What can you do to pay off debt?
June last year, after a long and ridiculously expensive custody battle, I was awarded full custody of my daughters. And left with $23,403 worth of debt which I assumed I would clear quickly.
My plan was to spend some time with my kids not stressed about court and money, then knuckle down and clear the debt.
The time with my kids, travel including the Solomon Islands, Fiji, Vanuatu, Slovenia and Austria all happened for work. Then 2020 hit with a vengeance and derailed everyone’s plans.
So here I am, with $10,550 left owing of the original $23,403 debt and I’ll be sharing how I do it.
Disclosure – this post may contain affiliate links.
Why am I still in debt?
We started the year getting evacuated from bushfires followed by a double death in Vanuatu so we returned there for family. Covid was hitting about now but not fully serious. My site was hacked and my income dropped by 70%. (Read about our experience this year and tips to prepared for and overcome financial obstacles.)
After Vanuatu, we flew to the Solomon Islands to sort my partners child custody agreement, spend time with his daughter etc. Whilst there, when we were on an outer island, borders closed and we couldn’t return.
We got back to Honiara, set up house (bond, advanced rent, a few kitchen essentials etc) and waited for repatriation. When it came up, we had to forfeit the bond, I lost the cost of our original return flights and we had to pay a fortune for the new flights.
Being repatriated, we had nothing but our suitcases. No car, no house, no furniture. So we then had to set up house, bond and advanced rent again, buy a car, enrol my kids in school, get uniforms, stationery and laptops etc.
It is expensive to do all of that at once! But fortunately, I was able to continue paying debt slowly while paying cash for all of this.
What is my plan to clear debt?
My debt is to my parents which means I have been able to pay a minimum of $50 a week and more when I could. There’s no pressure but I want to pay them back asap. I know how incredibly fortunate I am to have parents who can help whenever we (my 8 siblings and I) need it.
When I announced my debt of $23,403 last year it included a course I was paying off. I cleared that in March but due to a huge dive in my income, I couldn’t roll the payments into the debt to my parents until now.
Check out 6 tips to pay off debt (including tips for dealing with debt collectors).
1. Increase payments
Now we are settled and pretty much set up, the automatic payments I have set up will be $100 per week instead of $50. As business continues to grow and I am more comfortable with our savings, I’ll increase this again.
2. Round down
Whenever I check my account, I’ll be rounding down the amount and transferring this to debt. What this means is every time I check my accounts, if there is an uneven amount e.g. $169.75, I will round down to the nearest $5 or $0. In this example, I would transfer $9.75 to debt.
3. Control my spending
I shared on Instagram and in The Thrifty Issue Facebook Group a little secret. Since falling pregnant, my groceries have skyrocketed. Cravings, forgetfulness and pregnancy brain have changed some of my habits resulting in spending too much.
We whipped out the envelopes and will be working in cash a little more to control some of the spending. Writing out our meal plans properly, automating as much of our spending/bills as possible and being more conscious of what we do will all help.
Also, I’ll be sending my 13 year old in to get things such as bread and milk so I can’t be tempted. She finds this most amusing.
4. Plan Christmas and school NOW
Christmas is only a few months away, then it is straight into back to school plus I am due with a baby then. Both my older daughters will be in high school next year which means a new uniform for my 11-year-old, laptop for her for school, school fees etc.
Plus both my girls are growing at a rapid pace right now. My 13 year old is the same height as me and same shoe size. My 11 year old is above average height and just started a growth spurt too. This means new clothes etc too. The plan is to have this sorted by the end of November. I do not want to be super pregnant trying to sort this. And then I can focus on debt.
As for education costs, I have a massive article outlining how to save on that and other kids expenses here – How to Afford School Expenses.
5. Make more money
Last month I set a goal to make an extra $2,020 by the end of the year. I managed to make an extra $2,704 in a month. I don’t have as much time this month as I did last month so will focus on what makes me to the most money.
This means more on business less on side gigs. However, you can check out how I made $33,277.57 on the side in 12 months, 43 ways for single mums to make money, 19 ways I’ve made money from home or remotely for ideas. Also, 99 Side Hustles for Aussies is an eBook I wrote outlining 99 ideas plus how to get set up, how to market and how to maximise income from each idea.
6. Evaluate my time
Procrastination has been a terrible habit of mine. I am absolutely fantastic at making myself appear busy when in fact, I am avoiding certain tasks.
For the next month at least, I am tracking my time closer and evaluating what I am doing, what I can improve. Often, I’ve resisted too much routine or structure because I crave freedom.
While doing Unleash Your Inner Money Babe the other morning, I restructured this procrastination money block of mine and came up with a little mantra.
“Routine and Structure give me Freedom.”
Applying this helped me today already. You might also want to check out 18 time-saving tips for busy mums to save 15 hours a week.
7. Mindset work
Loads of books and podcasts have helped me over the years. This year was so overwhelming I dropped the ball on my mindset work. I know for a fact, when I have an abundant mindset, meditate and clear my money or other blocks, money flows to me easily.
As such, I am doing the following:
Listening to podcasts I find useful such as Manifestation Babe, The Strategy Hour, Tim Ferriss, Red Table Talk and Relationship Advice.
Morning meditation and evening guided meditations. These help me focus, clear my head and concentrate better.
8. Review all expenses
I do this regularly and have often saved money as a result (see how I saved nearly $5,000 with one review here and how I reduced my expenses by $18,000 last year). Now that we have settled into our home and I have an idea of our electricity usage etc I can do comparisons. Our usage is already well below that for the average family home.
Other expenses I am reviewing include insurance, subscriptions I have, watching petrol closer and anything for the baby.
My budget and expenses
This year has been harder than previous years to budget for due to so many changes. In the past few years, budgeting was easier, although the legal bills took everything.
We moved into our place in Noosa a couple of months ago and set up so now I have a clear idea of what our expenses are. Below is a rough idea of my expenses. You might also want to read how to create and stick to a budget, as well as how to stick to a budget as a single income family.
Rent – $1,560 per month/$390 per week
Our place is perfectly located for our needs and a great size. Within 1km to the beach and both schools, all the shops, markets and everything we need are within 10kms as well. The only thing is the hospital and major shopping Centre are further away.
We pay $1,560 a month which is super cheap for our area and I am grateful we got our home when we did. So many are struggling to get a property at all due to the huge influx of people moving to the Sunshine Coast.
I won’t be doing anything to reduce our rent at this stage but might rent it out when we travel again. We have set up a veggie garden now which hasn’t been possible for years in the places I’ve lived. Check out 9 things to grow in your garden to save money.
Car expenses – $67 per week
Petrol, car maintenance and insurance are my main car expenses. Until recently, I lived without a car and have numerous times in my life. Read about how to live without a car.
It’s typically less than $50 to fill the car and that’s only every 7 to 10 days. It’s an older Corolla so insurance is cheap, as is maintenance which won’t be due until next year.
Food – Too much…
Groceries is where I have been blowing too much money so I am going back to my old methods of a clear meal plan, shopping mainly at Aldi or the sales only, buying in bulk etc. Find out how to get free and super cheap food here.
Our food budget has varied so much each week but realistically, if we stuck to our list, we wouldn’t be spending more than $150 max. This will be the thing I am tracking closest.
Bills – $220 per month
Electricity is $60 to $80 per month, the internet is $60 per month, phones are $120. We don’t have gas and don’t pay for water. Other than these, we don’t have many bills or expenses now.
Other – $125 per week
Kids sports, school fees, dinner out, entertainment etc can add up. My daughters 13th party cost a few hundred recently. Christmas is around the corner. Plus I have medical expenses happening due to the baby.
For tips on covering some of these expenses, check out these articles:
Saving and investing – 10%
My income varies so I set a minimum of 10% for saving and 10% for investing. For investing, I enjoy shares, we have property in Vanuatu and I will be expanding business investments. Right now, it is mainly shares though.
In terms of banking, high-interest rates at the moment are not high so you need to shop around. For me, I find it better to have my savings with a different bank. Up Bank offers $10 to new customers ($5 when you join and $5 when you use your card 5 times). Australia’s first smart bank, 86 400 offers $20 for the same with the code S7VL6WF.
For shares, I used Spaceship. Use the code S87CDXOZ8M when you join here and invest $5 within the first month to get another $5 bonus
So with all of the above, I feel confident I will be able to clear the debt quickly.