Back to Black. Getting Out of Debt and Staying Out

Going back to this post, where I talked about being £6,000 in debt, I thought some people might be interested in the detail of how I paid it off.  "Rev T and some good friends helped me set a repayment plan and stick to it"

This was before the Internet.  It was an article in a paper or magazine about a book.  How to Get Out of Debt, Stay Out of Debt and Live Prosperously by Jerrod Mundis.  The book is based on the principles of Debtors Anonymous (DA).  

The main difference between DA and some other good sources of advice, is DA acknowledges for some people, debt is an addiction.  It's going to take more than a good budget to get them back to black.  Mundis has been there and bought that. He works through every excuse and demolishes them all.  It's not an easy read, but it's a worthwhile one.

The first thing is to acknowledge that debt is you have a problem with debt.  My name is Mrs Tubbs and I am a compulsive debtor. 

Once the problem is acknowledged and owned, it's time for the next step.

Commit to not incurring any new debt today.  Just today.  Yesterday has gone and life doesn't come with an undo button.   Tomorrow isn't here yet so you don't need to worry about it.  

The book sets out a re-education process.  A spending detox, debt repayment plan and a refocusing of priorities from shopping / debt to family, friends, career etc.

 A new person that's more than just the balance on a card.  As no one talks about money ever, let alone debt, it's easy to assume that you are the only person in the world with this problem.  You’re not.

There reason about why some people have this issue and others don't btw.  Rev T was born with the ability to track his money to the penny.  He can rattle off his bank balances and if he doesn't have the money, he stops spending until he has.  

Here’s a brief outline of DA's process: 

• Work out the cost of monthly essential out-goings.  Housing, utilities, food, transport to work.  What’s left is for debt repayments, savings and non-essential spending.

• Create a monthly spending plan that reflects outgoings.  £x for housing, £y for food, £x for clothes etc.   Unlike some regimes, the book allows for small items of non-essential spending and saving.  Only within the confines of the monthly spending plan. Identify ways to reduce outgoings and increase income.  

• Go through the bills and work out how much is owned.  And who too.  Try not to freak out!  

• Work out a repayment plan based on priority.  Size, interest rate or the lender.  Pay any mortgage / rental debts first.  Then the ones with the highest interest rate or the biggest. 

• Contact the people you owe money to ask them to accept your payment plan.  Many will accept as some money is better than none.  As each debt is paid, money is freed up to go towards other debts, outgoings and savings. 

• Track all spending.  However small.  Group spending into categories so you can see how the spending compares to the plan.  This helps you keep on track and adjust if needed.  Each night, add the daily totals to the weekly totals so you know what money is left for the rest of the month.  The commitment to not incurring new debt means this is the only money you have. This keeps you on track with the spending plan.

• Keep a monthly running total of how much you owe and how much you’re repaid.  Watching the balance decrease motivates you to keep going.  You can see it working!

• Cut up any credit or store cards so there won't be any new debt.  If they’re still there, they’re a temptation.  If they’re used, then the balance won’t decrease.  This was the hardest part of the process for me.  I hid my credit card in the underwear drawer.  It moved to a plastic bag of water in the freezer.  By the time I’d defrosted it, I’d lost interest in whatever it was.  Rev T had it for a while.  Eventually it got shredded.  I cried. 

Once all the debt is repaid, continue taking it one day at a time.  Keep to the spending plan and tracking.  The book assumes this is done in conjunction with regular DA meetings, a sponsor etc.  There weren't any groups near me.  I did it with the aid of some great friends.  Lisa, Laura and Karen and Rev T.  One day at a time.  

Years later, I'm still doing it, one day at a time.  Some days are better than others, but if one day goes badly, I know I did it yesterday.  That helps me feel able to give it another try tomorrow.

If you think that your issues with your finances are more than just being crap at budgeting, then DA may help you.  If you think you just need a better budget, then DA may help you create a realistic one and stick to it.   

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