I cried after spending £23,700 on holidays and Micheal Kors handbags – how I became debt free in two years

INSTEAD of celebrating on New Years Eve two years ago Aimee Starck found herself in floods of tears as she faced up to the reality of owing £23,700 on credit cards and car finance.

But just over two years later the now 23-year-old trainee accountant from Hertfordshire is debt free and saving up to buy a house.

As an 18-year-old on a low apprentice wage Aimee took out credit cards and signed up to expensive car finance deals. 

She also splashed money on expensive holidays to New York, Dubai and Rome and Micheal Kors handbags. 

“I wanted to keep up with friends. If they suggested doing something I would always say yeah lets go and I’d put the money on my credit cards,” Aimee told The Sun. 

“After visiting New York in December 2017, it was New Year’s Eve at my sister’s house. I remember crying realising I didn’t even earn as much as I owed. 

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SO THIS HAPPENED TODAY 🎉🎉🎉 I may literally only have £0.68 in my bank account (I get paid on Wednesday) but I am officially debt free!!! I remember sitting on New Years Eve 2017 thinking and crying that I was in debt of £23,700. I decided that was enough and that this time next year I was going to have less debt then I did then. I did that! I paid the last £3,700 to my mum today, I scraped everything I had (hence only £0.68 left) but I am so proud of myself! I wish my dad had been here to see this because he loved seeing me pay my debt off as much as I did 🎉 now the next challenge of saving and keep having no debt (except hopefully a mortgage one day)! #saving #savings #frugalliving #savingmoney #savemoneyandmoneywillsaveyou ##blogger #blogging #ukdebtfreecommunity #financialfreedom #debtfreecommunity #finacialplanning #budgeting #debt #budget #accounts #debtfreeaf #money #frugal #savemoneylivebetter #frugalliving #personalfinance #finance #debtfreecommunityuk

A post shared by Aimee (@moneysavvyaimee) on

SO THIS HAPPENED TODAY 🎉🎉🎉 I may literally only have £0.68 in my bank account (I get paid on Wednesday) but I am officially debt free!!! I remember sitting on New Years Eve 2017 thinking and crying that I was in debt of £23,700. I decided that was enough and that this time next year I was going to have less debt then I did then. I did that! I paid the last £3,700 to my mum today, I scraped everything I had (hence only £0.68 left) but I am so proud of myself! I wish my dad had been here to see this because he loved seeing me pay my debt off as much as I did 🎉 now the next challenge of saving and keep having no debt (except hopefully a mortgage one day)! #saving #savings #frugalliving #savingmoney #savemoneyandmoneywillsaveyou ##blogger #blogging #ukdebtfreecommunity #financialfreedom #debtfreecommunity #finacialplanning #budgeting #debt #budget #accounts #debtfreeaf #money #frugal #savemoneylivebetter #frugalliving #personalfinance #finance #debtfreecommunityuk

A post shared byAimee (@moneysavvyaimee) on

“I was on £17,000 a year, so even if I worked for a whole year I wouldn’t have been able to pay off my debts. I knew things had to change.” 

Then in January her dad Wally was diagnosed with terminal cancer. 

Aimee added: “I remember thinking that if I didn’t have my parents I wouldn’t be able to support myself. 

“I was ashamed of it. Being in debt is quite scary and frowned upon”.

Aimee mustered up the courage to tell her parents who were incredibly supportive. Every month Aimee would sit down with her dad – who was now mostly bed bound – to discuss how much she’d paid off and her plan going forward. 

She took out a Tesco loan to consolidate what she owed and while she had got herself in quite deep into debt, she still had a good credit score as she always paid on time. 

“I got a loan on a low percentage of 5.9 per cent and it was a no-brainer as my Barclays credit card was 38 per cent,” she added.  

She cut up her cards and threw them away. She set a strict monthly budget and only allowed herself a little treats and even overpaid her loan so she got rid of her debt earlier than she’d previously agreed. 

Aimee was lucky to live at home, as she was able to supercharge paying off her loan with every spare penny. 

She said: “It would be a lot harder if I didn’t live at home. I’m very lucky that I did.

“My parents never had debt, they’ve always saved up and bought their cars.”

“I think the main thing for me is I wish there would have been more restrictions in place, how was I able to get £5,000 on a credit card?.” 

Help available for those in debt

IF you're struggling with debt, here are some options you might want to consider

And if you're unsure what the right option is for you, speak to a free debit advice organisation, such as Citizens Advice.

Debt management plan (DMP)

A DMP is an informal agreement so you can stop it at any time and resume the normal debt repayments, or adjust your payments if your circumstances change, like you lose your job.

It ends when you've paid off the debt so it could last for decades.

Many firms charge a fee for the service, either upfront or one that's incorporated into your monthly payments.

If you're struggling due to coronavirus, contact your DMP provider so it can liaise with lenders on your behalf.

Debt relief order

If you're struggling to meet your IPA or IPO repayments, these can be updated if your income changes. You must contact your trustee immediately if this happens.

Equally, if you get a lump sum while you’re paying an IPA or IPO, you may be asked to make a one-off payment from it.

A DRO is way to have your debts written off if you have under £20,000 of debt and no assets.

You have to pay a £90 fee but you don't have to make repayments and after 12 months your debts are written off.

You can't apply for a DRO if you're a homeowner. It will negatively affect your credit score for six years and it may be difficult to get credit during this time and details will be published publically.

Bankruptcy

Bankruptcy is a last resort if there is no other way to repay your debts. It usually lasts a year but it can be up to three years.

A bankruptcy practitioner called a trustee will take control of your assets and sell them to repay your debts.

If you can afford it, the trustee will ask you to make regular payments towards your debts from your income through an income payment agreement (IPA).

If you can’t agree on payment amounts for an IPA, the trustee can apply for an income payment order (IPO). If you don’t meet these payments, the trustee can then apply to extend your bankruptcy.

It is much more difficult to get credit after bankruptcy and your credit rating will be affected by up to six years.

You could lose your house, possessions and some professions won't let you work if you've been made bankrupt.

If you own a business it could be sold and the details of your bankruptcy will be published publically.

You have to pay a £680 fee to go bankrupt.

 

With just £4,000 to pay back, Aimee’s dad passed away age 70. 

She said: “Becoming debt debt gave me something I never thought I’d have. It gave me this thing with my dad. I’d say look at how much I’ve paid off now and he’d be really happy. 

“When it got to the end I said to him actually going to be OK. I said to him you don’t have to worry about me. 

“I think he knew I’d get there. He was proud of it in the end.” 

The Sun spoke to Barclaycard about its lending policy, and it told us that it continually monitors and adjusts its cardholders’ credit limits to ensure that they are not borrowing more than they can comfortably afford.

Customers can control the amount that their credit limit increases via the company's website or app.

A spokesperson for Barclaycard said: “We are sorry that Ms Starck has had cause to complain.

“We have reviewed the application we received in 2016, and we are satisfied with our lending decision based on the information Ms Starck provided in the application, and the data we obtained from her credit file at the time.”

Meanwhile, a spokesperson at American Express, which had also given Aimee a credit card, said it takes it lending decisions “very seriously”.

“We undertake a comprehensive scoring process which utilises hundreds of data points to assess an individual’s eligibility for a card and what their credit limit will be.

“Examples include their credit bureau score, personal and household income, and joint account information, as well as other details included in their application form.”

We also spoke to Volkswagen, who had arrange Aimee's car finance deal.

A spokesperson for the company said that Volkswagen has an automated lending approval process which assesses both creditworthiness and affordability risks of every customer before it approves a financing agreement.

This means it considers how likely a customer will make repayments and whether a customer can afford it over the whole term of the deal.

“We carry out a number of checks, including engaging with credit reference agencies, to ensure the customer can afford to make repayments and not negatively impact the customers’ overall financial situation,” they added.

Amy has now been debt free since January this year and now she’s saving to buy a house. 

She added: “I wish my dad had been here to see it because he loved seeing me pay off the debt as much as I did.”

Blogger and author Clare Seal and her husband racked up £27k debt due to wedding costs and childcare – but managed to pay it back.

Charity Stepchange has warned that millions owe £2,000 extra due to coronavirus and that the UK is in ‘debt crisis’.

Here are eight simple steps which can help you tackle your debt.

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