- Do you find yourself living paycheck to paycheck?
- Do you currently have more outgoings then-incoming?
- Struggling to make minimum repayments?
- In debt and don’t know what to do?
Well if you can answer yes to those questions above you are in the same situation I was in and you have already taken the first steps to better your financial situation, you’ve stepped out of the unconscious incompetence stage and entered conscious competence, you have become aware of the situation you are in and are looking for a way to fix the situation. By no means is this going to be a quick fix, people out there offering to get rich quick schemes will usually draw people in that are in dire situations looking for a quick fix. By only seeing 2 feet in front of your face rather than looking beyond the horizon you will only end up getting into a worse situation.
Having been in this situation myself I can fully understand how it is not to be able to afford the things you desire, to have to miss or pay the rent late because you won’t be able to afford to put food on the table, I have been there and I want to share my journey with you guys!
How did I get into a financial rut?
So it all started with getting credit cards. 0% to start with being smart with them (or so I thought) when the time that the 0% was ending I would then get a new one and transfer the balance. The idea was to pay the credit cards off every month at payday but then payday would come and I’d only pay the minimum payment before I knew it I was then being charged interest. I ended up having a few credit cards, things seemed okay I was managing to pay the minimum payments but as the interest grew so did the minimum payments, it was working out that the minimum payment was just about covering the interest.
Alongside having car finance and credit cards I also had taken out payment options for things like Sofas, coffee machines, washing machines and the list goes on. At the time when taking out these payments option you think it’s only £20 a month, but these soon all add up.
Things got really bad for me when I consolidated all debts into one payment after putting our wedding on credit cards. At the time thinking it was the best thing to do to have one payment going out for all credit card debt. This amounted to around £20,000. Monthly payments of around £380, so having this payment going out alongside rent all household bills, car finance and it all added up to more than I was earning every month so I was then turning to more credit to pay for general living
So what I want people to see is that if I can turn my life around from being so inundated with debts and having more money going out than I had coming in then anyone can do it. With the right guidance and motivation to do so.
It’s still early days for me but I want to share my journey with you guys. Its been several months since starting my financial journey and already I’ve paid off a couple of my smaller debts and have allocated the money I was paying to those to the next smallest, this method is called snowballing and although mathematically it’s not the best way it is the most successful the feeling when is great and gives you the motivation to pay the next.
How do I get out of debt?
For me, I started by downloading the app Money Dashboard and letting this run for 1 month without changing any spending habits. After a month has passed you can go into your dashboard and look at all the transactions for the last month. See where your money is really going. For me a big amount was being spent on confectionery, just popping into the shop and buying a drink and a chocolate bar here and there, I was spending almost £80 a month.
With the Money Dashboard app, it’s really cool as well because you are able to set budgets on there. After seeing where your money is going try and cut back, maybe don’t go and buy that chocolate bar you didn’t really need. Also, have a look at your monthly grocery bill. For us a family of 3 we were paying nearly £600 a month just on groceries, going shopping for things every other day you end up spending more money. We have now a budget £400 a month for our food shop and for the last two months have been under our budget.
By doing a weekly shop and planning meals you will save a substantial amount of money though-out the year, money that can be put towards paying down debts or increasing your savings account
Get rid of direct debits you are not using (zombie bills)
To many of us are throwing money away on forgotten direct debits, standing orders, subscriptions, donations and memberships by failing to pay attention to what is coming out of our accounts.
If like me you have direct debits you didn’t even know where going out now is the time to go and cancel them.
recognize, prioritize and optimize
Work out your monthly living expenses.
Work out your monthly living expenses, this is your food, shelter and necessities. Once you know the cost of your living expenses you want to set up a savings account and set a goal of between 3 -6 months of expenses.
Once you have got 3–6 months of living expenses this is where the financial acceleration happens its when you are able to start investing in stocks but that is another subject for another time, for now, concentrate on saving that buffer account (savings)
#Small stepping stones reach the bigger milestones
Having money in the bank is what allows you to take risks, build bigger ideas, and ultimately live a more fulfilling life, be able to invest and yield returns and build profitable businesses. This is not a dream this is the first step towards becoming free.
Let’s do this journey together. If I can do it then so can you.
If you haven’t already check out the resources page, there you will find all things that I’ve found useful on my journey
Click the link below to head over to the resources page
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