I’ve knocked £10k off my debts and here’s how you can, too

Lockdown measures will have affected everyone’s income and outgoings in a completely unique way, with some people working from home and saving on commuting costs, others furloughed on 80% of their wage, others still made redundant and self-employed people having lost huge swathes of work and income.

Just over a year ago, I had over £27k of personal debt, and £0 in savings. After reaching a breaking point in my relationship with money and finally realising that something needed to give, I started the slow process of getting back into the black, using my Instagram account, @myfrugalyear, to document the journey.

A year on, we have knocked almost £10k off what we owe, as well as building a small ‘emergency fund’ of around £1,000, something which I grow steadily more relieved about as the current pandemic rumbles on. The human cost and the economic cost of the coronavirus crisis cannot be separated from one another, and the looming economic crisis caused by locked is a worry for many of us. All of this means that saving during lockdown, where possible, is crucial – especially for women.

It’s important to note that there should be no shame in having entered this crisis with a precarious financial situation; none of us saw it coming, and many of us were simply trying to do our best to stay on top of day-to-day bills before it struck.

Many people may have lost the ability to save at all, but for those of us who can, there has never been a more important time to start putting some cash aside. Here are some ways to get there:

Consider purchases carefully

Even as we all start to feel the pinch financially, the allure of online shopping has never been greater, with loungewear and home workout gear suddenly looking very desirable as we struggle with lockdown fatigue and anxiety. It can be easy to get sucked into a world of comparison on social media, feeling we need a bread maker or expensive slippers in order to ‘succeed’ at lockdown, but make sure that any purchases you do make are considered.

Think about whether you might need that money in a few months’ time, whether you really want or need the think you’re about to add to cart, or whether you’re simply bored, or trying to distract yourself from what’s going on. Sleep on it, if you need to – you may find that with a bit of distance, you realise that that £30 would be better saved for a rainy day than spent on a temporary fix.

Don’t waste money saved on travel, childcare or socialising costs

If you find yourself in the fortunate position of being a little better off during this crisis, make sure that any money saved on not having to pay for petrol, nursery or Friday night drinks isn’t frittered away on impulse purchases (see point one). This crisis will have given many of us a new insight into where our money disappears to in the manic rush of everyday life, so if you’re able to, budget for a higher food and utilities bill and stash the rest in savings.

Save the day you get paid

Being able to do this successfully relies on having a budget that works – i.e. knowing what’s coming in, what’s going out and what’s left over afterwards – but it’s the best way to make sure that any money left over after bills doesn’t just disappear on nothing. Putting money into your savings just after its paid into your current account is a great way to save higher amounts.

Use a saving app

If discipline isn’t a natural strong suit of yours (as it certainly isn’t of mine), using a saving app like Chip or Plum, where small amounts are automatically transferred to a savings account every few days, might be the best way for you to save. Their clever algorithms calculate what you can afford to save, and you can also do savings challenges, which can be more motivating as they make the process ‘fun’. The popular ’52 Week Challenge’ – where you save £1 the first week, £2 the second and so on – will result in £1,378 saved over the course of a year.

Save a little, even if you have debt

If you just have a little debt, it’s probably best to focus on paying it off quickly, but if you have a significant amount, it’s worth saving a small amount alongside. Of course, if you’re paying interest on your debt, this is likely to far outweigh the interest on your savings, but being able to pay for unexpected costs with cash, rather than credit, will help to keep you in a positive mindset. There’s also the risk that, if you focus on paying off debt, your lender might suddenly drop your limit and you’ll be stuck if something does come up.

Its ok if you’re only just managing to save throughout this crisis; everybody’s circumstances are different, many industries are suffering and nobody knows what’s around the corner. But if you do have the opportunity to save at the moment, make sure you do – no matter what happens next, you’ll definitely be grateful for the cash later on.

Leave a Reply

Your email address will not be published.