My Debt Stories, #howtogetoutofdebt regular feature continues this week with a post from Jennifer of MaMaFurFur. I am loving this series now onto episode four. You can read more debt stories from me, here is my latest debt update. Also have a read of stories from Maria Nedeva of the Money Principle, Debt Daddy and Vicky Eves. Everyone has such a different story of how the debt happened, how it felt and how they got out of it. I love reading the different stories.
Over to Jennifer.
How did you get into debt?
I had lived without any debt, outside of a mortgage, until I met my husband at age 31. Through impulse purchases and bad money management choices from previous relationships on both parts – he came with £22k of debt. Some of that debt also came from transferring money from previous partner’s name to his, believing that the relationship didn’t matter who’s name the debt was in. Turns out when people break up they tend to not want to claim the debt back!
When we initially started living together we still had separate bank accounts, I didn’t initially know about the debt until he told me one day before the arrival of our first son. It came as a complete shock as I had never owed any amount on my credit cards, always paid them off straight away. I lived with cash purchases only if I didn’t have the money I didn’t buy something. He was making the minimum payments only on his cards, four in total, and it was just was too big for him not to tell me. I think he secretly wanted help solving the issue as he had been repaying credit cards for most of his adult life.
What was your crisis point?
For me, sharing with me meant I could help him deal with it as a couple – I firmly believed we didn’t need that debt and I wanted it gone. With a child on the way back in June 2013 it was our choice to put a solid plan into place that would mean no more debt would be added and we would make the repayments. I still feel as strongly about debt as I did back then, having it was simply not an option and we needed to change spending patterns as we deserved all the money we were earning to remain in our household.
What help did you get?
I did as much research into what was the best way to repay debt as I could. I watched YouTube videos for advice and read many blogs. It turns out people have paid back debt successfully before and you can copy their strategies. My husband was accepted for a loan from the bank for the total amount of the debt on the cards, we then paid off all the debt with that loan and committed to pay back the one loan fixed monthly amount. For a £22k debt, this meant roughly £500 a month for the repayment over 5 years. A huge amount of money to repay but worth it to pay off this debt and free up the cash for our life again.
This particular situation taught me a lot. I had the experience of knowing what stress and upset it can cause to face a large amount of debt and seem like it is never ending. We earn good wages which were being sucked away by the debt. My husband had never been able to say that in his life before, and that felt amazing to know we were working on this together.
How are you progressing with repayments?
We ended up repaying back the loan within 3.5 years, with all the progress really in the last nine months of 2017. With the bank loan, I could log in each month and see exactly how much was due back and how much interest each payment had on it. Once you see the amount owed and also the interest added dropping it felt like an addiction. For the final nine months having the loan we saved and fought for roughly £13k alone to be paid off, even during my second child’s maternity leave. It was worth it cutting back on the monthly spending to save more and to see that number going down fast.
Tips for getting out of debt?
My biggest tip for working towards debt and any financial goal is what I call the 10% rule. Pay the minimum plus 10% or more – NEVER pay just the minimum. With doing just that you will make an extra payments to your debt each year without you realising and speed up the rate at which you pay it back. 10% extra is also very achievable if you are smarter with your money moving forward. Cut up the credit card until you feel you have learnt to manage your impulses better. Once you are working on debt repayment you tend to get the buzz to keep paying it back more and more.
Don’t let the bank or credit card company make a profit from you – get rid of the expensive debt so you can then use that money to make a profit for yourself.
This whole journey inspired me to blog and create advice for others to follow to help them get out of debt, but also work towards financial security and freedom. I want to help others create the lifestyle of their dreams, without debt, particularly women who might feel chained to working due to debt and bad choices when they really want to stay at home more. Without this experience, I wouldn’t have had that chance to help others. We also now have family financial goals set, with fixed amounts, that we are working on each month. One day with that money we will pay off our home, and the goal is to be financially free and to live off the profits of our investments and business.