How We Paid Off Our £16k Debt in One Year
Yesterday we made our final debt payment and reclaimed freedom from debt! A moment we had been waiting on since we started, exactly one year ago tomorrow.
In the beginning, I struggled to find any resources that I could relate to, as most of the information about debt in the UK is related to debt charities, bankruptcy advice, or ads persuading you to take on more debt! Where do you go when you aren’t at the stage where you are about to go bust, but you also know you can’t sustain your current lifestyle? The answer? Instagram! Thousands of lovely people documenting how they live frugally, pay off debt, and get the life they really want.
The UK accounts in particular spoke to me, because we all share similar salaries and living costs. My story, my thirty-something partner and I, earning average salaries, found ourselves in £16k worth of debt between a car lease and a home renovation project, was a familiar tale. So it was nice to find like-minded people, whether they were just starting their own debt free journey, almost debt free, or even just those who reached out to me to admit, ‘hey I’m struggling to sleep at night with the worry of my repayments’. The support I got from those people made a huge difference.
So now I’m debt free and my intention is to follow Dave Ramsey’s Baby Step 3 and build up some savings. My partner and I have been fortunate enough to reduce our working hours which has allowed us to really focus on our health and family, two areas I must admit that we have neglected over the past few years (we were too busy thinking building a life together meant making our life look really, really fancy). Long term, I’d like to start a family and work (at least partially) from home, so I’m going to be working on sharing my financial escapades (if such a thing exists!) with my readers and hopefully we can all prosper together. And by that time, I’m hoping to invest in property because all that home renovation experience has to count for something!
But for those people wondering how we managed to pay off £16k in a year, here’s a brief rundown of how we did it:
- It all started with a budget– I cannot stress this enough!
- Once we figured out our budget, we found ways to cut down on each spending area, like groceries, going out, etc. Basically, I took one area per month for the first few months, and just really focused on how we could cut down. For example, when it came to groceries, I started meal planning and bulk prepping, using vouchers and reducing our costs. If I had tried to make too many changes at once, I would’ve become overwhelmed, so sticking to one area at a time and really focusing on it helped me a lot.
- We upped our income by selling on eBay, matched betting, using survey apps etc. Where possible, we put this money into debt overpayments, but most of it subsidised the fun stuff like holidays and going out, allowing us to put a lot of our main income towards debt.
- As we cleared our car debt, we used the money we gained each month from not having this payment to overpay our home loan. As you repay debts, use the money it frees up to snowball your remaining debts.
- My partner’s redundancy was the very thing that triggered our debt free journey to begin with, and I’d like to mention that a £2k payoff he received was put towards our debt. I also just wanted to mention this because I’m really proud that he was able to secure another job so quickly, with a salary bump, that allowed us to continue paying off debt. He is the phrase ‘When life gives you lemons, make lemonade’ personified. And the morale of the story: sharpen your skills, keep your CV updated and know your worth.
- Of our £3k savings that we started with, only £1k remained in our account as an emergency fund, with the other £2k transferred to debt. I mention this because there is no point in having excess savings when you have debt. You pay higher interest on debt, and receive peanuts in comparison on your savings. Clear debt with savings, get out of debt, build wealth- it’s the smartest way.
So there it is; how we paid off our £16k debt in one year (tomorrow!). My story isn’t particularly glamorous or exciting; just a gal with a goal. But it’s a story that proves that paying off debt is possible, living a better version of your life is do-able, and change starts with you. Just think: a year from now, you will wish you’d started today!