I’ve been talking to a few people recently about debt reduction. I feel some people have been badly advised and may take the route of debt consolidation or even debt management,where they hand their debts over to a management company and pay a fee each month, not realising that the only thing that makes debts go away is bankruptcy. Bankruptcy is dreadful for your immediate future and means you sometimes can’t hire a car, rent a house and certainly not move house or get another mortgage. By far the best route is biting the bullet, accepting a very much reduced standard of living and paying off debts.
Once you get used to living on less money and living differently; soon enough and after a while, it just doesn’t matter! I can so easily tell who is and who isn’t ‘on their arse’ by their access to ready cash. So many people that I know have nothing left at the end of the month as they are either living on credit or they have maxxed out! Below is my debt repayment plan. You can only see this properly if you double click it to enlarge it……….I’m not ashamed of being in debt and not ashamed of how I have to pay this off and certainly not ashamed to share the payment plan with anyone who cares to see it.
We decided to pay off everything, which means in the first instance that you stop spending anything at all. Complete cold turkey! If you are in the position that I was in, you can’t afford to drink, to smoke, to go to the pub, to have a mini-break, to eat out, to go to the pictures or theatre………………………….YOU CAN’T AFFORD IT! You can’t afford to use your credit cards EVER! STOP IT!
Martin Lewis uses the analogy of attacking one debt at a time, which we did. We then repaired our credit rating in six months and were able to start moving debts into 0% cards and now we over pay them and we’re attacking those debts.
If you are reading this and you are cutting back because you are in debt, please contact me first before you even think of either consolidation, re-financing, re-mortgaging and especially before going anywhere near debt management. There is another way and YES it’s going to be painful and it will take a few years but you will walk away debt free, with a credit rating in tact, with your own roof over your head and you will have a better future. Who’s coming with me???
For those who have asked – to find the debt snow ball calculator simply google “debt snow ball calculator” – you can also discover how to pay debts off quickly by googling Dave Ramsay or Suze Orman, also watch the ‘good debt, bad debt’ video by Martin Lewis from Money Saving Expert on You Tube – search “Martin Lewis” in You Tube and look for his live stage show/lecture – it’s fascinating and will tell you all about paying off debts. Here’s Dave Ramsay and his video on debt snowballing