Debt Free: the plan

So now that we know what we want to do the “how?” comes into play. How are going to clear our debts and save for a deposit in 2 years?

I think a main thing to have in mind is that everyone’s journey is different and people have different priorities. We are a couple in our 20s so we want to still enjoy the next years and not spend them in a complete frugal living state.

We love travelling and that is a big priority of ours. So we will cut down on other things that are not as important.

First things to go are:

  • Shopping (clothes, accessories, makeup, whatever… to be honest we don’t do a lot of this, but it’s always worth noting)
  • Takeaways/eating out (our biggest money pit, by far)
  • Premium subscriptions (Spotify, NowTV, …)

After that we created a strict budget for food, transportation, gym and essentials. We did a lot of research and managed to reduce our household bills quite a lot and once our phone contracts are finished we will cut those back to a bare minimum too.

We have also transferred all of our bare bills to a rewards account that gives us back 3% of all of our bills and we will be adding those rewards to savings or using them to pay bills.

After all of that we gave ourselves a personal allowance of £100 each, which might not seen like much but it will only be for things like going to the cinema or other dates, small weekend getaways or stuff that we might just want. We could go 100% frugal and save those £200 extra a month, but for the sake of our sanity we decided we need some “treat yo self” money.

We have some extra pots of money coming in but those will go towards:

  • Travelling (we are going to Barcelona this month and Greece in May, but those are already paid); also going to see my family next Christmas
  • Annual expenses (insurances, emergencies, rainy day fund)

We are also both in line for promotions at work but have agreed to keep on living with our current salary and just save the excess.

Generally speaking we will be:

  • Spending 44% of our income in essentials (rent, council tax, water, electricity, insurance, buses and phones)
  • Using 39% of our income in debt repayments
  • 7% on food and 10% on ourselves

Once our debt is cleared (by September 2017) that will change to:

  • 45% essentials
  • 37% savings
  • 10% personal
  • 8% food

And this means we will have a 15% deposit by early 2019!

For other posts on our debt free journey click here.


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