We don’t have a large amount of debt. If I compare our family to the national average, where a UK household will owe close to £10,000 in debts such as personal loans, credit cards and overdrafts by the end of 2016 according to a recent report – we’re at about half that with our non-mortgage borrowing. Our aim since we got together has always been to be debt free, so we can save money and not feel like we’re living hand to mouth, in fear of disaster. We manage OK, and we’re not poor by any means, but this new year I decided instead of just trying to pay off things slowly, I wanted to take action. Instead of thinking of a day in the distant future when the debts will be cleared, probably creating new ones in the process, I wanted an end date. It’s not going to happen overnight unless I suddenly get a cash injection, and while things are going well financially with work, realistically I’m not going to win the lottery any time soon (feel free to prove me wrong, lottery gods). I did something I advise everyone to do.
Take a good look at any borrowings you have
- Know exactly the amount you owe, including interest rates.
Action point: Can the amount be moved to an interest free credit card?
- If you continued to repay what you’re currently doing, how long will it take to pay off?
- Are you locked into the lender? Would someone else offer a better rate?
- Can Debt Management Plans hurt your credit rating?
I have one credit card which is still under the interest-free period, until May this year. Prior to doing this, I had no idea if I was paying interest off or not, and I was paying £30 per month. I owe £1200 on it, so it would take me 3 years and 3 months to pay it off, providing I continued to pay no interest. What I’m doing with this one is increasing my payments so that they will be paid within 2 years of the May date. I won’t add any borrowing to it, I haven’t for 18 months so I don’t feel I need a credit card for the money. In May, I’ll transfer to a credit card offering 0% interest and no fee on balance transfers. I didn’t think this existed, but thanks to Martin Lewis from Money Saving Expert, I found out you can, as long as it’s paid off within a certain term. As it’s a relatively low amount, I believe this is possible. So often we just get used to the outgoings we have without questioning them, you should challenge them on a regular basis.
How much can you afford to repay?
If you have a clear budget and save money where you can, you’ll probably find you can increase those payments. The hardest one for me is that I have 2 overdrafts on 2 accounts, plus our joint account is often overdrawn. This is the hardest to claw back, as there are no repayments as such. There’s also interest and fees each month, meaning whatever you pay back you’re getting charged each month again. The reason I have two current accounts was so that I could use one as a repayment account. I did get back to zero with both of them, but leaving my regular job a year ago meant I had to eat into the overdrafts to stay afloat. I’m now making money from my blog business, which has helped reduce the overdraft, but I seem to be stuck at a plateau.
I also have a fixed personal loan that I got out last year to pay for my car. This has a fixed end term and fixed repayments, so I’ve used that end point as my end goal for the other debts: 1 credit card and 2 overdrafts. I’ve increased my payments into one lump sum to go into my second account (that I can’t spend from, only transfer) at a rate that will at the end of 2 years, mean all the debt will be gone. At the moment, it’s manageable, and I can still cope with other outgoings. Of course, I’m lucky in that I have my husband’s income too, which pays for our mortgage and bills. I pay for my loan and debts, some insurance, the lottery (!), my petrol and our food.
Look at ways to make extra money
I’m always on the look out for ways I can make extra money. I do this in varying ways, and you can too:
- Having a clear out and selling on goods I no longer need or want – with the rise of selling groups on Facebook and of course eBay still remains a staple. I steer clear of Gumtree, because you’re more likely to get scam attempts, and I didn’t get on with Schpock.
- Use sites like Quidco and Topcashback when you shop, so you get cashback. Remember only get things you would have bought anyway.
- I answer surveys and get paid. Newvistalive pays you £50 when you’ve answered a certain amount of surveys, no fees or ads.
- I use Swagbucks by filling in surveys, watching videos, shopping, downloading apps and signing up to offers (for swagbucks hacks see here) and then convert the points to vouchers or cash.
- I work as a Film and TV extra, which I love and pays well.
- I work as an election count assistant during election times at the local council. See if you can put your name down on the list. We get called around 2-3 times a year, it pays around £18.50 an hour and it’s great fun being involved in the election.
Write down your outgoings over a month and see where you can save money
If you see it written in black and white, it really makes you think about why and how you are spending. Do you really need that expensive coffee? New clothes? Shoes? Are you buying unnecessary food when you could be making your own? Could you cut down your alcohol intake? Do you buy too many toys/treats for the children? Stop buying takeaways for a month and see what you can save. Is there something you’re paying for but not using like the gym or a cinema pass? Consider changing your utility provider and when it comes to renewing insurance, always compare prices and don’t be afraid to switch.
Are your savings working hard?
If you have any savings, make sure they’re in a high-interest account, or consider investing them instead. The level of risk is up to you, there are various ways to invest, and it’s not all high-risk stocks and shares. Some people prefer putting their money in a property rather than a bank.
What are your favorite ways to save and make money? Have you got a savings and repayment plan? Let me know, I’d love to hear from you.
Disclosure: this is a collaborative post, all opinions are my own.
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