This blog explains 7 ways to get out of debt fast. These are seven things my husband and I did in order to pay off £36,000 in 2 years.
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According to a report by the Trades Union Congress (TUC), the average total debt per UK household excluding mortgages is approximately £15,385. This report was carried out in 2018, in light of the events of 2020, I imagine the figure is even higher today in 2020!
With over 8.3 million people in the UK currently in debt, it’s never been more important to have conversations about money and provide solutions to help people tackle their debt head on.
This is why in this blog post I’ll be sharing the seven things that my husband and I did in order to pay off over £36,000 debt in 2 years. It wasn’t easy and definitely took a lot of blood, sweat, and tears. However, if you’re willing to commit to the process you too will be able to achieve debt freedom and achieve all of your future financial goals.
When we became sick and tired of being in debt and not having enough money to even pay our bills, we finally had to admit to ourselves that we had a problem. We had dug ourselves into a deep hole, and it was our responsibility to get ourselves out of it. Face your debt head-on, stop running and hiding from your situation. Don’t bury your head in the sand. Write a list of all the different debts that you owe and tally up the total.
This step was very hard for us, we knew we had a lot of debt but had no idea it was over £36,000 worth. Seeing those numbers on the spreadsheet was the shock we needed to motivate us to commit to becoming debt-free.
Once you have acknowledged the problem, and know exactly how much debt you have, the next step is to create a budget. There are so many different methods of budgeting. My personal favourite is the zero-based budget. This method is where your income minus your expenses equal zero. You need to know exactly how much is coming in and how much is going out of your account every single month to your various budget categories, this will stop money from slipping through your fingers.
If you don’t have a budget and don’t know where to get started with budgeting, I’d recommend you download my free zero-based budget template. However, if you need further assistance, book yourself in for a coaching call and I’d be happy to help you with getting your budget set up and working for you.
Once you’ve created your budget and have a clear picture of exactly where all your money is going, the next step is to find ways to streamline your expense. Review all your spending categories and find ways to make savings in each category.
There are some categories which are fixed so you can’t do anything to reduce them. However, there are other expenses that are very much variable and by making a few lifestyle adjustments, you’ll be able to reduce them and free up money to put towards debt.
For example, when we first created our budget and started looking at ways to reduce our expenses, one of the categories we made big savings in was our grocery budget. I switched from online food shopping at Tesco, to shopping at Aldi and the market, and was able to reduce my food spend from £300 a month to £200. Other ways we were able to save money were by canceling a few monthly subscriptions and setting ourselves a limited allowance for fun money.
Making these reductions is our budget meant that we had a lot more money left over each month to put towards debt repayment.
Once you’ve reduced your expenses as much as possible, calculate exactly how much you can now afford to put towards your debt every month and then work out your potential debt-free date.
For example, if your total debt is £10,000 and you’ve been able to free up £175 in your monthly budget to put towards your debt, you can calculate your potential debt-free date:
£10,000 / £175 = 57.14months or in other words – 4 years and 9 months till you’re debt-free.
If you’re ok with taking nearly 5 years to clear your £10,000 debt then you don’t even need to follow this step. However, if you want to be debt-free sooner, you’re going to need to find ways to increase your income.
One of the things I did, when we were aggressively trying to pay off debt, was side hustles. I sold things around the house that we were no longer using. I styled hair for friends and family, my husband worked overtime at work and took on private jobs. Get creative and think of different ways to make some extra cash. Any extra money you make put straight towards debt.
Whether it’s freelancing, overtime, selling things, or even survey sites, find ways to make extra money to put towards paying off your debt.
It can be tempting when you start seeing this extra income to want to spend it but don’t do it. Discipline yourself to put any extra money earned straight towards debt and you’ll see your debt amount quickly go down.
The inability to practise delayed gratification was how we got ourselves into a lot of debt in the first place. Well this, and not living below our means. It’s not everything that you want to buy that you should just buy on impulse. Take time to consider a purchase before making it. Learn how to save up for the things that you want to buy, instead of buying now and dealing with the consequences of your impulse purchase later. Take the time to understand the difference between the things you really want and the things you’re just buying in the moment because you feel like you have the money to do so.
When I was a child my mum used to always say, “don’t be too available, it’s not everywhere they tell you to go you must go.” As I child I thought she was being the biggest killjoy and didn’t want me to have fun and enjoy my life. However now I understand exactly what she meant, it makes so much sense to me now.
‘It’s important to know when to say ‘no’. It’s not everywhere that you’re invited to that you have to go. If it’s not in your budget and you haven’t planned and made allowances to spend that money, then don’t. Don’t allow other people to make plans for your money or feel the pressure to spend money you don’t. Count the cost before making any financial commitments. Focus on your debt-free goal, and don’t let anyone derail you on your course.
I’m not saying don’t enjoy your life, by all means, do. But not at the expense of achieving your debt-free goal. If it’s not in your budget then say no and keep it moving.
Any money that you save, save it. Or in the case of trying to become debt-free, any money that you save, put it towards paying off your debt. So for example, let’s say you were on your way home from work and was going to go into the store to buy a magazine, however, at the last minute, you changed your mind and didn’t buy it. The money you would have used to buy that magazine put towards paying off debt. You were about to go without the money anyway, so instead put it towards paying down your debt.
These were seven things that we did on our debt-free journey that helped us become debt-free in two years. I hope you find them useful and they help you with your own financial journey too. If you’re serious about starting your debt-free journey but would like a bit of help getting started, book yourself in for a coaching call and I’ll help you get started on your journey.
If you’re currently on your own debt-free journey, what things have you tried to help you on your way?
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Wife and mum of three boys on a journey to achieve financial freedom. Earn more, spend less and invest the difference.
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