My Debt Story – Or Goren from Cord Busters
Or is sharing his debt story today, Or is a fellow member of the UK Money Blogger Community and blogs at Cord Busters. He openly talks about the onset of living with permanent debt. Being in debt for such a long time that you are just used to it, forever paying off a monthly chunk and living life as normal, a little more beyond your means each month. I recognise this and have been in debt for ALL of my adult life so far (but soon the debt will be gone!). Read on for Or’s debt story, how he paid it off and what are his top debt repayment tips.
The Beginning – When Debt Creeps Up on You
For years, I thought I was good with money. Always knowing the exact status of my bank account, taking care not to spend too much, knowing when each bill is due.
And all those years, I was always in debt. Thousands and thousands in debt. And it took me a long time to realise the two don’t go together.
I was living in Israel back then, and debt was a way of life for me. I never bought anything too big, I never took a loan for a specific big purchase like a new car or an extravagant holiday, and yet – I was always in debt.
That’s the danger of living with permanent debt – first, you don’t see it coming, and then you get used to it and think there are no other ways. I had a decent job from an early age, so my income was OK (if not spectacular), but it was never enough. The monthly supermarket spend was always a bit too much, the electricity bill was always a bit too high, the movie tickets were always just above what I could spend.
And so, each and every month, I always spent more than I had earned. Not by much – but by enough, to make those debts pile up. And then, things started spiralling down – I had to take another loan, to cover the overdraft. Then I needed to use another credit card, to cover the loan. And then the interest payments kicked in, and before long, I found myself paying hundreds every month just on penalties and interest rates.
It didn’t help that my husband was very similar to me in his spending habits – and before long, we found ourselves with a combined debt of close to £20,000. OOPS. We’ll NEVER be able to pay that without a lottery win, right? Wrong.
The Turning Point – I’ve Had It!
Living with permanent debt takes its toll. I could never sleep well, because I was worried about the upcoming bill. When small emergencies happened, like the car breaking down or an unexpected visit to the vet, it felt like the sky was falling down. Every bump in the road felt like a gateway to hell.
I was playing around with the idea of changing my financial life for a while, but it wasn’t until I came across Dave Ramsey’s book, that I finally decided to act. Dave is an American financial expert and author, who teaches people how to beat debt.
I remember walking home, while listening to the audiobook version of his “Total Money Makeover” book, and while some of it was aimed at Americans, the basic system just clicked in my head: Make a budget, give every dollar/pound a job, and attack your debts with gusto from smallest to largest.
“That’s it, we’re beginning our journey to get out of debt!”, I told my husband that day. Luckily, he was on the same page (otherwise it wouldn’t have worked), and on that day, we created our first-ever monthly budget.
We stopped using credit cards, we vowed never to take on a new loan, we saved money everywhere we could with coupons and deals and by cutting the TV cord, saving a considerable sum every month. Or you can read this article about lots of way to watch TV for free.
According to our written plan, and our combined income, we were due to get rid of that £20,000 debt in three years. Surprisingly (or maybe not) – it only took us 18 months.
Where We Are Now: Living Debt Free
While we were deep in debt, the future looked bleak – I lived paycheck to paycheck, never daring to dream about bigger things. But once I cleared those debts, it was time to use that same system and energy to actually save money – money that allowed us to move to the UK.
And while moving to a new country isn’t easy, and carries with it tremendous expenses – I kept sticking to my monthly budget, never spending more than is allocated. That way, even though our income was dire during our first year in the UK, things did NOT spiral down again, and we never looked at any loans or credit cards.
Some people think that living on a strict monthly budget is limiting – but for me, it’s the other way around – knowing and DECIDING how I’m going to spend my money each and every month, gives me the freedom to use it for the things I want and need – responsibly.
My Top Tips for Getting Out of Debt
1. Budget, Budget, Budget – Prepare a written budget at the start of EVERY month, deciding exactly where your income is going to go. Then keep tweaking as things change throughout the month – but do your best to stick to that budget.
2. Build an emergency fund or around 3-6 months of monthly outgoing. Before I started paying off the debt, I made sure I always had £1,000 set aside for emergencies. That way, if you have an unexpected visit to the vet or your car breaks down, you’re not tempted to use a credit card.
3.Throw everything you can at the debt – Every little bit helps, and for 18 months we were going crazy in trying to find new ways to save money – with those savings going straight into paying the debt.
4.Grow your income: Find ways to earn more money because, again, every little bit helps. Find a side hustle, do more overtime, sell stuff on eBay – anything you can do that will get you more money to throw at that pile of debt.
5. Remember the goal: Getting out of debt is not just about paying all your loans – it’s about living a better life, free of all those calls-from-the-bank worries and being able to have grand plans for the future. Remember that end-goal when you’re eating Lidl beans at home again.
This debt story is part of a series of posts by other bloggers, read them all here. Maria Nedeva of the Money Principle, Debt Daddy and Vicky Eves from I beat Debt, Jennifer from MaMaFurfur , Cat from Penny Wise, Life Rich. and Lucy from the Frugal Fox