Editor’s Note: Since I have a very low boredom tolerance, and I suspect many of my readers do as well, it is time to bring the series on coping/dealing with debt to a close. There is so much ‘debt talk’ one can take; there are so many strategies one can discuss. To paraphrase, the rest is action! This is my last post under the Debt Movement; but if you have not joined yet do it! Do it now!

You know that we just paid off all our consumer debt; all shamefully and inappropriately high amount of it and we did it in three years. Naturally we published a post about it; gosh, of course I would do, I wanted to get on roof of the house, forgetting vertigo and all, and shout it to anyone who could hear, to the whole city and to the Universe. Frankly it wasn’t much better than when I got my PhD and was ready to perform open heart surgery at the drop of a hat (I am, as my son used to say, a Doctor who can’t make people better, mind).

All this, and similar posts around the blogosphere, got going very tiny debates about paying off large amounts. Someone, on a different forum, mentioned that his/her first thought was not ‘well done’ but ‘if you are so rich how did you get in such a pickle’. There are also mutterings, albeit very subdued, about the role of different approaches and their relative moral ground; in this respect it was implied that doing it through frugality and deprivation somehow has the moral high ground.

What I think about these discussions aside, they made me think and question paying debt off as a process not an act (an act it isn’t, trust me; if you have substantial debt it is an endurance affair). What I realised is that the process of paying off debt can be seen as consisting of three different stages. These are: stabilisation, expansion and acceleration. During each of these stages certain actions and approaches have clear priority.

But let me address these in turn.


You have just realised that you are in debt. Disturbing as it is, assuming that this is the ‘end of the story’ is likely to land you in even more trouble: getting in debt is only in very few case an act (e.g. some kind of disaster strikes unexpectedly). More often than not, getting in debt is a process that takes repeated incidents of your expenditure exceeding your income. There may be variety of reasons for that but this is besides the point: what matter here is that if getting in debt is a process it is more likely than not that it is continuing.

In other words, at the time you figure out that you are in debt you are likely still getting further in debt.

This is why the first stage is about stabilisation or making sure that you are not getting further in debt; this should be done even before you start repayments.

During debt stabilisation you need:

  • Information about all your debt; all your monthly income and all your monthly outgoings;
  • Your main focus is on making sure that your monthly income is higher than your monthly outgoing (including the minimum level of debt repayment);

This is most efficiently and quickly done by reducing expenditure. Please remember that:

  • There is a proportion of your expenditure that you have no discretion to change or not fast enough anyway. Usually, but not exclusively, this category includes your mortgage/rent, council tax, utility bills and, ironically, debt payments. It may be hard to change fast enough different contracts (mobile phones, for instance). So, leave this well alone: don’t waste your time and focus on what you can change.
  • All insurances deserve a very careful look – there are very large gains to be made here and you can benefit fairly fast, usually within weeks. When we did this we manage to reduce our monthly outgoings by a very substantial amount by changing our house and car insurance and paying it in one go (losing the battle but winning the war, since this leads to a temporary cash flow problem but reduces monthly outgoings thus buying you twelve months) and changing our life insurance. Generally, changing energy supplier has not been worth it until the last change to Coop-energy.
  • Variable expenditure, all food and small spends, is where the fastest gains can be made; and this are not insubstantial. Don’t stop doing things but do them differently. In our case, we stopped eating out (this actually meant we had better time with friends), changed supermarket, started cooking and baking (including biscuits and muffins), and eliminated waste. Pay close attention to what you personally spend – lunches at work, coffee, stationary (in my case an enviable collection of fountain pens).

During stabilisation, paying off debt feels more like sailing a boat (and a rather large one) than driving a car. Things turn very slowly and your only success will be that your finances will be pointing in the right direction – you will be bringing in slightly more than you spend. And enlightened frugality has a leading role at this stage.


Having stabilised your finances and ensured that you are not getting into more debt means that you can focus your attention on increasing your cash flow, or the difference between what you bring in and what you spend. This is best done by combining enlightened frugality and increasing your income.

Doing the latter sounds scary, I know. But there are probably very few people who have decided to increase their income and have not managed to do so – commitment and desire will make you see opportunities where there were only hurdles before.

I intend to discuss different strategies for increasing one’s income in separate articles. What is important here is that any increase of cash flow ought to be put on the debt; and just watch it crumbling.

At this stage income increase is absolutely vital; frugality takes a step back.


If you managed to increase you income during the expansion stage and put it on the debt you will notice that it starts going down very fast. This is because of:

  • Reaching the point where you are paying more principal than interest; and
  • Your earning continue to grow so there is more to put on the debt.

At this stage, increased income is the lead and frugality should take the backstage.


I hope that the ones amongst you committed to paying off their debt succeed; I wrote the articles under the Debt Movement hoping that you will find some use for them – that they will give you ideas and the fire that one needs to stick with it and experiment. If you were to need more help with it, consult a specialised site like debtfreedirect.co.uk: more information and assistance hasn’t hurt anyone.


You think your debt mountain is steep? You can do it! You just have to figure out how to traverse it and learn to run fell!

Good luck!