Debt story – Maria Nedeva of The Money Principle – #howtogetoutofdebt

Maria Nedeva of The Money Principle

I am excited to share this post. Maria is one of the ‘original’ UK money bloggers, she has been blogging since 2011. She is known for speaking her mind and is often asked to speak at events with her unique style always going  down a storm with the audience. A big part of Maria’s story was the huge amount of debt that she had to deal with and how that debt was paid off. She is now quite the expert on investment and making money. Thank you Maria for sharing your story in my #howtogetoutofdebt series.

This is How We Paid Off £100,000 Consumer Debt in Three Years

Hi. My name is Maria and I have been debt free since February 2013.

I know.

Sounds like an introduction at an ‘Alcoholics Anonymous’ meeting, doesn’t it? It is supposed to: I believe, that in our consumerist societies, debt has become one more addiction.

Don’t believe me? Fine, let me ask you something:

How much consumer debt do you have and how long have you had it?

Chances are that you have had consumer debt most of your adult life and, as many others do, have come to see it as a normal part of your existence.

Don’t blame you. You are certainly not alone in regarding consumer debt as your life-time companion. Heck, even I fell into the ‘credit’ trap and I should have known better (being born and raised in Eastern Europe where consumer debt has always been frowned upon).

Not blaming you doesn’t mean that I agree with you. Quite the reverse: I am a firm believer in paying off consumer debt and staying debt free forever. Some, including Lynn, are already making large strides paying off their credit card debt.

Me and the stone thinkers of Stanford :).

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Here is the thing, though: when it comes to paying off debt, personal finance experts tell you about the technicalities. Things like slashing your spending, jacking up your income and having the discipline to throw the difference on the debt.

These are all good points. But paying off debt doesn’t start with the technicalities – it starts with developing an all-encompassing desire to be debt free.

This is what I want you to get from reading this post: want you to develop a debt busting lust impossible to resist.

To get you there, I’ll share our story – the story of how we paid off £100k worth of consumer debt in three years. Breaking all rules of storytelling, I’d like to begin our story from the end.

Let’s start from the end

One morning in February 2013, my phone pinged. I had received the text message that made me want to bellow my joy. It read:

‘Done and dusted.’

What it meant was that my husband had just made our last debt payment. Yup: we had paid off £100,000 of consumer debt in three years.

I wanted to yell from a sky-scraper: even having vertigo couldn’t overshadow the mixture of relief, elation and optimism that paying off all our consumer debt in record time brought.

What it also brought was a very different life.

Do you know that ever since we paid off all our consumer debt, I stopped fearing:

  • My phone ringing;
  • Letters from the bank;
  • Losing our house;
  • Stealing my son’s future; and
  • Older age.

I also love the little luxuries in life that were not an option, like:

  • Buying flowers;
  • Watching our wealth and investments grow;
  • Hustling; and
  • Looking forward to early retirement and great future with my husband.

Think about it. Isn’t living a debt free life worth it?

How did we get in this mess, anyway?

You are right to be asking yourself how a university professor and a computer maverick with penchant for statistics found themselves in £100,000 consumer debt.

I wish I could simply say that we got into so much debt because my husband’s consultancy failed in 2007-08 (to be expected with all that was going in the economy).

It was less simple than that though the business contributed.

Remember I told you paying off your debt starts with developing uncontrollable desire to be rid of it?

Now, I’m telling you that getting in debt is the result of having unhealthy money habits. For instance, in the decades before we realised how much debt we are in, I:

  • Didn’t know how much I earn;
  • Had no idea how much we spend and what we spend our money on;
  • Didn’t know how much a pint of milk, or a loaf of bread, costs;
  • Hadn’t opened financial statements, or looked at our bank account balance, for years; and
  • Delegated all money management to my husband.

My husband, as you have probably rightly guessed, didn’t do any money management either.

This, my friend, is how people who earn well can find themselves in a lot of money trouble.

Just like bad money habits get you in trouble, developing and maintaining healthy habits will get you out of it. I believe that debt is not to be ‘manipulated’ and avoided; debt should be paid off and seen as an opportunity to grow and develop healthy money habits. Anything less and your debt story would resemble the story of a yo-yo dieter – you’d be in and out of debt faster than you can count to five.

We reach our crisis point

You know what was interesting?

We had no idea in how much debt we were. Although a very uncomfortable feeling had been creeping inside me for some time.

One evening at the dinner table, after a gruelling day at the office, I had one of my tantrums (yep, some of us never outgrow these) and told my husband that I want to know how much debt we have.

Three days later we were sitting down with a glass of wine and my husband told me that he has calculated we have approximately £60,000 worth of debt. I spluttered my wine on the coffee table. Over the next couple of days, he found more and more debt; it levelled at slightly over £100,000.

Don’t know about you but in my book, this is too many zeros.

We had no liquidity and, just like 95% of people in the UK, our wealth was all in property and pensions.

We were earning well but over half of our monthly income, we discovered, was used to pay the credit cards’ minimum payments.

Our only way out of this mess would have been to sell the house and we were not keen.

As crises go, this was a revolutionary situation: we could no longer carry on as we did. We either had to buckle up and tackle our debt or lose everything we’d built over quarter of a century.

We chose to buckle up.

Epiphany or the strategy to pay off our debt

No, I didn’t start our debt free journey being rational, calm and collected.

I did exactly what most people who are told that they have £100,000 consumer debt would do: I had a complete meltdown.

For couple of weeks I didn’t sleep, I didn’t eat, and I shouted at my husband every time I saw him – you see, I blamed him for the predicament we found ourselves in.

Things started changing after I calmed down a bit and took responsibility for my part in getting in so much debt.

I decided to educate myself about money. I read anything I could get my hand on; from self help books, through blogs and websites, to more technical, academic publications.

Next, I started ‘doing’ and experimenting. Hence, we stabilised our finances by consolidating £80,000 of the debt as a loan secured against our house; we looked at our spending and eliminated all waste in our budget; and I started hustling like a pro.

There were four elements to my strategy to pay off the debt fast:

  • Earn as much as you can, spend as little as you can and throw the difference on the debt.
  • There is no such thing as ‘small’ money when it comes to paying off debt (the lowest we paid in was less than £5)
  • Stalk your debt with the focus of a hunter; don’t be prey.
  • Remember to have fun and budget for it (we had small ‘I’m so worth it’ fund each).

That’s it! The rest is technicalities and grit.

Top tips to pay off all your debt in record time

I’ve already given you some tips about how to pay your debt (and fast). This is a recap of the top seven tips, I believe, will help you pay off your debt:

  • Get to know your money. You must know how much you earn, how much you spend (and on what), how much you are worth and what is your monthly cashflow (the difference between what you earn and what you spend).
  • Polish your budgeting skills. Budgeting is not about restricting yourself but about ensuring that your money goes where your values are. You can have a budget line for spending on ‘God Knows What’ but it should be very small.
  • Change the way you think about money. It is not ‘simply the thing you buy other things with’. Money is what buys independence and freedom.
  • Get seriously mad about your debt. I remember waking up one morning and thinking ‘enough is enough’. This is when I knew that the debt no longer held power over me and that we’d pay it all off. Accidently, reading the stories of others who have paid off all their consumer debt, ‘getting mad’ features prominently.
  • There is one thing to focus on: growing your cash flow. Debt can be overwhelming. I remember spending weeks figuring out where to start. Now I know that this is easy: start, and finish, with making sure your cash flow is positive so that you have money to pay off debt every month. Grow you cash flow and you’ll have more to throw at the debt.
  • Create a side hustle. Earning money on the side is always welcome. Just make sure that you don’t buy more stuff with it; put it on the debt. When your debt is paid off, start investing. A word of caution: selling your stuff is not what I’m talking about. What I mean is creating sustainable income streams.
  • Don’t think about paying off debt as a destination. Most people tend to see paying off their debt as a destination. I’d urge you to see it as a ‘stop on the way’ to building wealth and living a life of financial health.

That’s all, friend.

Cool ‘debt paying’ and let me know when you are done – we’ll have a beer to celebrate.

Maria Nedeva is the creator of The Money Principle where she teaches people in financial trouble how to build sustainable wealth. You can follow Maria’s work on Facebook and Twitter.

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Lynn Beattie

Aka Mrs MummyPenny

Personal Finance Expert

I write about personal finance made simple, lifestyle choices that will save you time and money, as well as products and services that offer great value.

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7 Responses

    1. Such a great story isnt it, very grateful to Maria for sharing it with me. And I love love love her writing style.

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