We started our journey to financial freedom in September last year with just over £21,000 in debt. Today, just 5 months later, we have under £12,000 in debt and £1,000 in savings. How did we do it? I’m glad you asked…
First off let me give you a bit of background
Dean and I got together in August 2010 and we both bought some debt to the relationship, it wasn’t a lot of debt by any stretch of the imagination but it was debt none the less and it shows that bad money habits were already there.
Our first lot of joint debt came from a holiday we took with his family, an amazing trip to Mexico about a year after we got together. We took our credit cards with us as we kept getting told that was the safest way to take and spend money abroad, we paid for some amazing excursions and it truly was a fabulous holiday but it was expensive – even on an all-inclusive resort we manged to spend near to £2.5k on extras and excursions!
The biggest joint debt we created was our car which we bought ‘nearly new’ from the dealer, it was the ex demo car which was just under a year old, this cost us £10k.
Now this next bit is going to sound terrible but I really don’t know where a lot of the rest of our debt came from, I can’t think of any big purchases (other than the car) that were made and I wouldn’t say we necessarily have a lot to show for our debt.
I think a fair bit of it came from just trying to make ends meet month to month when we went through a particularly rough patch job wise – I got made redundant from a job paying £22k a year, spent 4 months unemployed (with only enough redundancy pay to cover 5 weeks living expenses) and the next job I got paid just over £14k and involved me commuting half way up the country to Birmingham 1-2 weeks out of every 4. It was a horrible time in our lives and I ended up having to use pay day lenders a few times to make sure there was money for bills or food at the end of the month, it was never for a lot or for long (maybe £100-150 for 5-7 days to make sure we didn’t hit our overdraft) but I hated it. We also ended up missing rent payments, thankfully we rent from my parents so we would never end up homeless but owing money to anyone especially your parents is a horrible feeling.
In 2017 life started getting easier,
I had been in a much better job for a few months and we were coming up to our first wedding anniversary. Life was finally starting to feel a bit easier, we were both in good and stable jobs (at the same company and doing something we both enjoy) and we were finally in the right frame of mind to start tackling our finances.
As of the 1st September 2017 we had just over £21,000 in debt
By November 1st we had our £1000 Emergency Fund saved, a budget that worked and money in the bank at the end of the month (it was only ever a few pounds but our account was in the green instead of the red) and were working the Debt Snowball to chip away at the money we owed.
It hasn’t been easy but if something doesn’t challenge you the it won’t change you! We’ve seen a change in the numbers, our bank accounts and our attitude towards money but the biggest change is that there is a massive stress that has been lifted.
When I used to do the budget I’d be going over it with a fine tooth comb to see if there was anywhere I could squeeze out a few more pounds for the food budget but when I do the budget now I’m trying to find those extra few pounds to put towards debt just so I can colour another square in on my charts (I’ll explain that one later!)
We did this all by following a simple plan called the Baby Steps. They were created by Dave Ramsey, an American money guru who became a millionaire in his 20’s, lost it all through bad choices and bad credit and then rebuilt it all again to become an even wealthier millionaire!
I found out about him through a family I followed on YouTube who were sharing how they were getting out of debt and becoming ‘financially free’, I did some research on the man and the method and found it to be a pretty obvious approach to handling money – spend less than you make and pay off debt so that the money you have is truly yours. We had nothing to lose by trying things his way, we weren’t making much progress our way!
I wasn’t interested in any of the religious stuff he talked about (he is a LDS Christian) but religion doesn’t change maths, what he was saying made sense. The Baby Steps translate from American dollars and cents to British pounds and pence pretty well with only a few tweaks needed for some of the financial products/services.