Happy New Year! If you have found your way here, you are probably working on a plan to get yourself out of debt or clear some debt in 2023.
I am pretty sure none of us plan to get into debt or get stuck in it, however, here we are. For too long we have put our head in the sand on it but last year we really took it on and made some headway in it, just not enough for our liking.
Now we have headed into 2023, it is a new year to get on with it and crack through to debt and step onto the next part of our journey into debt-free and early retirement. If this is your first step into becoming debt free, here are my top tips on how to get started.
Be realistic
A debt is a debt, whether it’s £20, £200, or £2000. It still needs to be accounted for in your tracker and paid off! For too long I always thought, oh that doesn’t matter, it’s only a few pounds. If you want to get debt free, you need to get it all in the pot to tackle!
Don’t be afraid, to be honest
No one wants to be talking about the debt they have, you know the looks you get and other people’s opinions but you need to start somewhere and honest frank conversations mean it doesn’t feel like it’s a big taboo subject.
Start with the basics
To be able to realistically tackle your debts you need to have a list of everything you owe, who to, and the repayment terms. I have a very simple spreadsheet with all the details on it and once a month go through and put in the figures at that point of the month. It is a great way to look month on month at your debts but also gives you the chance to see just how far you have come.
Expect to stumble
I have read so many blogs, posts, and forums and so many people seem to have it cracked. They get so much debt cleared each month, don’t spend money, and are smashing it, all whilst I have cleared minimal amounts. For so long it made me feel a bit deflated in our journey and then I realised that this was their story, not ours. We are all different and have different approaches but the same outcome.
Expect to stumble on the journey, maybe even fall, but as long as you get back up and take those steps again, that is all that matters.
Our starting point
It feels like this year is a fresh start for us and maybe time to share just where we are at:
Store cards – £5893.87
Loans/Credit Cards – £46059.85
Mortgage – £177483.99
Total to clear – £229437.71
It looks scary when it is written down and last year it would have made me panic seeing it like that. It is worth noting that on some of our loans is the car we have, we brought one new, and although I don’t regret it, I hate paying monthly for it! However, this year I am feeling so optimistic about what we can achieve and have plans to smash this apart.
The aim for the first 3 months is to clear £4500 off the debt with extra income from my side hustle incomes and sell off some bits, we have in the house. It might not seem like much but that month is almost 9% off the debts (excluding the mortgage). It will also free up £200 a month to snowball onto another debt, causing that ripple effects with the debts.
I do regret getting into the position we are in, but it is done now and in the past, for now, all we can focus on is moving forward and I plan to make sure that this year we do that with style!
Our plans to tackle debts this year
So, with such a huge debt to clear off, how exactly are we going to do this?
This is going to be a multiple-approach attack on this debt as we try and work on the best way to clear this down.
- Snowballing debts – We are going to pick on debt and get it gone, then move on to the next and rinse/repeat. If we can reach our target for the first few months, we will have £200 extra on another debt, which could effectively be a double payment on a debt.
- Clear out the junk – Our house is full of items, some of which we no longer use. So when the weather warms up I plan on getting up in the loft and clearing some of that out. These will either be sold for the funds, donated to a charity to make the most of, or cleared out. It will give us the space back and help us tackle the debts!
- Increase our income – I appreciate I am fortunate to have a job and make extra income from a blog, so I plan to utilize these the best I can in our journey. Every extra penny we have will be thrown at the outstanding debts to get these down as quickly as we can.
- Watch our spending – With costs rising, I understand out outgoings are going to keep rising. Where I can though, I plan to cut the costs as much as I can. Working with meal plans and shopping lists should help keep our spending down and make the most of vouchers and discounts when we do need to make purchases. Don’t forget to use Quidco for cashback on purchases, you can read a previous post on this here.
