A single mother who paid off £24,500 worth of debt in 17 months and saved more than her annual salary is now helping others become debt-free.
Malaika, 35, from London, had built up thousands of pounds worth of debt over 12 years as she became obsessed with buying the latest ‘in things’.
Although she knew she had some debt, the special educational needs learning support worker had no idea that it had built up to £24,500, only realising in April 2020 when she began saving for a car deposit.
For Malaika, the debt crept up over time – largely thanks to childcare costs, easy access to ‘buy now, pay later’ schemes, and loans that offered 0% interest on household goods.
The mum, who has a 13-year-old son and a six-year-old daughter, also became obsessed with buying clothes and other items.
“I used to love to shop all the time – and I would always want to buy something,” Malaika, said.
“I used to work in retail and every new season we would have to buy new items, so it then became a habit to always want the latest trends – and social media and adverts don’t help either.
“My debt wasn’t all due to clothes shopping.
“I’m a single mum and things crop up – childcare costs, new clothes from the children as they grow out of them so fast, school activities, food shopping.
“Before you know it, you’ve used your credit card or taken out a loan to pay for something.
“Looking at the final amount was a very big shock to me as not everything’s in one place – you have a credit card, an overdraft or you buy a sofa on credit.
“The small amounts you pay each month seem manageable, but it’s when you add the total figures together when you decide you want to pay it all off that you start to panic and wonder how you will ever get out of debt.
“Before you know it, your minimum payments are £200 to £300 per month and you don’t realise that you’re then only paying interest – you’re not paying for the product, in some cases.
“I wasn’t financially savvy.”
Malaika, who currently rents her home, wanted to secure a mortgage in the future but knew she needed to clear her bills first.
The mum decided to set herself a deadline of February 2022 to be fully debt-free – giving herself 22 months to clear the hefty sum.
Using an Excel spreadsheet, she worked out the minimum payments on her credit card and found that it would take her 35 years to pay off her debt.
The calculations left the mum feeling “defeated” before she’d even started. she admitted.
She said: “When you see that, it freaks you out.
“You start to wonder if you will ever be debt-free. [I wondered] is it easier to just pay off the minimum and wait it out.
“When you can’t see the light at the end of the tunnel, you already feel very defeated.”
But Malaika was determined to get control of her finances.
The first step was joining an online debt-free community on Instagram, where she connected with others who were setting themselves similar challenges.
Lockdown restrictions also became a blessing for the mum as it meant she wasn’t able to go shopping.
She said: “I became razor-focused and said ‘things have got to change to break the cycle’.
“We were in a pandemic so I couldn’t see my friends, couldn’t go out and shop – everything was closed so I knew it was the right time to pay off as much debt as I could and start saving for the future.
“By the time lockdown started, I had just received a refund for a car that I had bought broken – that was my first debt payment sorted and helped me start tackling my debt.”
Malaika wrote down all of her debts and outgoings and created a budget that she could stick to while still saving money.
She also got financially savvy by reading finance books, learnt new ways to save money through the online community, and started selling unwanted items.
To tackle her bad credit rating, with a credit card at 49.9% APR, she found a charity-run finance company, Credit Union, and managed to get a lower rate loan – helping her save interest.
She said: “I didn’t want to take out any more credit and dent my credit score anymore – I wanted to find ways of building my credit score to be in a better position and hopefully get a good mortgage one day.”
Malaika also gave herself small targets – such as cooking meals using only foods she already had in the house, or finding 10 items around the house to sell – which spurred her on.
She set a meal plan to help budget food costs for the week and got her children involved so they would find the activity more fun.
The family cooked together, making budget-friendly meals such as curries, spaghetti Bolognese and lasagne.
Malaika said: “The changes weren’t easy, but what change is?
“It was necessary. I sat down with my children to explain what I was doing and why, and how it would benefit us in the long term and teach them the value of money.
“There really is not a lot of help in terms of getting people out of debt.
“Debt has a lot of shame associated with it.
“Some of our debt isn’t because we are ‘bad’ with money – sometimes we don’t have a savings pot big enough for larger purchases or aren’t earning enough to save for them.
“We weren’t taught financial stability, emergency funds or what credit scores are in school.
“I knew I didn’t want this to be my life or my children’s lives.
The online community acted like her “cheerleaders”, keeping the mum motivated and “in the zone”.
The shopping-loving mum worked to change her mindset from wanting to purchase things to wanting to pay off a chunk of her debt each month – which she said became her “main focus”.
She picked up tips online, such as using cash envelopes to budget spending and skipping coffee dates in favour of putting the money aside.
Malaika said: “What you don’t realise as you’re doing this is that adding even those tiny amounts are reducing your interest.”
By September 2021, after just 17 months, Malaika had cleared her £24,500 debt.
She added: “I couldn’t believe it – it took me a whole month to let it sink in.
“I now feel more in control of my finances and have kept the same habits as I did when paying off my debt, as they are fundamental in keeping track of my money and helping it grow.
“I’m a big believer in showing your children the right way to do things rather than just telling them.
“Actions speak louder than words and this will be a great foundation for them to build on.
“I wanted them to look at money in a different way, and for that to happen I had to look at it in a different way.
“Now I am debt-free, I have more options and choices.
“I’m more in control and feel lighter, less anxious and not living above my means – I’m excited to see what else I can achieve.”
Now, Malaika is focusing on building her emergency fund and saving for a deposit to buy a home – a challenge she is “excited” to take on.
She also has a savings pot dedicated to fun, so she can enjoy life while still continuing to save.