Piggybanking

louby40 · 18 June 2016 at 7:42PM

I'm ready to start slimming down my spending and seriously start paying off my debts and building a buffer in my current account.

I currently save £100 a month as an emergency fund (I have £150 so far) but my question is, do I plough everything into paying things off each month? Or do I put some small amounts (e.g for Christmas, birthdays etc) aside?

Thanks
Lou

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PurpleFairy26 · 18 June 2016 at 7:50PM

You should ideally do both. Work out how much you spend annually in presents, annual bills etc.. And save 1/12th into an account each month and then save an emergency fund for when stuff goes wrong like fridge breaks.

louby40 · 18 June 2016 at 7:58PM

Ok thanks, yes that makes sense.

Ilona · 19 June 2016 at 9:27AM

I'm not sure how you can say you save £100 a month then say you have £150 in the emergency fund. So, you saved £100 for one month, then £50 the next month. Maybe your target is too high if you can't reach it every month.

If you can comfortably save £50 every month, then throw more at your debts, that might be a better way of doing it. In six months you would have £300, the price of a washing machine or a fridge.
Ilona

mrsbee17 · 20 June 2016 at 9:43AM

I use YNAB to virtual piggybank - that why I maximise interest from my Santander 123; I appreciate this isn't for everyone as YNAB has a small cost involved but it makes my life a lot easier. I put £20 in for birthdays, £30 for Xmas and £50 for emergency fund.

Million_Percent · 20 June 2016 at 10:05AM

Putting aside money in preparation for expected non-monthly expenses such as christmas, car insurance etc. is not saving, it is just sensible budgeting.

Wimbrel · 20 June 2016 at 9:18PM

Your budget should include elements for forseeable expenses and allow you to build up an emergency fund. Work this out then plough the rest into getting the debt down and paying less interest.
I have opened a separate account with the local credit union into which £25 a month is deposited. I deliberately don't have any way of accessing these funds online or with a card.To get money transferred to my current account I have to phone up then wait 24 hours. Now £25 isn't a lot but time goes fast and when I got my annual statement recently there was over £800 in there. That's emergency money and I'm hoping to change the Direct Debit to £100 per month next month because that's when, if all goes to plan, I'll be debt free.

I then have a monthly Payment into an ISA and another into a savings account. These aren't savings as such as the money is earmarked. The ISA is instant access and into it I pay 1/12 of the amount of Self Assessment tax that I calculate will be due from my husband's business. The other account is for car running expenses , excluding tax and insurance which go out monthly by direct debit but including service, MOT and things like tyres and an element towards things that tend to go wrong and throw the budget such as Cam Belt, brakes, clutch or, as happened this month, some numpty removing my wing mirror.

I keep a little slack in the monthly budget to snap up bargains from sales which are stashed away in the present cupboard, picked up two lovely gift sets yesterday from Debenhams reduced from £18 to £5.70. I buy with people in mind and so birthdays and Christmas aren't a problem. I also tend to add a couple of things to the food shop to go in freezer or store cupboard and, as Christmas approaches, a few little luxuries get stashed away bit by bit so that the December food bill is no higher than any other month.

These strategies have been hard learned, I'm on the last stage of a long and sometimes painful journey of reducing what was a very serious debt problem. I'm determined not to go back there again and in order to do that I need to properly budget and include some leeway for those unexpected bills by anticipating the foreseeable expenses.

And from July I intend to start some serious saving! It will take time but the intention is to build up a cushion of a few month's wages.

louby40 · 22 June 2016 at 10:20PM

I think my first priority is to get my overdraft down and build up a slight buffer.

Then I can begin budgeting and paying debts off.

Thanks for your advice

ReadingTim · 23 June 2016 at 4:01PM

No, you need to begin budgeting now, so you know how much money you have available to get the overdraft down, and stay down.

Otherwise you'll get it down this month, only to go back up again next month, 'cos you didn't plan for the car's MOT, or renewing the TV licence, or something else that slipped your mind. Writing down what comes in and goes out each month is a pretty good way of seeing where savings could be made - the sky TV, the mobile phone contract, the meals out and takeaways in, etc....

louby40 · 23 June 2016 at 5:20PM

I can't start budgeting properly till I get paid next Wednesday. I have about £40 to last me till then.

When I get paid, it will start.

kindofagilr · 23 June 2016 at 6:42PM

PurpleFairy26 wrote: »

You should ideally do both. Work out how much you spend annually in presents, annual bills etc.. And save 1/12th into an account each month and then save an emergency fund for when stuff goes wrong like fridge breaks.

Agree with this, I save £150 a month which is for all the birthdays in the year, Christmas, mothers/Father's Day, anniversaries, school uniform/milk/trips etc.

Then every other penny we have goes off the debt xx

Piggybanking

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