A Jaw Dropping April 2014 Debt Repayment Update

Happy Monday! Although this April debt repayment update is a little late, it’s well worth waiting for! Because April has been more than amazing for us in terms of us getting out of debt.

I’m still reeling from what’s been going on with our debt situation recently, so I’m just going to lay it out there like this so I can believe it all over again. Here goes…

In January 2013, at the beginning of this journey, our debt totalled a massive £41,489. We faced our fears about debt and set about tackling it.

We reduced our debt bit by bit during 2013 and just in the last couple of months alone we had a bit of a breakthrough after receiving a refund for mis-sold PPI. Yes, we were ripped off with Payment Protection Insurance by a major UK lender a few years ago and recently received a refund. In case you didn’t know about this, feel free to read all about it here!

Anyway, in March, we reduced our debt by £5707.44, which meant our debt stood at £27,287.95. This was pretty incredible for us given the amount we started out with.

And now for the most incredible sentence I’m probably ever going to write on this blog… During April we managed to reduce our debt by a jaw dropping £12,750.21! This means that our total debt stands at just £14,537.74! 

Say what?! How?

Well, I mentioned in my February repayment post that the PPI refund we were about to receive was four figures, not five. I didn’t want to jinx anything (call me superstitious) so I didn’t specify the amount at that time, but I can now tell you that we received a payment of just over £9K. The entire refund was put towards the debts and there is not a single penny left.

The reason why we managed to eliminate more debt than the amount we received was because we also added some savings that we’d put to one side over the last couple of months whilst we were taking over our debt management plan ourselves (rather than using a debt management company).

We also managed to negotiate some full and final settlements with some of the debts that we paid off. The only reason we were able to do this is because some of these debts were bought out by debt collection agencies when we had to enter into a debt management plan a couple of years ago.

Debt collection agencies often buy the debt for a lot lower than it’s worth, sometimes as little as 4p for every £1 worth of debt if I remember rightly. It’s been two years since we started our debt management plan so a couple of the creditors had more than made their money back and although they were not obliged to, they were willing to settle at a lower amount.

I’m sure not everyone will agree with the fact that we made a couple of deals to settle our debts at a lower amount. But I feel happy about this decision. The hubby and I used this opportunity with our mis-sold PPI refund to get enough money together to make a couple of reduced settlements which were offered and negotiated by following a very fair process. We have been in debt for 15 years now and we don’t want to be in debt for much longer! This seemed like the best way to make sure the PPI refund went to good use.

We’d been approached by PPI companies offering to look into PPI for us for the last few years and we always thought nothing of it and said “Thanks but no thanks!“. I think the stars aligned for us that day when we decided to look into mis-sold PPI and put a claim forward on our own instead of using a PPI company to manage it for us. We could have ended up paying a 25% commission if we hadn’t gone down the DIY route!

I’ve also since thought that if we’d have received a PPI refund before we started getting serious about our debts, we probably would have spent it on a holiday and lots of nice things (i.e. totally not put the debts first at all). As soon as we realised that we were due to received a refund, we honestly didn’t even think about spending the money elsewhere. It’s been such a relief to be able to pay it off the debts!

Review of financial goals

Back in January, I stated that one of our financial goals was to reduce our debt down to £20K by December 2014. It turns out that very unexpectedly we’ve achieved that goal (!) so now it’s time to set a new one.

We have just one creditor left to pay and this £14.5K worth of debt consists of one bank loan. I can’t quite believe this, but we’re on the home stretch and the end is in sight! It makes sense therefore that our new goal relating to debt will be to pay off the remainder of our debt by the end of this year. May as well aim high!

How was April for you?