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Living within our means?
pilesofstones
Posts: 35 Forumite
Just a general question. I've realised that i'm always living in between overdraft facilities. Not actually costing me anything, as they are paid back within a month. I think this is probably a common practice that most do. However, does anyone think that it affects how we spend money?
As a bit of an experiment i'm cancelling my overdraft facility and I'm going to try to only use cash for a month.
The only outcome I can see of this is me spending less money.
Anyone have any thoughts on this?
As a bit of an experiment i'm cancelling my overdraft facility and I'm going to try to only use cash for a month.
The only outcome I can see of this is me spending less money.
Anyone have any thoughts on this?
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Comments
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If you're going to be spending less and staying within your means, that's gotta be a good thing, surely? IMO a wise move, congratulations for making it. The best of luck to you, I hope that it works out and you can make it a long term thing.
Not so sure about your assumption that "most" people live in/between overdrafts, I suspect it's more likely that most people don't ;-)0 -
Chris,
I mean in a holistic view really. We pay for things on credit cards, essentially using money that isn't ours. I know the arguments to all of this go deeper into lifestyle, banking ethics etc, but it was more of a general point.
I'll let you know how I get on.
I'm not too sure about the cash thing. I've been told by a few people that it's better to manage a budget by only using cash. I don't see how it works really. £7 on lunch, paid with £10 note. £3 change that gets wasted on something pointless. Whereas a debit card would take the exact amount...0 -
I'm not sure what exactly you are wanting to achieve
-cancelling an OD may well be bad news if you then accidentally go into the red as you will then be charged fees and interest and also damage your credit rating
-you should anyway be saving every month so you can afford the money for all those inevitable 'emergencies'.0 -
pilesofstones wrote: »We pay for things on credit cards, essentially using money that isn't ours.
I do do that bit. I spend as much as possible of my monthly spend on my credit card - but I earn cashback on the card and interest on the money that I don't actually spend until it's time to pay off the card on full each month. What I don't do, though, is not pay off the card in full. If there's money to be made on my spending, I'll have it, not the banks
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I'm not sure what exactly you are wanting to achieve
-cancelling an OD may well be bad news if you then accidentally go into the red as you will then be charged fees and interest and also damage your credit rating
-you should anyway be saving every month so you can afford the money for all those inevitable 'emergencies'.
I just think that we live beyond our means. I don't worry about going into the red as I actually have an overdraft. So surely that means that my decision making is skewed because of this facility. I see where you're coming from, but lets just say that I can work to not go into the red.
I'm saving every penny I don't spend (and as a final year student, living with parents I'm saving £800 a month).0 -
Are you sure it isn't costing you anything?
Cancelling overdraft is a bad idea, you may need it one day. You can do the same experiment without cancelling, just budget and manage your money properly
Going into my overdraft doesn't cost me anything directly, no. I am a final year undergraduate and still get a good student account with free 0%, ODs. But my point is, maybe this overdraft does cost me, by skewing my view of what money I actually do have available to me?
What did we used to do before current accounts with debit cards were available?0 -
£7 on lunch?
Your problem is spending more than you earn.
It is not the method of payment that matters.0 -
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I applaud your intention but question the method.
Using 'cash' rather than other payment methods is not the issue. Living within your means is the issue.
Credit cards, debit cards, cheques, ATMs, DDs, internet payments etc etc are all conveniences - nothing wrong in principal with using them.
Keeping track of what you're spending, and ensuring it does not exceed what you are bringing in, is what matters, not how you spend.
I'd keep the overdraft facility in place but just make sure you don't actually use it!0 -
I'd keep the overdraft facility in place but just make sure you don't actually use it!
Good point, well made. I think that maybe if I reduce the facility to something small. It's currently around 1500 (that just screams free cash to my stupid mind). Maybe reducing it to around 100 would be reasonable.0
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