How I paid off debt without losing my mind

photo by Stil on Unsplash

photo by Stil on Unsplash

As it’s mindful money month, it felt high time that Tracy and I tackled the D-word.

Unlike Tracy, my money habits have not always been great. As a freelancer it was easy to make excuses about my poor money management, blaming an erratic work schedule and clients who paid me late.

The truth is, I used to find it really hard to keep track of my money. It felt like water running through my hands. I was always in my overdraft and using my credit card.

Whether you like or not, money really does make the world go round. It gives us a voice. To build a strong independent future for yourself, you’ve got to understand your cash.

I knew I would need to sort out my debt I had before I could start saving. This was a personal choice, other people would recommend saving first. To me this felt like styling wall art when I hadn’t cleaned and painted the room. I needed a strong foundation first.

The steps I’ve laid out were my personal process for paying of my debt. Some of it may not resonate for you and that’s absolutely fine. This process helped me get to my goal without becoming a husk of a women.

Using this method, I paid off debts that were the equivalent of 17% of my income for January and February 2019. Considering that lots of money experts suggest you should save 20% of your income this means I got pretty close to the amount I should be saving to build for my future.

This is how I tackled my debt:

1. How much are we talking?

The first thing I did was I got really clear on how much debt I was looking at. I had always been vague about the amount because I was (frankly) scared of what I would find. But you can’t hit a target if you don’t know what it is, so I got really clear on my numbers.

2. Don’t clump it all together!

When I looked at the scary number, I realised I was making it worse by lumping it all together. So I broke it down into bitesize chunks and decided to start with the smallest amount, my credit card debt and set this as my first saving goal.

3. Finding your big “why”.

I honestly started this process because I was fed up with feeling ashamed, sad and guilty every time I opened my banking app. This shame fueled me really well for a few days but as you already know, fear based motivation only gets you so far.

So I decided to focus on how I would feel after I had paid off my debt. I imagined how much more confident I would feel, how proud I would be of myself. It was this image of future me that kept me feeling motivated in the cash crunch moments.

4. Weekly goals and a time frame.

Once I had chosen to tackle my credit card debt first, I broke that amount down into 4 weekly payments. I decided I was going to pay it off by the end of January. The time frame put some positive pressure on me so I finally got on with it, rather than putting off getting started and making the debt even bigger.

The amount you set for your payments is important, My weekly payments were big enough that I felt like I was making progress but not so huge that I couldn’t do the things I enjoyed. I find if I cut costs too hard too fast, I tend to yo-yo and go into a “yolo” huge spending melt down. I wanted to avoid that at all costs.

Every time I made my weekly payment on a Friday (my payment date I set myself) I felt a huge sense of achievement.

5. Money tracking

I kept on top of my weekly goals by tracking my money. Tracking is one of the oldest money management practices in the book. Basically you record all the money that comes in and goes out, every day.

Tracking helped me to really see my spending for the first time. I started to become really present with it, and I started to notice patterns. I saw where my money was bringing real value to my life, how my rent represented my lovely home that I share with people I really like. Or how my Spotify payment keeps me connected to a world of music wherever I am.

I also saw the spends that weren’t fulfilling me. I saw how much I was spending on drinking and nights out. I love the odd party night but when the toll they were taking on my bank balance became clear, the fleeting joy of getting boozy lost some of its appeal. So I cut back on nights out and saved the money towards my goal instead.

This wasn’t about becoming a nun and not having any fun. Tracking showed my how all of my spending took me either closer to, or further away from my goal. For the first time I started to feel in the driving seat with my money.

6. Mistakes and pleasant surprises

Once I got over the first few weeks of stumbling blocks (over spending here and there) I found my rhythm and paid off my credit card.

When I reached my goal, I realised my lifestyle changes meant I had enough money to upgrade to a better gym. As I weight lift regularly, this was a way of really improving my daily life. I would never have had the confidence to bite the bullet on the membership fee before starting this process. Now I go to a lovely gym with my house mates and enjoy it every time. I am spending on experiences that I truly value.

When I finished January I set myself an even bigger target for February, hitting these goals has made me happier and more confident.

I never thought saving could feel as good as spending.

If you’d like to start saving but you don’t know where to start, we have a free course “How to finally start saving for you dream home, even on a low income”. Whether your goal is saving for a home or something else our free 6 step guide will help you kick start your saving habit.