Violet was the winner of the 1Life Win a Financial Makeover competition. That means she will have seven sessions with me, Winnie Kunene, Money Psychologist and trustee on the board of Truth About Money. You can get to know Violet by reading the earlier blogs about our first four sessions, and then read on to learn how she avoided the debt trap this December.
I was very excited to meet with Violet after the holidays. I was certain that she would have stuck with her commitment not to overspend in December – a trap that’s so easy to fall into – and I am delighted that she proved me right.
She paid back each of her creditors exactly as she said she would, and then stuck to her plan for the December holidays, which included:
- Not celebrating Christmas. This meant she didn’t have to buy presents or prepare a fancy meal, saving her a lot of cash. In Violet’s case this was easy, as she traditionally doesn’t celebrate Christmas anyway.
- Not going away. Violet saved herself the cost of travelling by staying at home. She had visited her grandmother and brother quite recently, so she didn’t need to spend the extra money visiting them again over the holidays.
- Staying at home. Violet avoided the temptation of spending money by spending a lot of time at home, resting and relaxing with her boyfriend, rather than going to the shops, where she might be tempted to spend.
- Not eating out. Violet and her boyfriend kept their expenses low by cooking together at home.
She tells me that she will NEVER go back into debt like this again.
I am continually impressed by Violet’s determination to get herself out of the debt trap she is in. I gave her the guidance on the process, but the hard work is all hers.
Each time we meet, she tells me that she will NEVER go back into debt like this again.
The state of Violet’s debts
Violet has made good progress in paying off her debts. Here is the current situation:
|Creditor||Balance at start of financial makeover End Aug 2017||Balance outstanding January 2018||Installation due end January 2018|
|Creditworx/ University||7 600.82||5 800.00||400.00|
|VVM-Game account||10 064.25||8 611.88||400.00|
|Jet||9 636.01||6 636.01||1 000.00|
|Ackermans||5 091.26||1 841.39||1 000.00|
As you can see, she is right on track to finish paying off her Ackermans account by the end of February. If you remember, she was using a debt repayment method called “snowballing”, which involves paying extra into the account with the smallest balance to get rid of it, and then tackling the account with the next smallest balance. This gives you a psychological boost along the way to keep you motivated.
Violet will then split the R1 000 extra she has in her budget between the Game account and her university fees. She said, “I believe if I keep being consistent like that, I will finish paying off all my debts.”
Looking to the future Violet and I took it easy this month, and just agreed to stick with the plan - because it’s working! But we’re looking forward to our next two sessions, in which we have lots of exciting things to discuss. Violet’s boyfriend has agreed to take on as much of the household costs as he can so that she can devote all her spare income to paying off her debts. So we might see even bigger amounts going to each of her creditors in future.
Violet also says that there might be wedding bells for her and her boyfriend in the not too distant future, so we’re going to make a plan for saving for their special day as well.
On a more serious note, we’ll also be talking about creating an emergency fund, so that if Violet faces any financial challenges in future, she’ll have a buffer to see her through.
The discipline that it’s taking Violet to pay off her debts like this is incredible. I believe it will stand her in good stead for all the other financial steps she’ll have to take in her future – once you’ve paid back debt, saving feels like a walk in the park. I’m sure it will for Violet.
The views and opinions expressed in this article are those of the authors and do not necessarily represent or reflect the views of 1Life or its employees.