Money: How I Got Out of 15k of Debt.

Debt has followed me around like a black cloud for my entire life. Circumstance meant I was living in government provided housing by the time I was 16 and I never quite caught up with myself. I’ve had a poor relationship with money my entire life and always lived in the moment, if I had a spare 20 quid I’d be out having fun with it or buying clothes or homewares. I didn't see the point in saving while I was young and I now know that ADHD was contributing to my reckless spending and lack of drive to sit down and sort it out.

In hindsight though, finances have always been the biggest source of anxiety for me. I never felt in control of my life. And the circle only continued into my business, I had no plan, no structure around my pricing and was just ‘winging it’.

But as much as I hated numbers I did have a monthly spreadsheet of outgoings and never defaulted on payments. But the debts had racked up so much that I was barely even covering the interest with my payments each month. It all came to a head in 2019 when I moved house (again) and the move had left me with more debt - I was struggling to see a way out and started wondering if I would ever be free to build a financially stable life or ever be a homeowner. I turned 40 that year and knew I would have to find a way out of my situation. I was barely sleeping with the financial anxiety bubbling away inside me and I wasn't happy with the workload I was having to have to keep afloat - basically I was working my arse off and I was so tired. I was also taking on work that wasn't in my plan just to keep maximum income coming in - I was grateful for it but it wasn't the path I had envisaged taking.

Everything changed when I saw a money coach. I knew having someone to sit down and go through all the figures with me would be the key to a path forward but it felt so damn frightening. I didn’t have a clear picture of what my finances were doing and I didn't know if I could even afford to get out of debt. But during 90 minutes, together we faced my financial situation and I spent the entire session in floods of tears with the sheer relief of finally getting clear with where I was at and how to get out of it. Fast forward 4 years and even with a major pandemic and my business grinding to a halt through it I did it - I’m out of debt - and what’s more I’ve saved enough for a deposit and am in the process of buying a house. Me! A single, 43 year old freelancer. So honestly, if I can shift 15k and save the same amount you can do and here’s how.

I want to make clear that I am not a financial professional and the below are some of the ways that personally helped me get out of debt. Please see the end of the article for professional resources.

Get a clear picture of your finances.

The key to getting on the path to debt free is to start with getting really clear on what your position is. It would really help to have a financial coach help you at this point - I know it seems like a big cost when you’re drowning in debt but it will save you in the long run and help you get your head around everything supported and with accountability.

First off start with a simple spreadsheet. Or just a notepad. Here we’re going to make a list of your debts, what the interest is and what the monthly payments are. You can use my template here if easier (you can export to Excel on a PC as this is a Numbers file). You may notice I have a list of assets - this is really helpful to list these as you’ll see that even though you have debts you do have assets too.

To find interest rates on your debts go into your accounts on the apps for your debts and you should be able to find them easily. I highly recommend installing apps from the companies you have debts with and getting your accounts in your hands for easy access. Checking in over time is satisfying, watching the figure go down and seeing your monthly outgoing reduce. If you don’t have access to those accounts yet on apps you should be able to find your interest rate on the initial documentation you got when you took the account out.

GET Clear With Your Credit Score.

You can easily see an overview of your credit score by registering for three free accounts: Clearscore (Equifax), Credit Karma (TransUnion) and Credit Club (Experian). This will give you an idea of where you’re at and what you can apply for. The reason for this is because you’re going to try and swap some accounts to one with less of an interest rate. If you haven’t missed any payments you should be in fairly good stead and you can work to be paying less interest each month.

The other reason it’s good to work on your credit score is mindset - playing a game with yourself to build your credit rating is satisfying and also the apps will give you tips every month on what you could be doing better.

Prioritise debts.

Now you have a clear list of all your debts have a look at them and make a note of current pay off dates - so for loans and payment plans. For credit cards you might not be able to see an end in sight - that’s ok, you can tackle that.

If you have 0% cards and are paying more than the minimum amount on them each month consider shifting the extra payment to the higher interest rate debts until they are paid off. Do make sure you make a note of when your 0% term ends though and factor that in to your plan.

Set up payment plans.

For overdrafts, bill accounts and store cards - call each person up and set up a payment plan with a clear end date. Your bank will help you set up a payment plan for your overdraft - my bank reduced mine by £50 each month.

Cut up ALL credit cards now and remove all of them off your Apple Pay. With store credit and buy now, pay later - it’s time to say goodbye to buying on a whim. Ignore that everyone else is using it, it’s time to only buy what you can afford and getting out the habit of credit and into a habit of setting aside money to be able to buy the clothing and homewares you need without getting yourself into further debt. Sorry not sorry.

Unless you have a reward card that you pay the full balance off every month without fail, credit cards are now only going to be for paying off debts.

Swap to Lower Interest Rate Accounts.

Looking at your debt sheet see which accounts you are paying the most interest on and you’ll need to aim to find a balance transfer to get this down. This is mainly for credit cards. It’s worth noting here that applying for multiple cards can reduce your credit score so you are aiming to open just one 0% balance transfer for now to get your higher interest rate card moved across. You can compare here and also get a peek into the likelihood of you getting the card you want without affecting your credit score.

The plan is to shift all your debt onto zero or low interest options. I shifted most of mine onto a 0% card but at the time my credit score wasn't good enough to shift it all. So I had about 11k of credit card debt but could only get 6k of it onto a 0%. So I switched all my payments to the lowest I could on everything and prioritised the card that I was still paying interest on, paying double the minimum amount every month. Once six months had passed since opening the first 0% card I opened another - hard searches stay on your credit file for a year but I knew I wouldn't be applying for a mortgage for another few years so could take the hit on the score.

When you open the 0% cards make sure you check when the 0% interest term ends and calculate how much you’d need to pay each month to clear the debt before that period ends. Again, cut these cards up - they are not for spending, purely for clearing debt.

The other option is a consolidation loan - do your research and see whether this would leave you paying less and how much your monthly payments will be. For me, the card route was better but in the past I’ve had one of these loans and it worked well. Get more information on these loans here.

Do a monthly check in.

I used to hate doing my monthly finances but when I started paying my debts off it became a joy to reduce the figures on my spreadsheet each month. As someone with ADHD checking my rapidly reducing balances became a dopamine hit and I got quite into it! As each debt gets paid off, shift that monthly payment onto the next pressing debt. You’ll be out of debt in no time.

See my monthly check in post here.

Budget for the things you need.

I knew from the beginning of climbing my paying off debt mountain that what would undo me would be unexpected costs - like work that needed doing to the van or my annual FIIT subscription going out when I’d forgotten it was and leaving me short, leading to me cancelling my credit card direct debit and only paying off the minimum amount - leading to falling off the wagon. So this is where pots or extra accounts where you can organise your money can really be a lifesaver. Work out what your costs are over a year - subscriptions, vehicle costs, house maintenance etc and then divide this figure by 12. You’ll need to put that sum aside each month into a pot.

Additionally, I felt the single most important thing for me while getting out of debt was not to deny myself. In fact the best thing I did along my trajectory was to budget and figure out how I was going to allow myself new clothing and a haircut every few months. I created Monzo pots and set them to take out a certain amount every week or pooled in money from things I’d sold on Vinted. I hardly noticed it and it meant when I was feeling like I needed new threads I was able to consciously buy myself something I felt was missing in my wardrobe. This was a stark contrast to in the past when I would splurge and end up buying things I ended up not loving. This conscious way of buying has meant my wardrobe is now full of conscious pieces that I love and feel great in and I when I have wondered into a fast fashion store I just haven’t wanted any of it.

Have a think about what money you can set aside for some nice things every now and then - perhaps you have a bit of extra income for something that goes in your fun pot?

Commit to freeing yourself of debt.

No one likes to think of pulling the purse strings in, especially when you’re living on a budget anyway but the feeling of being out debt is so much more joyful than clothes in the closet and new linen duvet covers. Make a pact to make do for the time you’re working on this. I barely spent while I was getting out of debt and instead used money I earned from selling on Vinted as money for me - clothes and any other spends outside of bills and food. Without a doubt giving up drinking was the main way I got out of debt - perhaps there’s something you can reduce or cut out to help you on your way to a debt free life?

Speak directly to your friends and explain what you’re doing - you are getting yourself out of debt and would love if you could come up with budget things to do together - your own version of Come Dine With Me. Picnics instead of boujee lunches. Yoga together at one of your homes. They might be relieved too in our cost of living crisis. It won’t be forever and you’ll be so much happier and present for losing the finance anxiety.

Check in with everything regularly.

I check my bank balance every day just to make sure nothing unexpected has gone out that I need to enter on the monthly budget and tweak. Also, make sure you are checking in with your debts monthly, making sure no terms are ending soon and reassess if you can up your payments on something. Here’s my monthly budgeting post.

Extra resources.

These are just a few of the resources out there, some of them that helped me immensely on my road to debt free.

My Frugal Year - I love Clare’s way of talking about money. It’s realistic, non jargon and human.

Open Up is a book by Alex Holder all about how we talk about money. So useful!

Step Change is there for you if you are struggling with debt.

Money Saving Expert have a number of articles on their site that offer insight on how best to tackle debt. Start with this one and then have a dig around.

MSE also have a debt calculator which is useful to work out how much difference you can make by tweaking your monthly payments.