One day, hopefully soon, you’ll reach that magical moment when you pay off the last of the debt and all the money you’ve been putting towards debt repayment no longer needs to go there. What now?

This is a fairly critical moment. The direction you set is likely to define what happens in your financial life going forward. You are faced with both risks and opportunities.

If you’ve set up the first three parts of the five-step plan appropriately, you should have a clear path to success in front of you.

By now you have

• A monthly budget that allows you to live within your means
• A system for keeping track of your costs, giving you the tools to stick to your budget
• An emergency fund with three months costs saved up, giving you a safety net in case anything should go wrong
• An amount of cash left over after your costs each month, which you will be using to pay down your debt

You now have a long, hopefully fairly straightforward path to being debt-free in front of you. We just need to calculate how long it will take us, and engage a process of continuous optimisation.

By now, if you followed step one and step two, you have a budget that, provided you can stick to it, throws off extra cash every month.

The temptation is to start paying down that horrible debt as fast as possible.

For the long-term success of your plan, however, it’s very, very, very important to build an emergency fund first.

So before you start paying down your debt, build an emergency fund. It will be good for your mental health, for your confidence and the for long-term success of your journey to a debt-free life.

In this step, we’re going to do most of the preparatory work for your journey out of debt. This mostly involves preparing a budget and sticking to it, but we’re going to go into a little more detail than that.

We’re going to do three things.

• Draw up a monthly budget that’s sustainable over the longer term
• Calculate how long it will take to work your way out of debt given the budget you’ve chosen
• Choose the methods you’ll use to track your progress and stick to your budget over the duration of your journey

You should have your minimalist budget that you prepared during the first step nearby as you’ll need to refer to it.

Let’s get started.

I posted a few weeks ago with a savings plan calculator that allowed you to build you own 52-week savings plan using a google spreadsheet that I shared.

I thought about that some more and wanted to make it more versatile. What if you want to save over only 40 weeks, for example? What if you wanted to start with savings of £20 per week?

Check out this article to see the free online savings plan builder that achieves whatever target you choose.

I shamelessly participated in the traditional financial blog January epidemic of sending out 52-week savings plan sheets to my readers.

I decided upon a savings plan that doubles the amount you save every week from a very small base, so in my case, you started by investing 50p, then £1, then £1.50, until the 52nd week when you saved £26, and you’d have a box, or a jar, with £689 in it.

This savings plan post proved a bit more popular than average, in part because the concept is both appealing and approachable.

That’s a decent chunk of change that allows you to do something substantial, and the idea behind the plan is that it’s small enough an effort that anyone can sign on and stick to it until the end.

The reason everyone in this field suggests this is because it works. It’s something simple, tangible, that anyone can do.

But it’s a bit prescriptive. What if you really needed to save £827 to buy your Spring holiday trip for next year? Maybe my £689 plan isn’t all that useful to you…

Since the math is really simple, I thought I’d review my post from last week and go one better, letting you set your own target and print out your own savings sheet, based on the target and the method you choose.

A straw a day makes a bale of hay.

Follow this easy and accessible weekly savings plan to save over £650 by the end of the year with almost no effort.

Not just money, but hassle too!

After going through the exercise of finding the cheapest airline tickets to my destination, I was faced with a simple problem.

We had far too much luggage. It was going to cost us a huge premium over the plane tickets to get our stuff to where we were going.

There is so much you can do to reduce your monthly spending it’s sometimes hard to know where to begin. On the other hand, when you want to save money, these obvious savings can be difficult to spot. That’s because your spending habits are so ingrained it’s difficult to see what you can change. It takes a conscious, guided exercise to re-evaluate your spend.

It’s also not enough to measure how much you’d like to spend and then just arbitrarily spend less – if you spend £400 a month on groceries, you’ll find it hard to halve that without completely changing the way you shop. That’s a massive change. Don’t underestimate the difficulty of reversing what is basically a large collection of bad spending habits.

In this series of posts I’m going to look at the spending categories that are common to most budgets and examine each in turn. I’ll point out how you can generate extraordinary savings by taking a fresh look at how you spend in each of these categories. You’ll see that even small changes that don’t look like they’re very significant can, over time, add up to major improvements to your finances.