I’m a mum and cleared £60k worth of debt in just eight months – here are my four top tips for anyone in the red
A MUM who was drowning in £60k worth of debt has shared how she cleared it in just eight months after four long years of denial.
Kumiko Love had maxed out five credit cards, ten student loans and a car loan in her 20s.
And after an expensive divorce which left her as a single mum in 2015, she thought she’d never pay off the daunting sum.
Now 33-years-old, she is an avid budgeter and looks to empower other mums to achieve financial stability.
“My mission is to inspire women and people to live a life they love on a budget they can understand and afford,” she says.
Kumiko shared her five-step strategy to financial security with CNBC Make It.
Beat the fear
Kumiko was in denial about her debt for four years after her divorce, being officially declared debt free in 2019.
“With debt, it’s a matter of getting over being scared,” she says.
“And not only that, it’s about looking at the big picture.”
She advises people to be honest with themselves about the numbers and find out the “true, true balance” of their debt before trying to clear it.
That means recording every credit card you took out or tenner you borrowed from your friends, as well as interest you’re set to pay and deadlines.
Find your motivation
The second step to reaching your financial goals is to figure out what motivates you to be a better spender.
“You have to get to a place where you finally say ‘No more, I’m done just making minimum payments’,” Kumiko says.
“You have to feel that anger. You have to get mad at your debt. You have to have those feelings and that passion to truly be motivated to pay it off.”
She urged others to focus on why they want to pay off their debt, rather than how much they need to pay.
Track everything you spend
“I always tell my readers to not even think about creating a budget until you have tracked your spending and have that full awareness,” Kumiko says.
“If you’re tracking your spending, realistically tracking every pound and you’re creating that plan for your money every single time you get paid.
“You are then aware of where you can cut expenses and throw more money toward your debt or financial goals.”
She recommends documenting everything you spend for a full 30 days and using it as a benchmark to figure out a budget and reflect on your spending habits.
Order your debt repayments
Kumiko advises finding a “logical order” to repay your debts in, rather than letting the money come out of your account willy-nilly.
“Often, when we want to get out of debt, we start throwing all of our extra income to all of these different debt buckets,” she explains.
“Whether it’s a car payment, student loan, mortgage, credit cards, personal loans,.
Instead, she says to start by drafting up a step-by-step plan for all of your bills and then make decisions about where your debt repayments should go, how much should go and how often it should go.
To determine which debt is most important for you to axe, figure out whether you want to pay off the debt with the highest interest rate first or start with the smallest account balance to motivate you for the larger chunks.