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Steps I Took to Reduce Debt and Get Back on My Feet After a Job Loss

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By Mary Greenhalgh

I’m Mary and I used to work for a big firm in London as a Legal Assistant, earning £28,000 a year. Life was good until the credit crunch. After that I lost my job, and ended up having to find a new firm to work with. Now I’m just earning £22,500 a year, but life has never been better. You’d think I’d be in a horrible mess – and I was at first, but losing my job was the best thing that’s ever happened to me because it forced me to learn how to reduce my spending, shop smarter and actually start saving money. I’d like to let you know what I went through and how you can use my experiences to reduce your own debt and save money.

To be honest, the first thing I did when I lost my job was to start freaking out. I had no idea where I would find work, and no way to pay my rent since I was living from month to month off my pay checks. I had student loans I needed to make payments on, a car payment, and a phone on credit from O2. My bills were so much that I couldn’t figure out where I was going to get the money to pay them all, even after I found work. So I consulted Doctor Google, and found out that I wasn’t the only one with these problems.

Of course as everyone knows, Google always tells you you’re going to die, but there was good news too. Even though it took me six weeks to get hired, I was able to find help and get back on track. While everyone’s situation is different, I thought sharing might help others that might be in a similar situation or who just needed to know that it could be done. This is what I learned, what I did and how it can help you if you need to get back on your feet and reduce debt after a job loss.

Step One: Find any job you can to get some income. The very first thing I did was to pick up a part time job on the weekends and a few nights a week as a waitress. It’s thankless work, but I got my tips in cash every night, which was what helped carry me through the worst of my unemployment scare. It also let me meet my immediate expenses and gave me some hope that I could sort out the mess I was in. Having some cash in your pocket makes a world of difference and even though I was working bad shifts, having something is better than nothing. As a plus, there was usually off time between split shifts, which gave me a chance to look for other work (and everyone over 20 waiting tables is always looking for other work). Plus I got free meals, which saved money on my weekly shop.

Step Two: Find a real job in your field or profession. The next thing I did was to start looking for work in my profession. Unfortunately I wasted days filling out job applications and online CVs on every job site and hire site I could find. I barely got anything back from them, which was depressing to say the least. I had more luck with the government’s Universal Jobmatch site, and that gave me some hope. They let me quickly find places that needed my skills and cut through the mess I had been dealing with in trying to find work with the other sites.

Step Three: Cut your costs as much as possible. Then I changed my flat. I was paying £900 a month for a little one room, but I found a flat share for £400. It wasn’t great, but it was good enough, and let me save £500 a month from what I had been paying. Plus I didn’t have the costs of my utilities and Internet plan, which also saved me money. I also sold my car, because it was more of a convenience than a need. It took me almost two months to sell it, but I got everything in order with my papers, and made sure to tell DVLA that I had sold it. I ended up with an extra £800 after the sale, and the loan was closed in my favour, which was great for my credit.

Step Four: Take a hard look at your spending habits. The other thing I did was to take a hard look at my credit cards and my spending habits. Part of that involved researching sites out there that had good tips, which showed me that I was actually paying interest on my pants. Seriously, who does that? It’s just crazy when you think about it. Since I had good credit, I was able to get a Tesco 0% card for 18 months, and transfer my balances over. I lied a little on my application and said that I still had my old job, but that let me shift all of my high interest payments to a no interest card and start paying things down without the interest. That made a huge difference in what I had to pay out every month.

Step 5: Start saving money to protect yourself. Finally, after I’d reduced my debt, cut costs and put myself in a better financial position, I took a look at what I had been spending before. By cutting my rent payment, moving to a flat share, reducing my outgoing payments and consolidating debts, I was saving more than £1,200 a month. That was almost half of my previous yearly salary when looked at over the course of a year. When I realized that I almost cried. Not because I had lost the salary before, but because I had just jumped into this crazy financial circus without even considering how much money I was wasting. Three years of wasted money was more than £30,000 I could have saved if I had just known better. Now I save every week, and I’m on track to save more than £6,000 this year, despite my pay cut.

Step 6: Look at your long-term financial goals. I used to just live for the moment. I had a great time, but if I could change it I would definitely have focused more on my future. Now that I’m saving, I can see that in a few years I’ll have about £20,000 saved up. That will let me buy my own flat, which means I won’t be wasting my money on rent every month. That means I will have the security of a home, and as I build equity in it, I’ll be able to get a secured loan if I find myself in a jam. That’s something I could have done before too if I had known better, but no one ever taught me how to save money or even pay attention to debt. I just lived for the moment, but now I actually feel like I am living. I’ve got security and a plan for my future.

Reducing debt isn’t easy, especially if you’re pushed into it by a job loss or unexpected change of circumstances. The thing is, looking back I can see so many ways I could have done this before I found myself in a pinch. Now I’ve got enough extra cash to do what I want, and to go out when I like – but I’m always aware of how much I am spending and what else I could do with the money. I’m no longer binge shopping and I always buy things on sale when making my weekly shop. These are things you can do too, and they’ll make a big difference in not just how you live, but also the quality of life you enjoy.


11 Comments

  • Reply Laura |

    What are these last 2 posts? Sponsored posts? Guest bloggers? Some context would be nice

  • Reply Kfh |

    I find it a bit troubling that you lied on your credit application. That could cause you a whole lot of issues especially in the legal field. I would not be so cavalier about it even though you were in a tight spot. I would not encourage someone to do that. I’m glad you paid off your debts and are in a better place now but your story left me a bit leery.

  • Reply debtor |

    I think it’s a new feature they might be testing…but I agree some context would be helpful

  • Reply Meghan |

    I agree that the context was confusing and the lying on a credit app would not be recommended (I didn’t take it as advice, just her telling her story), but I think with this particular guest post. Mary managed to go from living paycheck to paycheck to making the difficult changes and choices necessary to not only get out of debt (I’m assuming) but to manage to live below her means going forward on a lower salary! To that I say, congratulations Mary!!

  • Reply Meghan |

    That should have said “with this particular guest post, focusing on the negative means no one has seemed to notice something worth noticing.”

So, what do you think ?