I was £40,000 in debt but got myself out of it – here is the rule I swear by and how it changed my life
A SAVVY mum has revealed how she cleared £40k of debt and changed her life by using one golden rule.
Money blogger Maddy Alexander-Grout shared how she scrimped and saved to make a financial comeback - and even runs her own business now.
Now the mum regularly shares money-saving and budgeting tips with her 31,600 TikTok followers.
It all started when Maddy finished university, having racked up huge amounts of debt after taking out four different overdrafts.
She told The Sun: "I got into a pickle fairly fast, I saw it as almost free money, I didn't care.
"My spending was out of control. I lived literally hand to mouth at the time."
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But the carefree attitude didn't last long - in 2005, debt collectors began to call.
Maddy recounted one scary scenario where a bailiff even showed up at her house.
The period was extremely hard on her, as she revealed: "My mental health was on the ground."
Concerned for her wellbeing and ready to make a change, Maddy moved to Southampton in 2008.
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She sought advice from the Citizens Advice Bureau on how to pay off her debt.
While she received many useful tips, it wasn't quite enough.
Instead, Maddy took to creating her own methods to try to make ends meet - and pay off the crippling debt she had amassed.
Maddy, known online as , revealed that she also lived off just 60 per cent of her salary while putting the other 40 per cent towards paying off her credit cards.
Here's how she broke down her debt and paid it off through clever tactics.
The 50/30/20 rule
Maddy started by seeking advice from Citizens Advice Bureau, where they suggested the 50/30/20 method to her.
This method works by helping you divide your earnings between your needs, your wants, and your savings.
And Maddy swears by it as her golden rule and top tip to save cash.
Fifty per cent is for all of your needs - all of your bills.
Thirty per cent is on your wants. You’ve got hobbies, you want to go to dinner, you want to go shopping, you want to go for brunch. You sure can.
The final 20 per cent is for savings and paying off debts.
But Maddy wasn't sure this would work for her - she said: "I worked out it would take me 60 years to pay off my debt this way, so I came up with my own method."
Instead, she adjusted the figures to create her own rule - 50/10/40.
Rather than spending 30 per cent of her income on her hobbies, Maddy lived frugally, using only 10 per cent on going out.
The final 40 per cent want towards paying off her debts.
She revealed: "I spent 5 or 6 years living on about £15 a week. I became the most frugal person."
What is the 50/30/20 rule?
Maddy and other savvy savers have sworn by this as their golden rule.
The rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must-have or must-do.
30% will be put aside for everything else that you might want.
While you should split up 20% between savings and debt repayment.
These might be things you don't need - but make life a little nicer.
It's important to remember, depending on your income and where you live, 50% may not be enough to cover your needs.
The key to keeping to the rule is being organised.
With bills soaring under a cost of living crisis, many are spending much more than 50% of their income on food, energy and more.
If you're able to save cash, remember to put it in a savings account that pays interest.
If not, it means your hard-earned cash is losing value day due to soaring inflation.
Maddy added: "I shopped for yellow stickers on a daily basis, to try to get a variety of foods.
"I also worked in recruitment so got a lot of bonuses - sometimes £3,000 at a time. The bonuses would go straight to paying off my debts."
Shopping for yellow stickers is a great way to find deals on food - especially as the cost of living crisis continues to affect families across the UK.
According one Marks & Spencer manager, there's even a very specific time you should head down to your store if you're hoping to nab a bargain on food - and it's likely not when you think.
Snowball method
Maddy also swears by the snowball method to pay off her debts.
Traditional financial advice has been to tackle the largest, highest interest debt first, helping to reducing interest payments - but the "snowball method" has the opposite approach.
It suggests starting with the smallest debts can be most effective for people who struggle to make a debt payment plan and stick to it.
Fans of the "snowball method" believe that paying off smaller balances can keep people motivated and on track as you get the regular satisfaction of knowing you have paid off a debt or closed an account.
Also, if you are being bombarded with debt letters and repayment calls, clearing some of the smallest balances can reduce the noise and stress of being in debt, even if the largest debt remains.
It can also to – some extent – help boost your credit score, says James Jones, head of consumer affairs at Experian.
He said: “If you can reduce your borrowing then this is good news for your credit score, regardless of which accounts you pay off first.
“This is because an important score factor is your total unsecured debt, so whichever route you take to becoming debt free is likely to ultimately lead to a similar score outcome.”
Things took a turn for the worse when a house fire broke out in the flat above Maddy's at the time.
Despite the damage, Maddy claimed on contents insurance, which saw her gain £15,000 to pay off debts.
Make every penny count
With £25,000 worth of debt still hanging over her head, Maddy continued to live frugally.
Insurance helped her pay off some of her debt, as well as bonuses from work, but she still had to save money wherever possible.
She also made some decisions regarding food to help her save cash - often making meals out of just bread and tinned tomatoes.
After 8 years of scrimping and saving, Maddy's methods paid off in the long run.
Maddy revealed: "I've been debt free since 2014.
"We bought a house at the end of 2014 through shared ownership - it was my only option due to my credit rating."
She's now a mum, and shares money saving tips with her fans.
Helping hand
If you are struggling with debt there is a range of help available.
Citizens Advice is a free and impartial service which will help you come up with a plan to get on top of your debt including which payments to prioritise and how to reduce your living costs.
The organisation's website has a on many aspects of debt, but you can contact them directly by phone, online or in person for more personalised help.
StepChange is another free advice service offering support and guidance online or over the phone, and it's completely confidential.
You'll need to provide details of your debts, income and household spending to get a clear picture of where your money goes.
Where possible, their advisers will help you come up with a plan to repay all your debts but in a way that you can afford.
National Debtline is a charity run offering free and confidential advice to people in England, Wales and Scotland.
You can or over the phone on 0808 808 4000, between 9am and 8pm Monday to Friday, and 9.30am to 1pm on Saturdays.
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An adviser will help you work out what you can afford to repay, and help you decide on the best solution for your debt.
The Sun has published a full list of the help available to struggling Brits.
