Formerly Skint comes all the way from England to tell us her debt story including outstanding rent, student overdraft and council tax owed. She literally started from the bottom but was able to work her way up and now owns a home and is on track for her next house move!
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1. Please tell us a little about yourself in a few sentences.
I’m a 29 year old lady living in the north west of England. In the past 6 years, I’ve gone from being an out-of-work graduate struggling to pay my rent each month, to a homeowner saving for retirement. My blog is over at Formerly Skint
2. What was the total amount of debt, type of debt, and how fast did you pay it off?
£5000, a mixture of outstanding rent and council tax owed, as well as a student overdraft which I had maxed out during my final year of uni. I realise this is pennies compared to some of the PF bloggers out there, but to me it was a HUGE amount and I had nothing to show for it. No home, no flash car, no degree. Council tax has got to be my single most depressing debt to date and I still hate paying that one bill each month.
3. How did you acquire the debt in the first place? Do you regret doing so?
In my final year of uni, my course was pretty intense, so I wasn’t able to work a steady job. I relied on one off event work, my overdraft and a very lenient landlord. When I graduated, it took me around 2 months to find even the most basic paying job. In this time, I’d gotten myself into such a downward spiral that when I did start making money, it seemed like an impossible task to pay off my debts so I kind of ignored them. That’s the part I ignore. I don’t think there was really any way around me getting into debt, but I definitely could have started working sooner to clear it!
4. Describe the moment you decided that enough was enough, you needed to pay off your debt.
I was lucky enough to pick up a decent job on an hourly paid wage. This won’t suit everyone, but I ended up working about 70 hours a week and making more money than I had imagined I would. With the lack of time off work to actually spend it, I decided I should really do something productive. I tallied up my debts and started chipping away at them. At this stage, I was also looking at moving house and had realised how much cheaper a mortgage would be than renting, so I was adamant that I’d have my debts cleared before saving for that.
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5. How did you end up paying off the debt? Please be as specific as possible. Describe the choices you had to make during this time. Did you have a good quality of life?
As I mentioned above, it almost happened by default once I started making semi-decent money. I was just at the stage where I was winding down my student ways, I was going out less anyway with working more hours. I had also just started dating my other half and was usually happy to sit in for a night with him rather than going out spending money. I did have to cut back quite a bit on my quality of life, but given that I had been living way beyond my means anyway, it was a somewhat welcome shock!
I wouldn’t say at any stage that I deprived myself of something I really wanted to do, I still went out for dinner and drinks and saw my friends, just not as often as I had been before. What I did find very difficult was that a lot of my friends were still in University, and couldn’t always understand why I didn’t want to go out partying 7 days a week with them any more.
6. Did you have a plan for paying off your debt that didn’t work. Why did it fail?
When I first started paying off my debts, I tried to create a budget which was just totally unrealistic. I was cutting expenses to the bare bones then feeling like a failure when I overspent. I’d never really worked off a budget before so I didn’t quite get that it needs to be doable, not a pipe dream! When I stopped being so hard on myself, I found I was actually able to spare a lot more from each paycheque. I abandoned my restrictive budget and just spent sensibly!
7. Can you describe a time where your friends, family or significant other challenged your plan to pay off your debt? How did you deal with it?
This kind of ties in with what I mentioned above, when I first started paying down debts, a lot of my friends just didn’t understand the situation I was in. I wasn’t particularly open about my circumstances, but they did all know I was working on paying off my overdraft at least. Even knowing that, a lot of them have just never been in the financial difficulties that I have through my lifetime and they were still of the “YOLO” opinion. I generally stuck to my guns though and when, 3 years after that, I picked up the keys to my new apartment, they all admitted how wrong they had been!
8. Describe the moment that you made your last payment on your debt. When was it? What did it feel like?
I had imagined this day would be literally filled with fireworks and sunshine, but it’s actually a bit of a letdown, isn’t it? I remember just feeling at a bit of a loss. With my next paycheck, I treated myself to a new laptop, then threw my efforts into saving for my house deposit. A lot of people say that saving doesn’t have the same sense of achievement as paying off debt, but I find that if I am saving for something in particular, it feels much more satisfying!
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9. What resources (books, blogs, videos, podcasts) inspired you as you were paying off your debt?
This is where I missed a trick, a really big trick I was pretty naive to the world of personal finance at that point in my life! I had no idea there was this amazing community of people out there just waiting to be supportive and celebrate my successes with me! If there is one thing I wish I could change about that time, is that I would have kept track of when and how I was paying off my debts. At the time, I felt like I was the only person in the world in that situation. I didn’t really have anyone to talk to about it or to get advice from. The friends who were aware of the nitty gritty of my debts, through no fault of their own, just didn’t really get it. My best friend and housemate was the kind of girl who cried poverty when her bank balance dipped below £100 and got straight on the phone to her parents.
10. What’s next for you now that you are debt free?
After spending a couple of years getting out of the habit of saving while I’ve been spending money on the new house, I’m now back on track and saving seriously. I’m about to buy a new car in the next couple of months, and after that, my aim is to save for my next house move. It’s so easy to get out of the habit of saving so I’m trying to constantly keep something in my head to save for!
Are you currently in debt? Here are three things you can do.
- Get an idea of how much you owe, to which company, & the interest rate.
- Start tracking your expenses (we use the free app Personal Capital).
- See if you can get a lower interest rate by refinancing your loans (take the Sofi survey here).
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Have you paid off debt? Share it with us below.
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