Life after a Debt Management Plan

Life after a Debt Management Plan

Have you spent years paying off a Debt management plan and found yourself wondering what life might be like once you’re done?

I know I did.

I spent alot of the last 15 years in debt and eventually, found my way to a Debt Management Plan.

If you are unsure what a Debt Management Plan (DMP) is, take a quick look at my article below:

What is a Debt Management Plan

You can also find a more in depth view of my situation and the reasons why I ended up with a DMP.

How I got out of a 15 year debt cycle

These articles may seem irrelevant, however, I believe that you need to know what my situation was to be able to fully appreciate where it has gone.

If you have time, I would strongly suggest reading those articles first.

This post contains affiliate links. If used, these pay a small commission to this site, at no extra cost to you. It helps us keep the lights on and continue to provide you with awesome content. If you are interested in any of the products shown on this page, using one of our links would be greatly appreciated.

Quite understandably, if you have never been in a large amount of debt, then you may have no idea how it feels.

Frankly, why would you.

It is a really tough concept to comprehend for a lot of people.

If you have never suffered with debt, be it due to your own mistakes (like me) or a low income, then you may not understand what all the fuss is about.

Not knowing how you are going to pay the bills every month or how you are going to feed yourself can be such a stressful position to be in.

I applaud those who are in that situation and have kids, I found it hard enough just with my fiancee and I.

Having been through a Debt Management Plan, I can tell you that while you are going through the process, life is tough.

With a DMP, all of your income and costs are taken into consideration.

Everything down to how much you are spending on food, entertainment, clothes etc.

On the initial setup, it really is like having someone go through all of your finances with a fine tooth comb.

Don’t get me wrong, the feeling once it is done is amazing and for me, it was such a weight lifted off my shoulders that I knew it was the right decision.

If you are considering a Debt Management Plan though, be under no illusion that you will have money spare every month, you will not.

Once you have gone through your finances with your DMP provider, everything, and I mean everything left after your expenses will be split up and divided between your creditors.

The key is, and the thing that you have to (and I did) rememeber, is that you are in a really tough position.

Being in a large amount of debt for most people, is a bottomless well.

If you do not do something about it then it’s not going to get any better.

Reside yourself to the fact that the next few years may be a little tight but you will be better off in the long run.

Getting your debt paid off can be a long term commitment but better that than a life of debt.


Life during a Debt Management Plan

After what we have already discussed, this may not come as a suprise to many.

Life during a DMP is tough.

It’s really hard at times to look at the amount of money you are paying out with essentially nothing to show for it.

The thing you need to remember is that you are getting clear of your debt.

For me, I reminded myself of all the letters and phone calls from creditors.

The dreaded visits from the post man with letters that I really didn’t want to open.

I’m sure you’ve been there. You know what they are, you can tell who they are from but we all, naturally, just want to bury our head in the sand.

As we’ve already discussed though, that does not improve your situation.

When you are going through your Debt Management Plan, remember where you are going, not where you have come from.

Looking to a future after debt

As much as it is not something i’m sure you want to hear, I know I didn’t, you need to priorotize and make sure you are budgetting on a monthly basis.

Making sure that your debt management payments go out in full and on time every month is crucial.

You have unfortunately ended up in a situation where you have had to take action.

You have taken out your Debt Management Plan so lets make sure it does what it’s meant to.

The overarching goal of getting all your debt paid off must be in the forefront of your mind.

Things will get better, you will get there you jsut need to be committed to the process.

And that is what I did.

I cannot even remember how many times my fiancee and I said “in 4 more years”, “in 3 more years”, you get the picture.

We were always thinking about it and looking to the future. That, I believe, was one of the most frustrating but empowering thoughts I had.

Everything we wanted to do but couldn’t because of the amount I was paying out.

Knowing we would get there just helped me maintain my commitment to it.

And we got there, eventually.

One key thing while you are going through your Debt Management Plan that I do need to mention is additional debt.

While making your payments, because things are tight, you may well be tempted to look for additional lines of credit.

Store cards, Credit cards etc.


If there is any way, and I mean any way that you can avoid this then avoid it.

It comes back to your monthly budget we spoke about earlier.

You DMP payments make things tight, you really cannot afford extra payments on top.

Although a new Credit card may help you go on that holiday you want, ultimately, you will regret it further down the line.

Once the bills start coming in and you have to start making payments, you will be stretching your already tight budget even more.

That is why, reluctantly, my fiancee and I didn’t go on holiday for over 5 years.

Luckily, we live in a lovely part of the world so staying at home during time off work wasn’t a huge issue but hey, who doesn’t dream of a nice holiday in the sun.

Again, this all comes down to commitment and identifying the things you are willing to give up in order to get yourself back on the straight and narrow.

Life after your Debt Management Plan has ended

Putting into words the feeling of that last payment is tough, maybe i should insert a sound bite of someone who has won the lottery.

Honestly, that is kind of how it felt.

Not because it was paid and we were saving a nice chink of money every month, it was because that chapter of our lives was finished.

Strangely, by the time it was finished, I found that my attitude towards money had changed somewhat and now, I was even more determined than ever to NEVER get into that position again.

All of the holidays and nice things we had dreamt about during my Debt Management Plan seemed to fade away and now, we were looking even further.

Obviously holidays and treats happened, I am not going to try and say they didn’t, but the mindset of how to achieve them had changed.

No more would I put things on a credit card just because I could.

My entire outlook changed to that of saving up rather than paying things off after the fact.

This, I hope, is something that would happen to most if not all people who have been through something so extreme.

Being in that kind of position makes you think about your future and although by this point it has been a long road, you want to keep moving forward.

So what did I do with my new found wealth?

Do you think I spent it all on random stuff that we didn’t need?

Not a chance.

Holiday in the sun

Moving forward with your finances

So the Debt management Plan was finished.

I found that all of a sudden I had a substantial amount of money left after every pay check.

Awesome, party time soem might say. Not at all.

Not trying to make myself sound like a booring old git, we had fun and we made sure we kept enough of it to make our day to day lives a little more stable, however, let me take you through what I did,

Looking at my Credit Score

After years of paying off a Debt Management Plan with some creditors always marking my payments down as defaults (not good), it was no great suprise that my Credit Score had taken a nosedive.

I started to track my scores with all the major Credit Reference Agenecies and low and behold, they were all “poor”.

If you are unsure how you can check your Credit Scores and reports for free, or why you even should then check out the article below:

Your Credit Score, What it is, why you should care and where you can check it for free

So once I had my scores, I realised very quickly that I wanted to start improving them.

Mainly, this was due to the fact that:

1.  I could only get very high interest Credit Cards.
2.  My fiancee and I were thinking of buying our first home together.
3.  I wanted to start building my score now for better deals in the future.

It may seem a little counter intuitive as I had vowed never to take out finance or loans again, however, I was being realistic.

Getting a good mortgage rate or interest rate on car finance was to me, a way to save in the future.

I had spent time researching and reading about personal finance so I knew that if I did not sort this out now, I would suffer for it later.

So I got to it, I started using some high interest Credit cards purely to increase my Credit score.

I made sure I implemented as many of the points as I could to help increase my score and tracked my reports to ensure they were all up to date.

If you are in this position and you are unsure where to start, I have a few articles I wrote on how to build a Credit Score, take a look if you have time.

14 ways to improve your Credit Score today
How to build a Credit Score from scratch
Increase your Credit Score by simply NOT doing these things

Also, if you have not already read them I would highly recommend the Personal Finance books covered in My top 5 Personal Finance books to read today.

Money Matters

By now, I hope you know that I was sensible with my money and I would encourage every single one of you to be aswell.

When you get passed all of the payments and find yourself with more money than you have had for a long time, don’t let it go to your head.

Or your heart for that matter.

Take your time, do some research if you need to and start planning for your future.

You can enjoy it of course, my fiancee and I do but not in the way many would think.

Essentially, I have set up the following.

Out of the money that I am not NOT paying to a Debt Management company:

20% is helping us on a monthly basis, making day to day life a little more comfortable.

10% is being spent on my education. Mainly on books and a few online courses.

50% is getting put away into an Investment ISA every month (a nice little chunk for the future)

The remaining 20% is getting divided between:
Emergency fund
Birthday and Christmas fund
Holiday fund

I know there are many people out there that will say my percentage allocation of my remaining cash is wrong, maybe I should be investing more/less but personally, I think it is an individual decision.

Although the investing is important to me, putting money aside for future expenses is just as, if not more important.

This is something that I would recommend for anyone just coming out of a Debt Management Plan or any form of debt repayment scheme.

By this point, you are used to not having that money so why not repurpose your debt payments once complete into something more useful.

If you are interested in the different pots, I will be writing another article on how I have automated and optimized my finances but for now, I will point you to this book by author Scott Pape.

The Barefoot Investor has sold over a million copies now and is where I got my inspiration for my pots and savings.

Scott is an Australian and although some of the material is very specific to the AUS audience, the principles it instills in you are relevant to everyone.

Final Thoughts

To finish this article I wanted to give you a final washup of everything we have discussed today.

Once you have had the realisation that a Debt Management Plan is the way forward for you, be preparred for a tough journey.

You’re not going to have much spare cash for the duration, but for your future, you have certainly made the right move.

Once your Debt Management Plan is complete, have a think about what you want to do with your now expendable income.

Some will just want to enjoy it and if that is you, then go right ahead.

I would emplore all of you to have a good think about it though and come up with a plan about your future.

The last thing you or I want to do is to end up back in the same position again.

Use your money wisely. Save, invest and prepare for your future while improving your Credit Score.

If you are in the midst of a Debt Management Plan or any form of Debt repayment then just know life is good when it’s done, don’t forget the reasons for doing it in the first place.

I hope you enjoyed this article. If so, please share it via the links below. Helps me get the message out there and hopefully helps those in a similar position as I was, all those years ago.

Share it with a PIN

If you like it, share it below. 

Help others find the same content to help them along their journey.