Firstly, not writing this to get any attention for myself, but want to share after the recent Wonga news and hearing the statistics about spiraling debts.
If you feel TL:DR - Moral of the post, think of the alternatives rather than having the uphill battle of trying to get back to £0 from the Negatives
I’m 29 now, and fast approaching 30, with the mission of being 100% debt free, including all my student finance debts. I’m well on course to reaching this but I haven’t enjoyed the process, and would want to say all of this to make someone else not make the same mistakes.
Payday Loans, the easiest way to get into the biggest regrettable and avoidable debt. I recently worked out I have paid over £18,800 in interest to them over the past 8 years… actually makes me feel so ashamed at the number! That’s a brand new “decent” car or a hefty house deposit !
Alongside this, I gambled away well in excess of £50,000 during the same time frame, I have lived the blind sighted “joys” of addiction from the habit I regret the most.
I’ve always been in employment and been the guy who works every overtime hour given, all to keep normality as I fought to keep up paying the scarily high value in interest you soon saw grow by the day when you had over £2,000 in payday loans from multiple lenders at once.
Big smiles to everyone was the way to hide it, buying lunch from shops at work rather than making my own dinners (had to keep up the appearance of doing well!) and appearing to live beyond means to keep up the “secret” debt.
A few years ago, I turned a corner with the debts and stopped borrowing unless needed. I had a few steps back at the end of last year when I borrowed again, but luckily I got them settled a lot quicker than the past. Along with finally (with added help from Monzo Gambling Block) I pretty much got rid of my gambling addiction ! I will always be a gambler, once you’ve fell into it, you will always be affected, you just have to put steps in to avoid.
When I started to get debt free it was a bit of life event that made me wake up. My mum passed away sadly, and initially I went a bit extreme, and set 10 challenges in her memory to raise money, from reaching the top of 24 peaks in 24 hours in the Lake District, to learning to do a SOLO skydive. I’m pretty proud to say I completed every challenge set and raised a considerable amount of money in her memory.
Straight after this I started to set the mission, clear my personal debt and repay the remaining £9,000 from my student loan.
I made a list of everything I spent on and did what I called the “skim it challenge” and some of the main ones I remember, and many I still do now:
Travel : I used to get the train to work for £6.20 a day, I switched to getting a weekly bus pass for £15.50 - less crowded, get a seat everyday but had a longer travel time.
Holiday : A ‘luxury’ but something I think is a worthy reward for working so much! I started scanning for last minute deals, and splitting the holiday down rather than package etc
Ditching the Brand : I realised that part of the joy of working in an office where you wear your own clothes is the cost of not wanting to feel self conscious. I realised you can pull off the same look for half the price, if not less, by looking online and thinking twice before adding to cart !
Shelf Down : Supermarket shopping - when you need to, move down a single shelf to the brand down a step, you’ll be shocked at the savings
I could keep on going if you anyone needs any ideas let me know!
Next the snowball approach. Many people will already know this one but make a spreadsheet of every debt and agree a minimum payment with each (be honest to every company about your situation, without complaining, you’ll be shocked at the amount have a duty of care to freeze the interest to let you get it cleared soon). Once you’ve all set with the list, work from higher interest/value and make minimum payments, plus all additional money left after everything has been paid.
6 months on, start the list again and increase all minimum payments by a small amount and pick your highest and start again, paying them the increased amount with left over money.
Just under a year ago I got to point where I realised my student loan was already halved due to overtime and that increasing the repayments has been adding up. I realised that I had agreements to pay off all of my remaining debts within 12 months, it was time to the same with my student loan. Previously, the student loan took a fixed percentage of my salary when I earned over the threshold, means the amount paid could go up and down (due to overtime etc). Instead I requested they stop my salary attachment, and let me pay them 12 equal payments for the remainder.
Alongside all of this I was in a position where I could move into my Dad’s rather than renting my own place, which helped increase the proportion of my income that I could use to clear my debt.
So all in all, if you ever think twice about a payday loan, think about it again, a third time. You can find alternative ways around. It becomes a sliding slope, and the battle to get debt free simply becomes harder and longer.
Everything is cheaper if there’s no added interest. Like I say, only wanting to share this to make others think twice before taking out the way too easily accessible payday loans out there. It ends up being a shameful spiral that you always say you’ll never fall into.