The past few months have been tough from a financial perspective. I have slipped back into thinking of my debt as a mountain to climb that is taking forever to pay off. Recent months with me only being able to pay off smaller chunks per month are not helping with these feelings
But then I read a post by the wonderful Maria Nedeva, the post is called Stop hating your debt and start building your wealth and was a guest post on Humble Penny website. The concept is actually quite simple. Think about every pound being put towards your debt as building your wealth. Each payment, no matter now big or small is moving you towards a more wealthy position.
I really love this difference in mindset and thought process and I really think it can help me and others in their mission to clear the debt. Each payment into my debt in the past has been laced with resentment, money that I am working hard to earn going to the forever debt pit that is taking an eternity to pay off.
But no more, I am going to focus on finding as much money as possible to pour into my debt to grow my wealth. Say it enough and you can believe it.
My Wealth Growth plan.
I am 18 months into my debt repayment and have 9k remaining to repay of the initial 16k. By April of this year, 2018 I had got that debt to £5k, this included an offset of £3k in savings. Fast forward to six months later and the savings have been spent and a bit more has been added to the debt. The summer months were tough. My business income went down yet my business expenses went up. And six weeks of summer holidays with three boys put pressure on the budgets.
I am where I am, and I am not going to beat myself up about the debt going backwards. But I do want to plan on how to increase my wealth and get that 9k paid off. It would be amazing to be able to say by this time next year that the debt is gone and net wealth can start to multiply in growth.
Aiming to pay off at least £1k each month and Building up the Safety fund to 5k
My aim is to repay at least £1000 each month of the debt. I get this is a huge amount of money which is going to take hard work and sacrifices, but I need a goal something to aim towards each month. At the same time as paying off the debt I also want to save money into various pots for different requirements.
I need to set aside money for various things. I have a very handy function within my Starling business account where I can set up goals. You can set up as many goals as you want. The money goes into the goals pot and I can no longer see the money in my bank account balance. The money is still there but it can’t be spent. Firstly there is the tax goal. A chunk of money must be set aside to pay that bill in January. Secondly there is emergency funds, money must be set aside to cover off those challenging months that I know will happen next summer. Thirdly the Vegas fund, April 2019 I am going to Vegas with my best friend. So I need to put aside some money to pay for that. So many goals!
Earning more money from the business
The summer months are tough in the world of blogging, but from September through to May income is so much better. I have three good years of past income to look back on and I know these months consistently perform better. September already proved it by being my second best ever month for new pieces of work agreed, the previous best being January 2018. I know I have good income coming my way.
This will mean that I can put at least £1000 each month towards increasing my wealth and repayment of the debt.
Cut back Spending again
There are some very simple tactics that I can switch on which always mean extra money can be saved. I shall be doing some low/no spend months. September was one of those months where I managed to spend very little. This means no nights out with friends (that costs money!), no coffees, no lunch costs, no cinema, no fun. But the result is a huge saving versus regular spending months. I have saved up to £300 in a month doing these no spend months.
October/November and December are more challenging to be no spend months as I have three birthdays for all of my boys and then Christmas. To prepare somewhat for birthdays I had saved Amazon vouchers for this expensive time and have managed to use them for most of the birthday pressies.
Time to Look at the Budgets again and delete anything unnecessary
Every few months I go back through my personal and business expenses to ensure that everything I am paying for each month is 100% neccessary and at the best value I can get. This month I have taken the decision to cancel a few business expenses that I was using but not enough to be worth the spend, these include a linky tool, zoom subscription and an Instagram scheduling tool. Cancelling these three services will save around £30 per month, £360 per year. Its amazing how much the savings can add up when you look at the annual saving.
Say No to the Takeaway.
Resisting the want of a takeaway is a big money saver. Each takeaway costing around £30 is a big saving. Pizza is a big favourite of the boys so ensuring that we always have a supply of frozen pizzas from Aldi normally means that craving is satisfied. Aldi do some great frozen pizzas that are really good quality. Okay, they are not Domino’s but they do the job and save A LOT of money!
Building Our Wealth
I really want the next post I write about the debt repayment to be more positive and with me reporting back that I am a big step closer to a zero credit card balance. We can do this!