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Some straight-shooting experience from somebody that has dug their way through ten years of debt.
As I write this, I’m just about to clear the last penny of over ten years of personal consumer debt.
I could have cleared this sooner, but there were many hard lessons of financial discipline I had to learn along the way and much of what I have learned here came through correcting bad habits and seeking out advice on how to become better with money.
When I was 18, I headed out to start a business – that’s a generous term; It was self-employment which was the same as being employed, only you had to do all of your own administration. I went to my bank with a view of setting up a separate business account to keep everything separate, and while opening the account the manager took me to one side.
He carried out a number of personal checks and then offered me a $20k loan on the spot.
Money in my account within hours!
The only reason I turned it down was that I couldn’t think what I would spend $20k on! Imagine a financially inexperienced 18-year-old with thousands to use however they wanted. It would not have gone well.
I did manage to rack up $20k of debt, but this was in the more deadly and subtle way of bank charges, missed payments and bad clients.
Many people find themselves in a position where they are offered loans and credit cards and quickly are left with nothing but years of debt.
There are things you can do to deal with debt if you have no money left at the end of the month. The chances are you are doing this with bad credit, which has been consistently destroyed through missed payments. The truth is that all of your creditors want you to pay them back and they will even help you to do it. It’s expensive for them to take you to court and the courts really insist on every possible means being tried before they hear a case. It’s expensive for you to miss payments too. They would rather have a little than nothing.
Here are a number of things I used to dig (and you will have to dig) my way out of debt. If you have bad credit, are on low income and have no money at the end of the month, it is possible to still deal with debt. That was precisely my circumstance over a decade ago.

Have A Reality Check – Take Ownership

The reality is that you are not going to get out of debt overnight. This is going to take years, but those years are going to go by anyway. Wouldn’t it be better if at the end of the next 3,5,7 or 10 years you are there debt free?
Debt is like an emotional chain and the more we ignore it the heavier it can feel. Money is not worth more than your life or your mental health. In order to deal with debt, we have to face it. See it in all its ugliness and acknowledge that there is a problem.
In the west, we have a very strong honour and shame culture around debt. It is taboo to talk about money and it’s embarrassing to be thought of as bad with money. But, if it’s a problem, it will not solve itself. It will only get worse if un-dealt with.
Bad debt (that’s credit cards, loans, store credit and anything that is not considered a ‘money-making asset’) is what robs you of your future. You take your future potential and spend it now. Your swap future pain for immediate pleasure, but good stewardship means having immediate pain for future freedom.
I had a money problem. I was in debt. I owed thousands and it was wrecking me at its worst emotionally. Sleepless nights. Emotional anxiety gave me physical sickness and constant worry. The days were numbered for these problems the moment I took ownership of my debt.
You can deal with it. You can handle your finances and you are capable of winning this battle. So get ready to master your debt.
Get out a piece of paper now, and write on it ‘I have a debt problem, and I am going to deal with it as of now. It will not beat me, I will own it and I will destroy it’.

Find Personal Support

If possible, find somebody you know who is good with money to help you along this journey. You’re not asking to borrow money (don’t do that), you’re not asking them to fix the situation. All you looking for is someone to help be a sounding board, offer encouragement and support.
Do not ask somebody who is terrible with money, or is struggling with debt. The old saying is don’t take advice on diamonds from bricklayers. In other words, you need somebody who has overcome financial hardship or already lives out good stewardship principles.
Friends and family of course can still be supportive, but be careful that they understand what you need to do in order to become debt-free.
You may be reading this and you might not have anyone to turn to at this time. That’s okay. Don’t worry, I know it will be hard, but as you take control of your finances you will find support along the way and you will find self-confidence as you take back control. I did 70% of this journey alone and support came along the way as I reached out.

Get An Overview Of Your Finances – Know What You Owe

First, we need to work out what we have coming in each month and what we have going out. To the penny, at the top of an A4 sheet, list how much money you have coming in and where from. Is it government credits, a part-time job, income support, money from a supporting family member or child support? Write it down.
It might look something like this when filled out:
Income  Amount (Monthly)
Employment $1,200
Benefits $0
Child Support $0
Total $1,200
Expenses Amount (monthly)
Rent/Mortgage $600
Utilities $150
Food $160
Travel $50
Credit Card 1 $150
Credit Card 2 $200
Loan 1 $250
Phone $55
Total $1,615
In the above example, we are $415 short every month.
Having faced up to reality, we need to see the beast in the shadows.
We need to list all of your monthly outgoings. This includes how much you need each month to feed yourself and anyone who depends on you, utilities, living costs such as travel, subscriptions, personal care/hygiene, and of course debt.
You will feel better seeing everything laid out and no longer hidden. Even though the debts will still be there, knowing (to the penny) everything that you owe can give you immense power and comfort. The simple fact that you know it and see it means you can control your finances.
On another page, make a list of every single debt you owe as its own exclusive list; whether that is credit card balances, outstanding utilities or small change that you borrowed from the neighbour.
Leave no stone unturned, and make sure you have every single possible debt down on the list. Don’t round it up or down, but have it listed to the penny. The extra detail of working out the exact amount is a part of the discipline of controlling your finances. Look after the pennies and the pounds look after themselves.

Avoid PayDay/High-Interest Loans – Stem The Bleed

If you are paying more than 10% for a loan, I would consider that steep. If you can consolidate into a reasonably low rated loan, this may be an option that helps. Or if you have a property to borrow against, that too could be worth exploring in certain circumstances. In those cases, you ought to seek the advice of a professional and regulated independent financial advisor.
With a bad credit rating, you’re likely not to be offered any loan or credit as cheap as 10% or balance transfers; and are only left with products that have an ungodly amount of interest. The reality is that more borrowing will only rob you of more years in the future. If you are facing huge interest rates, you need to follow the below suggestions, but certainly, take action on using the help links at the end of this blog.
When faced with a bad credit rating, it can be really tempting to turn to a payday loan with rates well over 100-200%. Cash in 10 minutes and a chain for years to come!
Think about it this way, you borrow  $100 and weeks later you have to pay back $200. Since you have to raise $200, you are better off not borrowing and holding on to that potential $200. Borrowing now is a false economy and will only push you further into debt. At some point, the opportunity to borrow runs out, so you may as well tighten your belt now.
Sometimes when you can’t get a regulated loan, you might turn to someone you know (or a friend of a friend) who lends money. Don’t do this.
When you have no options and are struggling to make ends meet, that is when loan sharks rear their ugly heads. Do not borrow from anybody who is not regulated by the SEC This is illegal and will be a door to a living hell. If you have borrowed from someone who is unregulated, contact and cooperate with the police immediately.
If you are struggling to get food, pay bills and keep afloat – extra borrowing is not the answer. It kicks the problem further down the road. Instead, look for alternative support. With bills, you can negotiate with providers and lenders. With food, reach out to charities and local churches. Food banks and local relief is available in nearly every city and town.

Cut Up Credit Cards – Restrict Temptation

This part is quite fun.
Take out every credit card you have, a pair of scissors and cut every single card (apart from your debit card) into tiny little pieces. When you are good with money you can always get a new card (although you will probably have closed and settled these accounts by then).
You don’t need a credit card on hand. All this serves as is another temptation to feed the debt.
It’s time to starve the debt.
By physically cutting them up you cannot whip one out for a last-minute impulse buy.
Furthermore, go onto every online spending account you have; PayPal, Amazon, Apple, Google PlayStore, eBay and the like – and remove the credit cards you have saved on your online accounts.
From this day forward, if you don’t have it in cash or in your debit account, it cannot be spent.

Cancel Every Unnecessary Expense

I’m afraid to say, this part you may find uncomfortable.
You’re going to resist this at first, but trust me – it’s true. You do not need a SKY, Virgin, Netflix, TeVo, Disney+ or BT Entertainment package. I know it takes the edge off boredom, but if you’re paying out over $10 PCM for entertainment, you are bleeding money you do not have.
Some packages are north of $50-100 PCM. That is cash that can be used to dig you out of debt. It’s time to cancel Spotify, the gym, switch to Sim only for less than $10 and get rid of every unessential piece of entertainment. Even if it’s $2 PCM, cancel it!
I know this is brutal, but you have to sacrifice in the short term to thrive in the long term. You can rediscover different ways to be entertained. YouTube is free. Spotify let you listen with ads. Charity shops sell old DVD’s – find some classics that you love to rewatch. Or, perhaps choose an entertainment account (only if you can actually afford it) and stick with that platform.
Of course, you need some joy in your life, all I’m saying is readjust to stop spending money unnecessarily. You don’t need the latest phone, laptop and 6 pints on a night out. Lime and Soda will have to be your drink of choice until the debts are gone. It may be extreme, but extreme times call for extreme measures.
Learn to rediscover the joy in things that don’t cost the Earth.
If you can afford luxuries (and make no mistake, they are luxuries) – great. There is nothing wrong with having nice things. Just don’t get into debt to service massive corporate franchises that don’t care if you miss a meal.

Talk To Your Creditors & Explore All Options

Now you have a handle on what you owe and have reduced your outgoings, work out what those monthly amounts your need to pay to your creditors (the people you owe money) each month. If it is still more than you have coming in, write next to each creditor what you’d be able to pay to make all of this work.
If it’s $100 PCM you owe, you might find you can only afford $50. Make a note next to them on your list. Go through them all until you can see that your monthly income is balanced with your monthly outgoings (the same as or better).
Debt/Creditor Amount Owed Monthly Payment Notes & Amount I can Afford To Pay
Credit Card 1 $4,000 $200 $25 – Spoke to Jenny in Customer Service
Credit Card 2 $6,000 $250 $100
Utility Bill $800 $25 $10
Loan 1 $3,000 $100 $10

This is going to be tough and a little time consuming, but it’s absolutely worth a try. You now need to call each of those creditors (customer services) and ask to speak to them about the money you owe. Remember, it costs them money to pursue you so being proactive and pursuing them to solve the issue can only be looked on positively. They want you to pay them back and most companies will help you do it.

Speak with them about your situation, tell them that you are in financial hardship (providing that is true) and talk with them about setting up a repayment plan.
I would expect to see success with most, if not all of your creditors at this point. Hopefully, you’ve managed to agree on figures that work for your income and your expenses have now been reduced enough to see that your debt starts reducing.
If you’re still struggling at this point, or your mental health is so adversely affected that you need support, It’s time to reach out to supporting charities that specialise in helping people out of debt. For the UK, you want CAP – call them now and get the ball rolling. For the US it’s

Snowball Your Way Out

One of the ways to deal with debt, and the way I cleared my debt, is to use the snowball method.
Having listed your debts and negotiated repayments with your creditors, reorder your debts from the smallest amount to the largest amount.
If you’ve managed to restructure your finances to the point where your income is more than your expenses, try to overpay your smallest debt. If you can’t then just pay the minimum until it’s cleared.
Now, instead of enjoying that extra cash once the first and smallest debt is cleared, take the amount you were paying to the first debt and add it as an overpayment to the next largest debt until that is cleared. So if your first debt was $25 PCM and your second debt is $100 PCM, start overpaying that next debt with $125 PCM.
Debt/Creditor Amount Owed Monthly Payment Snowball amounts
Utility Bill $800 $25 <— One Paid, add the monthly amount to the next debt payment.
Credit Card 1 $3,000 $100 $125
Loan 1 $4,000 $200 $225
Credit Card 2 $6,000 $250 $475
Keep snowballing the payments onto the next debt every time the smaller debt is cleared until you are debt-free. Once you are out, all of the money you were paying back to lenders is now the money you can put into savings, or be used sensibly for other parts of your life and on loved ones.
Do not take on consumer debt again!

Control Your Cash Flow

If you’ve managed to get a handle on your finances, it’s now time to keep a tight choking grip on them so they never get away again.
I generally live by the principle of give some, save some, invest some, spend the rest. You can only do this properly when your debt is sufficiently low enough or completely gone.

Give Some:

Being generous is a character trait that you don’t want to lose, or you will turn into Scrooge from the classic Charles Dickens novel ‘A Christmas Carol’.

Save Some:

Try to put aside at least 10-20% of your income if possible. Most financially stable people aim for 3-6 months expenses in savings, and when you have that amount consider your account to be at 0.

Invest Some:

Only when you are consumer debt-free (or your monthly payments are well within an affordable range) can this be done. I highly recommend pursuing some education around investments and putting a small amount aside for your future beyond savings.
If you don’t have the time but have cleared your debts, sit with a financial advisor and consider building up a pot for sensible investments (not the crazy adrenaline-inducing day trading you see on tv); I mean the boring kind. When my finances became healthy, around 10% PCM was a good starting point into Index Funds and dividend-yielding companies.
If you are unsure about an investment, don’t do it. Never invest in something you do not understand.

Spend The Rest:

Easy now, don’t blow any disposable income without being thoughtful about it. Ask yourself ‘do I need to buy it?’ and ‘will it bring me joy? in the coming months. If you can afford it fine, if it jeopardises your financial health, forget it!
Check your balances in your bank every month (I did this every week, to begin with). Make sure that nothing catches you by surprise.
Guard yourself against signing up to any new subscriptions and avoid any offers of ‘3 easy payments’ – there is nothing easy about getting into debt.
Oh, and be generous. I know it was tough to dig out of debt but watch out that you don’t become penny-pinching as a result of this hard experience.
Please help make this article better – if you have some suggestions or experiences/tips of digging out of debt, comment below to share your story.
Romans 13:8 Let no debt remain outstanding except the continuing debt to love one another

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Julian Joseph

Author Julian Joseph

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