How To Get Started Paying Off Your Debt

This is a guest post by the amazing Francesca over at frompenniestopounds! She’s had experience with debt, and overcoming it, so I thought who would be better to give some advice on how to start paying off your debt!

The Frugal Frenchie

When you realise that you have a bit of a debt problem, it can be a bit overwhelming in knowing where to start tackling it and making a plan to get rid of it completely!

Paying the minimum payments each month is the slowest possible way of doing it, not to mention spending an absolute fortune on interest costs. Paying off your debt is one of the best feelings ever, as crossing the monthly payment amounts off your budget is so satisfying. Furthermore, without debt payments,  you are freeing yourself up for better things, such as money spent on holidays, retirement, having fun, and security for your family.

Add up all of your debt

This is the first step, but it can definitely feel like one of the scariest. Ignorance is bliss, and knowing that you will have the numbers in front of you and can’t avoid them, can be pretty overwhelming, and quite frankly, upsetting. It will all be worth it, however – once you’ve started tackling the debt you’re on your way to getting it sorted and being financial free again!

How To Get Started Paying Off Your Debt

Go into your internet banking and look at the direct debit/standing order section, as this is where the monthly debts that you pay the minimum payment for will be. Have a look at your bank statements (either online or paper versions) and check through to see if there are any other payments that you make towards loans etc that you may not have direct debits set up for. Do you pay some of your debt in cash, e.g. for kids classes?

Write down all of your debts and how much you owe in total, and how much the monthly repayments are currently. Don’t worry about what order to put them in yet as we will be tackling that in the next step.

Find out the interest rates

This is really, really important, and not something that you should skip despite the temptation. It’ll probably mean going back through all of your paperwork to find out when you took the debt out and which interest rate it was on.

Go through all of your paperwork, and if you can’t find it, make sure that you find out the interest rates and when they run out/increase. If you can’t find the paperwork then you will have to ring up the company in question and ask them.

How To Get Started Paying Off Your Debt

This is essential as you could be paying out a ton of money on something that you don’t need to be! Interest means that you will end up spending potentially thousands more than you need to, especially as interest rates aren’t fixed – so they will likely increase after a certain period of time… definitely look it up or ring the company!

Interest rates are also a good way to look at which debt to pay off first – do you pay off the debt with the highest interest first, which will probably make sense mathematically, or do you go for the smallest debt first for the psychological benefits? This is a completely personal choice, there’s no right or wrong answer; whichever is of biggest priority to you.

Once you have found your interest rates for each of your debts, it may be time to look at doing a balance transfer. Please note that this is not for everyone, and you need to be sensible about this. You need to know that you will not – under any circumstance – give in and go back to getting into more debt.
If you are 100% committed to paying off debt and know that you will not slip up, you can look at getting a 0% balance transfer. I personally did this for one of my credit cards when I was paying off debt, and it saved me loads of money in interest.

How To Get Started Paying Off Your Debt

However, doing a 0% balance transfer means taking out a new line of credit – which not everyone will be eligible for. A good resource for this is Money Saving Expert, where they will be able to tell you if you are likely to be accepted or not, and the best ones that are out there.

Even though a 0% balance transfer sounds amazing, don’t forget that it’s like most debt – the interest rate can change. There are usually set dates when the 0% interest rate will vanish and the interest rate will go up again. This is something to bear in mind if you do decide to go down this route – will you pay it off before the 0% runs out?

Create a budget

Budgets are one of the most efficient ways of making sure that your money is working as best for you as it possibly can. After all, no-one wants to spend their money on pointless stuff, do they? If you could spend less money on your electricity bill and then have that extra money for a night out or something fun (even paying off debt, I promise you that it does turn into a bit of a game!), you would, wouldn’t you?

When it comes to making your budget, start with all of your incoming money – salary (after tax), benefits, child maintenance etc.  This can be a bit more complicated if you don’t get the same amount every month coming in but don’t worry, just put down the average or minimum amount that you will definitely be receiving.

How To Get Started Paying Off Your Debt

The next step is the one that most people find the trickiest, because if you don’t already have a budget or aren’t keeping track of it, you may not have a clue how much is going out of your account each month. I’m talking about adding up all of your expenses. Go through your bank statements (either on your internet banking or paper statements), and add up everything – this will enable you to get the best picture of the money that is going out of your account each month. If you guess on the variable expenses e.g. groceries, you could leave yourself short.

Your internet banking should also have a section that lists all of your direct debits and standing orders and the dates that they come out, but don’t forget any expenses that you pay for annually such as car insurance.

My favourite way of budgeting is the zero-sum method – which is where all of your money is allocated. So for example, say you have your income at £1000 per month and your expenses at £800 (in an ideal world mine would be this low!), this would leave you with £200. The temptation to spend this £200 on whatever takes your fancy is too strong, so instead of leaving yourself that money floating around, you allocate it – for example £100 into your savings, £100 towards your Christmas fund.

Reduce Your Expenses

Now that you’ve got all of your expenses listed, you can see exactly how much is going out of your account. But what if you could have less money going out each month? You can do this by cutting out things – such as cancelling gym memberships, cinema passes, TV packages etc, and you can also do this by switching providers on what you currently have e.g. TV, internet, electricity etc.

It is quite overwhelming to try and reduce all of your expenses at once, so perhaps pick one to focus on at first and see if you can get it cheaper elsewhere.

Earn Extra Income

Now that you’ve got your expenses as low as you possibly can, the fastest way to then get rid of your debt is to increase the money that is coming in. A great thing to do is aim to have one or more income streams dedicated solely to paying off your debt – that way you don’t have to reduce your expenses any more and feel too deprived.

Ways that you could earn extra income could be:

  • Matched betting
  • Mystery shopping
  • Answering surveys
  • Dog boarding/pet sitting
  • House sitting
  • Blogging
  • Freelance writing
  • Entering competitions
  • Selling your stuff on eBay, Gumtree, Facebook marketplace, car boot sales etc
  • Re-selling (where you buy stuff cheap and sell on for higher prices for a profit)

Are you on a debt payoff journey? Are there any tips that you could add to the above?

Tips for passing your driving theory first time

Having been a week since I passed my actual driving test, this is being written a bit late! Nevertheless, for those currently learning, I thought I would give you some tips for passing your driving theory first time. Hope it’s useful!

The Frugal Frenchie

Tips for passing your driving theory first time

1) Get some experience

I know that in some countries, you’re not allowed to start driving lessons until you pass your theory, however, I found it ever so helpful to have some lessons first. Not only does it help you familiarise with road signs naturally rather than from a book, but it allows you to develop a sense of awareness to help you with your hazard test.

2) Download an app- and practice

There are many apps out there that can help you with your theory. I was personally recommended a more official DVLA one that costs £5, however being the cheapskate I am, I opted for a free one. You can get apps that are specialised in some topics over others, such as just signs/ general questions/ Highway code etc.

This is the one I used. Personally I downloaded several at first to find my favourites, but by all means, have a look around yourself. I found this one helpful as it had several easy tests and then you could go to a higher level if you wanted.

3) Observe and ask

I am now 20, turning 21 this year, however, most of my friends passed their driving test around 17-18. I had no idea that it’d be so long until I started to learn, so in preparation, I would always ask questions about “how do you know…” “what does this mean…” etc.

I think it actually helped my theory, especially as, were it not for driving with my boyfriend in the New Forest, I wouldn’t have remembered the country signs so well!

4) Watch some youtube videos

Personally, I am a visual learner. I remember things by how they looked on the page or by symbols or videos etc.

It’s impossible to practice for a hazard perception test or to know what to expect, however, the DVLA posted an example online, and there are a few driving instructors who post tips and tricks too.

5) Keep calm and use your common sense

If you’ve prepared, then you know what to expect and what to look out for. For the hazard perception test, keep your wits about you, use your common sense for the signs (sometimes we overthink in tests!) and just keep calm.

It’ll be over soon! Good luck!

Advice with Annelies: catfish

This series will answer people’s questions or worries, either that have been asked to me or I wanted to give my opinion on. Of course, these are just suggestion, and if the problem is severe, you should seek professional help or advice. This addition’s topic of Advice with Annelies: catfish.

I’ve experienced two catfishes now. I am slowly losing faith in the male kind. I just can’t take it anymore, far too many f**kboys, mind games and catfishers for me”

Sounds like you’ve received the bad end of the stick in regards to men, which, admittedly sucks.

Advice with Annelies: catfish Having personally binged the series “Catfish” many times, I realise how bad it can leave the victim feeling so I hope that after having discovered those two bastards, you can grow and successfully move on with your life. They’re not worth your time or thoughts! I hope that the following advice is useful for you.

“I am slowly losing faith in the male kind.”

Don’t let this be the case! This is a very very small proportion of the available single men out there, so don’t let this leave a sour taste in your mouth. There are many things you can do from here, one being maybe avoid dating apps for a while, just allow you to “detox” a little and go back to it after with a fresh mindset.

If it does start affecting you mentally or your self-esteem, don’t hesitate to talk to someone about it or rant to people close to you to get it out of your system. Remember that the people who have to pretend to be someone else, probably aren’t too confident or fond of themselves either, so don’t let this impact your perspective or opinion of men in general. They’re not all bad, and you will find somebody out there for you!

Advice with Annelies: catfish

“Far too many f**kboys, mind games and catfishers for me”

Another thing you could do is try and find a new way to meet guys. Perhaps joining an association or club somewhere where you could meet somebody with similar interests? Or maybe taking a risk and trusting your friend’s judgement to set up a blind date for you?

In terms of the catfishers, a good way of finding out whether somebody is catfishing you is to ask to do a video chat. If they continually make up excuses then you’re right to have suspicions. Having spoken with you, something you did very cleverly, which I would recommend to others, is to do a reverse image search, which is where you take an image that the person supposedly took of themselves, and see if it comes up with any matches elsewhere on google.

I really hope that your future experiences online are more positive and that you don’t ever get catfished again, you deserve better. Do keep in touch!

The Frugal Frenchie

Top 5 money lessons to know before graduating

We don’t learn about money in university, or in younger education at that. It’s sad but it’s true – no one teaches us how to pay taxes, how to budget and what a mortgage is. And yet, money is essential! No matter what career you get into, you’ll be earning a salary and using money to buy food, transport, etc.

So if the schools won’t teach us, we need to teach ourselves. Based on the several months I’ve been working and researching with Financially Mint, here are the top 5 money lessons you need to know before graduating.

Top 5 money lessons to know before graduating

1. Money is just a tool

My life changed when I realised I didn’t have to spend my entire life working for money at a job I didn’t like just to pay the bills and have a roof over my head.

Money is your tool to live how you want. You are the one who chooses what to do with it. If you want to use it to travel the world, that’s on you. If you want to use it on going out every weekend, that’s also on you. It’s about making priorities and deciding what you really want. Once you understand that, you realise that money is just a tool to achieve your goals and dreams; what you really need is willpower and a desire to do better.

And the key to making sure you use your money correctly is financial education – what we’re not taught in schools. Learning how to invest, how to start a side-hustle, how to save money. These are things we need to learn by ourselves, and the more we study them the better we get at it. So get started in college!

2. Invest, invest, invest

The key to growing your wealth: investing.

Investing is stowing away your money somewhere safe and watching it grow. It’s starting off with £500 and seeing it grow to £100,000 over 20 years. It’s what lets people retire early and always have cash for emergencies.

If you don’t want to start investing in college (check my how to get started in uni post), I recommend at least learning the basics and preparing for investing once you graduate. Invest into low fee index funds and put away some money every month. Watch your money grow into something useable for the future: a car, a house, retirement, etc.

Investing is one of the pillars of financial education, so I recommend every student to get started as soon as possible.

Top 5 money lessons to know before graduating

3. Control is key

Control means knowing where your money is and what it’s doing at all times. It means not having a heart attack every time you open your bank account (it happens) and it means knowing where to put your money once you get your paycheck.

This starts with a nice and simple budget. In my 6 day course, that The Frugal Frenchie has reviewed, we go back to the basics of budgeting: allocating your money to the right expenses and making sure you reach your ambitions/goals.

Being in control of your money outflows and inflows before graduating will make your entry into the workforce so much easier. You won’t have a pressure to get a job immediately (Emergency fund to the rescue!), you’ll know what kind of salary you’re looking for and you’ll know exactly where to put your money every month.

4. Don’t be in debt

Debt can good and can be bad. But when it’s bad, it’s pretty bad. The bad debt: credit card debt and payday loans. As a student, you hopefully will have very little debt (student loans are a separate case), and you really want to keep it that way. Credit card debt accumulates and will get more expensive every time – pay off all your debt and make sure you know what you’re doing if you take on any more debt.

Student loans are another story altogether. In fact, they’re so different that some people prefer calling your student loan debt a contribution, simply because the situation is so particular. Before graduating, take a look at your student loans and decide whether you want to pay them off. This post on Should I pay off my student loans? will give you an idea of how to make a decision and plan appropriately. And as always, do your research.  

Top 5 money lessons to know before graduating

5. Pay yourself first

The best part of the budget: yourself.

This means allocating a certain percentage of your income to yourself, to your goals. And you can start this in college: the minute you get your paycheck/loan/money each month, allocate 15% to your goals, to your emergency fund, to your debts. That 15% is what will get you out of the rat race, out of living from paycheck to paycheck.

If you start paying yourself first in college you will actually be prepared for adult life (shock horror). You’ll be way more flexible and really be able to pick the job you want – because you’ll have an emergency fund, you’ll be debt free and will have the motivation to keep working on your goals.

Again, this starts with the mighty budget. At the time of calculating your budget from your income, the first thing you do is allocate that 15% to ‘Savings’. And then the rest is for your expenses! No need to worry about saving up more.

Understanding these 5 lessons on money will get you prepared for the world after graduation. Heck, it’ll even get you excited – you understand that you don’t have to be stuck at a job you just tolerate, you can achieve that flexibility to help you find the job that works best for. It all starts with being in control and financially educated.

Review: Free finance course for students

Through my old money blog, I have made friends with other money bloggers and learnt so much through them. Recently, my friend Araminta from “Financially Mint,” has put her financial knowledge into a super helpful, FREE, 6-day course. As it has an emphasis on helping and teaching students, I thought it would be a great idea (for my benefit too) to try it out and give you a review!

The Frugal Frenchie

Day One: Planning

In day one of this email course, you’re encouraged to create a plan and set goals for yourself. Emails across the next few days will guide you and give you ideas on how you can reach those goals!Review: Free finance course for students

Day Two: Lower Spending and Budgeting

To get you started, one of the most commonly used words in finance – budgeting- is covered. Why is it important? What can it tell you? Araminta also shows you, through pictures and instructions, how you can keep track of your expenses, savings, debt, income and how to set a budget.

A big emphasis is placed on cutting down your unnecessary spending, and if not possible, Araminta has you covered with a guide to student discounts as well as a long list of available ones out there!

Day Three: Increasing your Income

I love how this course is catered to students. It’s always annoying when people assume you can just get a full-time job or something of a higher wage, we’re students! It’s not always possible!

Catering to this, day three of the course gives you several options for side hustles that you can manage alongside your studies, as well as a clear guide to helping you get started on each one. They’re super easy and really well explained- so don’t worry if it’s all new to you.Review: Free finance course for students

Day Four: Pay Off Debt

As I personally have no debt, bar student fees (I didn’t take out a maintenance loan), day four was really interesting for me. I learnt about interest and how potential payments could be made in future, and how to get your head around it. There were also some helpful tools attached to the email such you can try calculating a future payment plan for yourself.

Day Five: The Savings

You’ll see that throughout the first few days, there will be a continuous mention of “15% in your savings account.” This is explained in more detailed at the beginning of the budgeting email, so make sure you go back to it and understand that before day five!

In this email, there are heaps of good ideas on what to do with your savings. This includes investing ideas (with case study examples), with some relevant articles and resources and then explaining what a “FU Fund” is and why it’s beneficial to have one.Review: Free finance course for students

Day Six: Financial Education and Resources

The last day of the course is helping you to continue to grow your financial education. There is a free resource pack available through “Financially Mint,” as well as a list of other places you might grow your knowledge from.  Once you start budgeting more seriously than just on pen and paper, this email has you covered with some great recommendations for budgeting apps that you can try and have a whizz at.

Overall, as you can imagine, I found this course extremely interesting and above all, very helpful. If you’ve never really thought about your finances or don’t know where to start, it’s ever so helpful having tonnes of information in 6 clear, consecutive emails.

If you’d like to join the course, simply click here and let me know what you thought afterwards!

Advice with Annelies: loneliness

This series will answer people’s questions or worries, either that have been asked to me or I wanted to give my opinion on. Of course, these are just suggestion, and if the problem is severe, you should seek professional help or advice. Here’s the first Advice with Annelies: loneliness.

“I am 28 years old. I feel very alone and lonely most of the time. What should I do to overcome this? I don’t have friends or close relatives and am home 24/7.”

Of course, everyone’s situation is different, but to some extent, I understand how you feel. Last year, I studied a year abroad, away from family, and although I spoke to people at uni, I didn’t have anybody that I would see outside of it. I stayed at home whenever I wasn’t at uni, and only leave the house for grocery shopping.

In retrospect (because isn’t that a joyous thing) I think there are a few things I would change, which hopefully could help you.

Advice with Annelies: loneliness

“Am home 24/7.”

I really went wrong here. When in a situation of loneliness, you have to go out. It’s what keeps you sane. I realise when not at university, sometimes it can be harder to meet people and have an incentive to go out but have a look at what’s around you.

It’s important to get out of the house, even when there’s no particular motive to do so. A change in routine and scenery, is, to be blunt, good for your sanity. Having fresh air, taking a walk… it all helps relax your mind, put things into perspective, for some, it even acts as a form of meditation!

“I don’t have friends”

If you have a particular interest, look up on Facebook, or through the local library, whether there’s an association or club for it: if you like reading, see if there’s a Book Club… that kind of thing! Surrounding yourself with like-minded people is a great way to make connections as you’re guaranteed to have a common interest and a conversation starter!

Furthermore, if you work or are in education, make sure to attend as many events or trips as you can. If there’s a work do, make sure you attend, and you could use the excuse to speak to new people by asking if they’re going etc.

Advice with Annelies: loneliness

“I don’t have… close relatives”

Thankfully, we live in a world where it’s possible to keep in contact with people across long distances. If they have access to a phone or computer, you can skype them or just ring them and hear their voices.

If worst comes to the worst, you’ll just have to wait impatiently for the next letter to arrive, but it can make them feel all that more precious!

I wish you all the best!

The Frugal Frenchie