Sunday 19th May 2024

I used the lockdown to blow an £1,800-shaped hole in my debts

I have a confession to make. I’m a financial journalist who has not always practiced what he preaches.

Over the past decade, I have written countless articles urging people to shop around for better savings deals, switch energy providers or simply set a budget.

And yes, I have done a great deal of those myself. But I, like many other people, got a little lazy and let my finances slip.

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The odd credit card here, a personal loan there. Living in London on a journalist’s salary with, let’s say, an ‘active’ social life, had taken its toll.

Despite that, the real crux of the issue here is that I didn’t do enough about it. Hands up. Full disclosure.

You think that shifting debts from card to card or chasing the 0% deals on offer means you have done enough.

And, don’t get me wrong, that is absolutely the right thing to do. But that method of debt management is most effective when you then make a concerted effort to chip away at your debt, which I didn’t. Instead, I carried on paying the bare minimum, which was a mistake. 

That’s not to say I was struggling, but a quick look at my balances left me, at one point, more than a little concerned.

A year or two back I decided to turn things around for good. However, in a perverse way, the coronavirus was the best thing that has happened to my finances in a long time.

I feel guilty saying that, with so many losing their jobs and, even worse, their lives.

But the truth is Covid-19 has given me the opportunity to press the reset button on my finances. I am sure there are a lot of people out there who would like to do the same – and there is no shame in that.

Here is a very quick guide to how I managed to pay off £1,800 of debt during lockdown.

The obvious stuff

The lockdown has meant no holidays, care-free shopping sprees or even a much-missed trip to the pub. For me, personally, that has meant a drastic reduction in spending.

In the pre-lockdown world (ah, remember that?), I was shelling out £200 a month on commuting, £140 on shop bought lunches and perhaps double that on socialising.

So, in an instant, I was £600 a month better off, not taking into account the slightly bigger weekly grocery budget to satisfy my mid-afternoon sugar cravings.

That meant, as long as I could resist blowing this extra dough like 50 Cent at a Bling Convention, I could use the money saved to attack some of that nasty credit card debt.

And once the lockdown extension was confirmed, I instantly shipped another £600 into my savings. Cha-ching.

Just get rid of it

But I wasn’t finished there. This savings malarkey had almost become a game. How much extra could I get? Perhaps I could sell some stuff to boost my pot?

The gaudy, good-as-new, baby blue Nintendo Switch, which I had perhaps played three times, was the obvious candidate. The ultimate impulse purchase. Time to go.

Thankfully, a good mate of mine, who is a gamer, took it off my hands. And while I made a small loss, it was another £150 to add to the pot. Lovely.

What is that? And why am I paying for it?

Ah, subscriptions. Great until you get bored of them and forget to cancel the monthly or annual fee.

It was time to cull some things.

Gym membership? Arrivederci. Amazon Prime? Off you go. Now TV? I don’t even remember signing up to that; you’re gone.  

Another £45 per month into the pot.

Extreme penny-pinching

During normal times – i.e.: pre-lockdown – my usual routine would see me swing by the supermarket most days on the way home from work.

Now, being a responsible citizen ‘n’ all that, I have tried to limit my trips to the supermarket.

Instead, I have tried to use the mountainous mass of frozen food and tinned goods that has been gathering dust (or ice) in my flat.

In fact, I have been so insistent on using what we have first, on becoming an ‘ultra-saver’, that I am pretty sure I have forever changed the way my girlfriend looks at me – and not for the better. Ah, well.

This one has been harder to quantify but between the supermarket budgeting and just generally spending less on a daily basis, I was able to add another £400 to the pot.

This is getting addictive.

Stopping it from all happening again

I’m well aware that, sooner or later, everything is going to get back to normal and my outgoings will go up considerably.

But I’d like to think my eyes have been opened by the lockdown, from a financial point of view, and that I will no longer go back to the wasteful spending of before.

However, I am human, and therefore can be a complete and utter berk at times. Therefore, I decided to seek out the help of technology.

That’s why I decided to go so-called “Full Monzo”. By this, I mean I switched to the online bank entirely, rather than just using it for day-to-day spending, like a lot of people do.

Why? No other reason than I like the way it helps me budget and separates my bills from my savings and my everyday spending.

Before, I go on, this isn’t a product plug for Monzo in exchange for cash. They haven’t given me any – unfortunately.

And, of course, Monzo is not the only way to help you take control of your finances. In fact, there are other, much more comprehensive apps out there to help you budget, such as Emma, Yolt or Money Dashboard. This just works for me.

What was all of this for again?

Ah, yes. The debts. The very reason I started this saving spree in the first place.

I’m glad to say I recently took that £1,800 and paid off my overdraft, a small outstanding personal loan and a big lump of credit card debt.

It may sound small, but it has made a difference. And while I don’t want to sound self-congratulatory during such bleak times, I hope the message you take from this is that now could be the perfect time to sort out you own finances.

Think of it as a small positive in very negative times.

Undercover Money Reporter

If you want to spend it, save it or make it, I’m here to help. I'm the Undercover Money Reporter and I’ll tell you how you should really manage your money.

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