Virgo In Pursuit

anjyeah

This is my first DFW diary on my journey to become debt-free. For those who don’t really follow the zodiac, Virgos are known for being perfectionists and control-freaks, I tend to tick the boxes except when it comes to my finances. 

A little bit about myself, I am over 30. I think I enjoyed the freedom of my twenties too much that I somewhat didn’t really consider paying all the debt I owed. My mindset was as long as I have work, I can pay it off with ease. How wrong I was, the work and money were always there but the repayments were a nightmare.  At 25, I was having a credit card with a limit that I cannot afford to payback, focused on too many experiences that I can handle that I ended up with payday loans. Being in University on basic pay also meant that I was over utilising my credit card, hence, the hefty result. Looking back, I do not fully regret having those life experiences as it was something I still remember fondly and learnings were made. However, I wish I knew more about being financially responsible and knew life hacks such as overpaying my credit card (and not just the minimum) and living below my means. 

I am where I am now and I’m taking control of those decisions. 

Fortunately, I have gotten over the payday loan spiral and closed my accounts years ago, finished University and resumed working with a more appropriate pay (unsocial hours increments and extra shifts can be a lifesaver). The University aspect was vital to my promotion. Two years later, I got another offer to a senior role.  So I am using this opportunity to save bigger and even end my credit card debt quicker. Obviously without sacrificing my usual self-care (within reason).

Brief SOA: 

Annual Income: £30,000  (Was £26,000 annual income until March 2021) + overtime 

Credit Card: £9201.57 / 22.04% interest  (Was £13,200) - looking into 0% balance transfers or overpayment at present 

Savings: £4,600 of 5,000 goal / £5000 goal achieve as of May 2021 (Trying to aim for £10,000 the rest of the year)

I do have a few reasons why I decided to become “money smart” recently. But I will bore you with my sob story some other time. I just want to be stable enough and boost my finances so I can actually start thinking about a future in London. 

I will tackle posting my statement of affairs next (if I can find the template again) and talk about my woes and progress as much as I can. Fair to say, I have seen an improvement in my mindset to money since I started joining in January. The advice and support I see on here is are motivating and heartwarming. I hope this little diary of mine can shed the same because I know I am not alone and I am bigger than my money problems. This is me, Virgo in Pursuit of becoming debt-free. Wish me luck! 

londoner2019

Well done on what you're doing - I see a lot of similarities in my story regarding not worrying about paying back when in your 20s. 

One thing I would try and look at is your savings / credit priorities. If, for example, you get a 0% balance transfer for 8000, I would consider paying off the remaining 1201.57 using your savings. Have a look at the amount of interest you're paying each month - you'll be able to reach your savings goals and wiping out the credit card debt goal much faster without the interest payments. 

I do understand the reluctance to do this, as it's nice to have that pot for emergencies and other goals, but if you're able to, I would focus everything on clearing any debt with interest.

Congrats on the promotions though! Sounds like it was thoroughly deserved.

WinterWarrior

Good luck ⭐️

anjyeah

londoner2019 said:

One thing I would try and look at is your savings / credit priorities. If, for example, you get a 0% balance transfer for 8000, I would consider paying off the remaining 1201.57 using your savings. Have a look at the amount of interest you're paying each month - you'll be able to reach your savings goals and wiping out the credit card debt goal much faster without the interest payments. I do understand the reluctance to do this, as it's nice to have that pot for emergencies and other goals, but if you're able to, I would focus everything on clearing any debt with interest.

Congrats on the promotions though! Sounds like it was thoroughly deserved.

Yes, I was looking for 0% balance transfer over the weekend and was just in the process of wrapping my head around it. I guess, I got really worried when I now have to juggle two cards in case they give me a different limit on the second one. I would follow that advice and see where my application goes - I am preapproved for Virgin Money, it's just finding out the limit that killed my overthinking a little. 

Thank you for the kind words @londoner2019 and @WinterWarrior!  

millymolly22

I second Londoner 2019.  Maybe when you have reached your goal of £5000 for your emergency fund then focus on clearing the debt.   Savings get very little interest at the moment and unless you can get a 0% transfer you are paying out more interest than you are earning on your savings...Good luck 

anjyeah

Dear @Londoner2019 and @millymolly22 - I followed your advice. I think it was just the extra insight I needed to apply for the 0% balance transfer and I got approved! I have been sitting on the results since I've gone through the MSE eligibility checker last week. I don't know why it took me so long but here we are. I still plan to make the same amount of monthly payments on the new card and that would reduce my debt to end from the estimated 22 months to just 15 months the latest. I can be stubborn by nature at times that I actually tend to sit on information until I'm ready to tackle it. Thank you for putting things into perspective! 

FootyFanDan

good luck 😄. I was very similar you in that I never really worried about the paying back the debt and then I buried my head in the sand hoping debt would have disappeared when I came back out of the sand.....it didn’t...shock 🤣 but with a good plan anything is possible. Wishing you the best of luck in your journey 

londoner2019

Yes, I'm with you on juggling two cards. Honestly, when I was able to have everything in one place, I have become much more serene and calm about things. 

Don't worry at all - you've done the hard bit! Facing up to it and figuring out a plan is hard.

anjyeah

0% Balance Transfer Versus Overpaying With Savings Each Month? Save Or Control Spending? 

My main focus recently was my credit card debt. It seems like no matter how much I overpay, use the card for little spends, I still don't seem a dramatic decrease with my balance. I really have two options:  0% balance transfers versus overpaying with savings each month. 

I didn’t really want to touch my the savings pot that I built, but the advice was sound, I am actually still paying more interest than paying off the actual debt. I decided to take the plunge and go for a 0% balance transfer instead. I was eligible for Virgin Money from the MSE calculator and was approved for the full amount. I managed to get a 0% for 26 months for a range transfer fee with a limit that I was happy with. I can project to pay off my credit card debt in 15-16 months with the monthly that I put in compared to the 22-23 months I estimated with my first card. 

I was quite pleased since if you think of the state of my affairs from last year, I don’t think I even qualified for a balance transfer and was almost classified as someone with persistent debt. To me, that is a win. 

I am taking the advice: As soon as I hit my £5,000 savings goal this month, the rest of my extras will go into overpaying the credit card. 

Thank you all for the sound advice! 

TheAble

Make sure you close down the old cards once the balance transfer goes through.

anjyeah

Good news: £5,000 savings goal achieve! I was aiming for an ambitious £10,000 for the rest of the year but I will try to slowly balance that with overpaying my credit card instead. 

My 0% balance transfer has been approved for £8,800. If the balance transfer is correct, it saved me at least £1,400 in interest alone and estimated my debt free date to 16 months after (or even sooner). 

Needs Improvement:  Since I was poring through my accounts this week - I realised I am spending too much still. I had a quick look at my Monzo spending estimates and it was more than my allocated £500 on top of my rent and debit outgoings. I will post an updated SOA so you know what my main culprits are. 

I’m really glad I took this step, it was well time for it. 

Today will be a "spend day." Having our first date night in months now that lockdown is being slowly lifted. I will not go overboard and forget my goals, I promise.