Three Simple Steps To Tackle Debt

I remember that one day in my life when I decided that I was going to tackle debt and live debt free, never to borrow again. You see, that was the actual decision that I’d put off for years. I used to get in debt, pay it off and then borrow again. It was a momentous moment where as a family, we discussed a future where we would live within our means, not use credit cards or loans and live without the misery and worry of debt. I think I felt ‘better’ from that moment. I wasn’t a penny richer and I had to begin my frugal journey to debt freedom but the very fact that I had made that decision meant that for the first time in years, I had taken control of my future.

 

SourceSo, we’d made the decision and then there were the next steps. We’d never had a budget, we’d never tracked our spending, we just spent and when there was no money left we stopped. That couldn’t go on any longer. One of the first things we had to do was to track our spending just to see where all of our joint salaries were going. It was odd but for a month, we kept every receipt. A sandwich here, a newspaper there, a coffee mid-morning and a handful of chocolate bars when we filled up the car with fuel and we soon discovered that the little bits and bobs added up to a whole lot of money wasting. We then worked out the annual cost: £1140 on lunches, £1140 for both of us to pick up one coffee a day, £240 a year on newspapers, £120 a year on chocolate from the petrol station. We suddenly found money we thought we didn’t have! £2640 saved by taking lunch, a flask, reading papers online and cutting out chocolate. The little things add up.

We turned next to our household expenses. Previously we had took no notice of our bills, didn’t check tariffs, didn’t compare suppliers – we just paid the bills. To start, we looked at price comparison sites and reduced our gas and electricity bills by £500 a year just by switching suppliers. Next, we looked at our consumption. We turned off lights in rooms we didn’t use, we reduced the temperature and the amount of time the central heating went on. We turned down the water thermostat on the boiler, we started showering instead of having baths and then timed our showers. By checking and reducing our consumption we reduced our energy costs by a further £500 a year. The simplest thing we did was to work out that we could get by with metered water. Without a meter, £1200 a year, and with a meter, just £600 a year. By keeping an eye on our bills, our consumption and who was supplying us, we saved another £1600 a year.
One of our biggest household costs was food. We’d often shop without a list, with no idea what was in our fridge or freezer and just bring home whatever caught our fancy. Then, and I can’t believe I ever did this, I would pop into the supermarket on my way home if I’d not prepared something for supper and pick up something easy such as a ready meal or pizza. When it came to Friday night, as far as we were concerned, that was takeaway night. Saturdays? That was reserved for eating out. Let’s add all that up. Weekly supermarket shop – £80, then the top up midweek at £20. The Friday night takeaway would cost £20 and the Saturday night meal out £50. That all added up to the eye watering amount of £170 a week, or £8840 a year – and that doesn’t even include the wine! We started to meal plan, to stock take so we didn’t buy what we already had and set a budget of £50 a week and stick to it. We have treat nights of course but that’s all in the budget. By sticking to that our food bill reduced to £2600 and we find we can eat really well and healthily on that amount. If you kept count then you will have worked out that we saved £6420.

If you’ve been keeping a tally then you’ll have worked out that overall, we were able to save just over £10,000 a year and use that to pay of chunks of debt every month. Every month, I could see the final figure reducing, I could see the interest charges reducing and with each payment, I was less stressed, more in control and working my way to a happier and more relaxed future.