I went from being homeless and £12k in debt to running a business – here’s how

SINGLE mum Euphemia Senar thought she had hit rock bottom when she was made homeless and facing £12,000 of debt - but now she’s out of the red and runs her own business.

Euphemia, 39, from London, said she had “always been bad with money” when she was younger, taking out credit cards and missing her monthly repayments. 

Starting a family young with her then-husband put a strain on their finances, and Euphemia’s marriage broke down - which meant she had to move into a hostel with her three kids.

She struggled to keep on top of paying her bills as a single parent, falling behind on her hostel rent and bills.

By 2019, her debt stood at £12,000, the biggest of which was £6,300 of rent arrears to her hostel.

Other debts she owed included over £2,400 to a debt collection agency for a number of debts including an unpaid credit card, Very bill, and mobile phone bill, and outstanding gas and electric bills totalling over £1,400.

“I got a job teaching science in a school and things seemed brighter, but I knew I needed to pay back the money,” she said.

“I didn’t even know where to start, I even considered filing for bankruptcy. I couldn’t see a way out of my debts, it seemed like an overwhelming amount of money.”

But using the snowball method to pay off her debts and taking up two extra jobs, one of which was her own business, helped her to become debt free in under two years. 

Snowball and cash clipping method

The first step Euphemia took to start tackling her debts was to create a budget.

She wrote down every single debt she owed, how much income she was getting per month, and started to prioritise which bills and debts she needed to pay off first.

“I prioritised my rent, council tax, all essential bills, then paid a portion of the money I had left to pay off my debts.

“Armed with my budget, I went to my lenders to ask for a more affordable repayment plan.”

Once she had set up monthly repayments she could meet, she then used the snowball method to pay off her debt.

This is where you pay off the minimum repayments on all of your debts, and with the extra cash leftover, put it towards paying more off the smallest one you owe.

Although experts usually recommend you pay off the debts with the highest interest rate first so you don’t pay more on big fees, Euphemia chose the snowball method to keep herself motivated.

“I paid off the smallest first to feel like I was making progress - I thought I could get debt free more quickly then,” she said.

To help her keep on track, Euphemia also used the cash clipping method to monitor exactly how much cash she had.

Cash clipping works by taking money out of your bank account and divvy-ing it out into separate pots for different uses.

Once she had paid all of her bills that came out of her bank via direct debit, such as her rent and debt repayments, Euphemia took out the money she had leftover and put it into envelopes. 

She had 17 envelopes for different savings - for example, her grocery shopping, car maintenance, and her kids’ birthdays.

But there are risks to using this method - you could lose an envelope and your cash, or miss out on interest you could get putting it into a savings account.

Cutting down on bills

To make sure she could put as much cash as possible towards paying off her debt, Euphemia began to see where she could cut down on her outgoings.

She managed to half her shopping bill from around £80 to £40 a week by switching to cheaper supermarkets. 

“Instead of shopping in Tesco and buying whatever we fancied to eat, I went to Aldi and wrote down a pre-prepared list of food we needed,” she said.

“I planned what our meals were, and knew exactly what I would be paying.

“We ate noodle and pasta-based meals, which were cheap, and as we’re vegetarian, we didn’t buy any meat which is really expensive.”

She then focused her attention on cutting her energy bills.

Disabling the programmed timer on her heating system and just turning the heating on when she needed it helped her save money, while switching off appliances at the plug helped lower her bills.

She managed to save £20 a month with these energy saving tricks, reducing her bill from roughly £140 a month to £120 a month.

Cutting down on unnecessary trips and planning her commute to work better helped her shave money on her fuel bills. 

She arranged her after-school tutoring sessions so she could pick up her kids from school at the same time, and stopped driving to see family and friends at the weekend.

This helped her halve her fuel bill from £140 to £70.

Extra income

As well as her day job working as a teacher at a local primary school, Euphemia got hundreds of pounds in extra income per month by juggling two other jobs.

She held private tutoring lessons for maths and science after school from Monday to Thursday, giving her extra a month.

Setting up her own business in May 2020 also helped her boost her income. 

She sells budgeting tools, like planners and stationary, on Etsy, and can make up to £6,000 a month during busy periods.

The business has become so much of a success that Euphemia was able to hand her notice in at the school she worked at to focus on growing sales in May last year.

It helped her pay off her debts much sooner, and she became debt-free in October. 

She is relieved that the debt she owed, which once felt overwhelming, is gone.

“I’m still dealing with impulse spending and buying unnecessarily, so I’m working hard to making sure I’m keeping on track,” she said.

She said anyone can tackle their debt and clear it if you have the right mindset.

“So many people are in same position - hearing other people’s stories has a big impact on your life.

“Research and look into debt help yourself - even looking at hashtags on Instagram can help you.

“With bills going up, a lot of people are in the same boat as you - it’s good to talk to friends and family for support.”