cooking means you need to consider the weekly shopping list carefully, prep a meal plan and bulk cook. It’s easier than it sounds.
- Learn to say no. It sucks, but it’s needed. I’ve done it before, and I need to do it again. To really nail the debt, you need to say ‘sorry, but no’ to random invites for unplanned nights out, meals out, trips away or any other costly activity that you’ve not budgeted for. So time for me to do this again. It’s the only way to really make in roads to paying off debt, once and for all.
So now you have it. My plan from when I get home is to embody the above, and have all my credit card debt paid off by November, in time for my birthday!
It’s a big challenge but it’s doable. I’ll report progress as I go.