25k debt to 50k in the bank in 10 months

People make New Years resolutions for fun. I’ve stuck to mine when it was clear I had no other choice. It was 6:30pm on New Years Eve 2006 and I logged onto my bank online to see how much I could spend at the New Years Eve party at the Middlesbrough working mans club, with my friends and family.

I got a shock. It told me that I was over my over-draft limit and so I had no cash available. The worrying thing was that my next pay cheque wouldn’t arrive until the end of January and I still had rent and other bills to pay well before then.

Fortunately my Shop Codes site reported excellent traffic and sales from October and so my business bank account had a few thousand sat in it. I transferred some money over as emergency cover and then set about to rebuild my finances.

On the 4th January I sent myself an email detailing the debt I was in that included one overdraft, one loan and six credit cards. I wasn’t concerned about the loan but it was the credit cards. One card alone raised its interest rate from 9% to 16% and the other banks were soon to follow.

Each month I was paying a significant amount of money just paying off the interest and so my debt wasn’t getting cleared. In fact I was spending so much meeting minimum repayments that I had to keep using the credit cards to shop for essentials.

As my business had been regularly bringing in good revenue for a few months I gambled that my bank would give me a big loan to cover all my outstanding debts, including a 9,000 debt to themselves.

So I applied for a 25,000 loan during January online rather than seeing someone at the bank face-to-face. If I failed the application I’d have to get in touch with a debt management agency. As it was, I got an instant approval and the money was soon in my account.

It would be repaid over 3 years. My repayment would be less than the minimum payments I was paying towards my credit cards. And it would cost over 2,500. So I was effectively 27,000 in debt at the start of this year.

Instantly I paid off all my credit cards and attempted to close four. That wasn’t without complication. So I still have a few unused with credit balances.

I then closed all my online accounts where I could pay for anything with a previous credit card, such as gambling, book clubs or magazine subscriptions.

I am now only 26 months away from being debt free. That sounds a lot but it would have been 260 months minimum in the previous situation.

The picture is also far more rosier. I don’t actually struggle any month now and get by on my day job monthly pay. I’ve also had three fantastic holidays this year including back-to-back holidays to Portugal and Ibiza and a two-week stay in Hong Kong.

I’ve only had to use a credit card once in the whole of this year and that was to fund my Middlesbrough season ticket at 400.

A milestone came for me in September when I realised just how far I’d turned the corner. For the first time ever my total amount of money sat in my bank accounts covered all of my debts and more. So I was above water albeit that some would be paid to the tax man at some point.

Plus, with the news that Google are sending me a cheque for 17,000 in the coming weeks, my business bank account will soon have well over 50,000 sat there until the next tax bill is due.

50,000 is a milestone that I’ll be quietly celebrating with cash up front, with my friends at the working mans club.

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17 Responses to “25k debt to 50k in the bank in 10 months”

  1. Excellent and well done.

    The key now is remember the taxman, the VAT man, to keep some aside “just in case” – oh and reward yourself too but keep your feet on the ground!

    That’s worked well for us for 10 years nearly (although I’m not confessing to how much is in the duck accounts).

    Jason

  2. Great post. Brilliant how you’ve turned your money situation around 😀

  3. Well done mate what a fantastic story, just think how much better off you would be if you supported Leeds our season tickets are much cheaper.

  4. A great story, and one that can be an inspiration to many.

  5. Great post and well done 🙂

  6. […] I know you’ve seen my previous post by now and so anything above 200 makes a dent, especially after a holiday. […]

  7. Great news – really well done for realising what you had to do and then doing it.

    Shame you had to buy a boro season ticket though 😉

  8. I know this is a bit of an old post but it was too impressive a read to not post a little comment. The way you turned your finances around is amazing. I hope by the time I reach 10 months I can say I’m in the same position!

  9. […] I started the year at rock bottom, with over 20,000 in debt and struggling to pay off the crippling credit card interest rates. I successfully applied for a loan, stopped using my credit cards and then worked solidly on my website. By day I work for a telecommunications company and by night and evenings, I was working hard on making my website a success. […]

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  11. A fantastic and very inspiring story. Its shocking to see how far a little research and work can take you.

  12. Exactly one year later in January 2008, I paid off the loan in full and saved a bit of cash in the process. I am now officially debt free and it’s a great feeling.

  13. Well done! Now if you will just explain how to get Google to pay out $17,000 for the rest of us that would be a perfect article 😉

  14. The 17k was a refund from Google. We all received them (differing amounts) and they came pretty much as a surprise to all. Happy days 🙂

  15. Great story…Very well researched and organized. I appreciate the time and effort!

  16. Terrific post. Glad to see somebody taking action against their growing debt problem and WINNING!

    Not sure you should have disclosed the fact you brought a Middlesborough season ticket though… that lost all your credibility!!!

    Only joking 🙂

  17. […] 25k debt to 50k in the bank in 10 months […]