I went from being £20k in debt to buying £170,000 first home in just two years – here's how | The Sun

WHEN you're in debt, clearing it can seem impossible – but Rachel managed to wipe hers and buy her first home in just two years.

Office manager Rachel Elliott was struggling after racking up £20,000 of debt three years ago.

She had two credit card debts, two overdrafts, a loan for her car and had car finance debts.

The 37-year-old said that as a "proud person", it was hard to admit that homeownership was a pipe-dream unless she made a drastic change.

But after facing up to the amount of money she owed, Rachel and her partner Rebecca, 27, who works in a pharmacy, sat down together in March 2020 to figure out how to clear it with the aim buying their first home together.

Rachel created a spreadsheet based on their incomings and outgoings to see how much they could pay off per month.


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The couple raided their finances and decided they needed to pay off between £2,000 and £3,000 a month to clear the debt in a year.

Rebecca covered the couple's rent and utility bills, which was around £1,000 so Rachel could focus on repaying her debts.

At the start of the pandemic in March 2020, Rachel lost job and had to search for work to fill the gap in her income.

She said losing her job gave her "sleepless nights" as she contemplated how she would keep up with her payments.

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After just a few weeks of searching, she managed to find work in a care home and on the railway network.

Working 12 hour shifts, seven days a week, Rachel was able to earn between £2,000 and £3,000.

Around £200 of this would pay for the couple's broadband and council tax, and the rest of it would go to paying off the debt.

She also took advantage of payment holidays offered by lenders during the pandemic, managing to secure a break on all of her debts.

In 2020, the regulator told lenders to pause payments for three months for customers whose finances had been negatively affected by the coronavirus crisis.

This allowed Rachel to focus all her efforts towards clearing one debt, while another was paused.

In just one year, Rachel managed to clear her debt once and for all and was able to turn her focus to saving for her first home.

By December 2022, Rachel and Rebecca, 27, had the keys to their £170,000 three-bedroom home in Liverpool, which they are currently renovating.

We sat down with Rachel to see how they kept on track with clearing their debt and saving at the same time for The Sun’s My First Home series.

Tell me about your home

It's a three-bedroom, three storey terraced house in Liverpool.

We have a back garden that can be accessed through french doors in the living room.

There's also a large driveway at the front of the house.

We are hoping to convert the bedroom at the top of the house into a cinema room with a mezzanine.

How did you decide on location?

We had seen a couple of properties in the area and put offers in that unfortunately weren't successful.

But we loved the area, so we just kept searching and eventually we were lucky.

The location is great because it has good transport links for Rebecca getting to work and we have a driveway too.

How much did you pay for it?

Before we moved, we were paying around £550 in rent a month.

Our mortgage isn't that more expensive – we pay £620 back a month.

We took out a mortgage of £144,500, on an 32-year term with a fixed rate of 3.51% for five years.

Rebecca and I also both opened a Help to Buy Isa in around 2019.

By the time we were ready to buy, we had saved up £5,000 in our accounts.

We got a bonus from the Help To Buy Isa of around £3,000 in total.

How did you save for it?

We knew we needed to clear my debt before we could buy our first-home together.

In 2020, we sat down to work through a budget to tackle paying it off after we faced up to my financial situation. 

I made a spreadsheet based on our incomings and outgoings to see how much they could pay off per month.

We worked out we needed to pay off between £2,000 and £3,000 a month to clear the debt in one year.

I paid off the debts with the highest interest rate first so you I didn't have to pay more on big fees.

This is called the avalanche method.

Luckily, lots of lenders were also offering payment holidays because of the pandemic.

These holidays are offered in emergencies.

This meant I could pause each loan – credit cards, car finance and loans – for three months at a time.

However, I was still being charged interest during this time, as payment holidays don't stop you from accruing interest.

Doing this allowed me to get on top of one debt, while not having to worry about also paying another.

At the beginning of the pandemic, I lost my job and I knew that being unemployed just wasn't an option because we couldn't afford to live on just Rebecca's income.

Luckily, it took me just a few weeks to find a job in the care industry and another as a site access controller on the railway.

I worked 12 hour days, seven days a week and most worked away from home.

While this was exhausting, this helped me to earn between £2,000 and £3,000.

I would then pay around £200 a month out of this to pay our Council Tax and broadband bill.

Rebecca then covered our rent and utility bills, which came to just under £1,000 a month.

As I was working away a lot, it was often tempting to spend money on expensive takeaways.

I used to carry my slow cooker with me when I was working away from home for work and would use this to cook meals.

I would buy ingredients from Aldi, and slashed around £100 off my weekly food bill.

We also cancelled our subscriptions to services like Netflix, Apple Music and Amazon Prime, saving around £50.

At the end of the year, we had cleared my debts and I was able to leave the care job.

We continued to run the budget spreadsheet though while we kept saving for the house.

Rebecca and I were each putting £200 a month into our Help To Buy Isa.

We also had a savings account that we would add to each month.

While I was paying off my debt, I was only able to put away around £40 a month, but I was able to up this to around £100.

By the time we came to put down our deposit, we had £11,000 in our savings accounts.

We were also fortunate enough to get a gift of around £7,000 from family to put towards the deposit.

Any complications?

If you have a history of debt, sometimes it can be hard to get a mortgage. 

But I always paid the minimum monthly repayment off on time and never got a bad mark on our credit file.

Rebecca also had no debt to her name.

It meant we didn’t have too much trouble getting a mortgage.

How did you afford to furnish it?

We had both accumulated a lot of furniture over the years from renting.

This meant we were able to bring a lot of stuff with us and we didn't have to fork out a lot of extra cash.

The only things we bought for the house were a new fridge-freezer and a dishwasher – with both coming to around £X.

Do you have any advice for other first time buyers?

It's a cliche, but if you look after the pennies, the pounds really do look after themselves.

If you get yourself into good habits, you will continue to use them and you'll find you always have a bit of spare cash.

Just don't give up, because at the end, you'll have a place that's truly yours.

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Do you have a money problem that needs sorting? Get in touch by emailing [email protected]

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