Savings Newbie - Some Help Please?

hellohello_2

From what i've read though a student loan is one of the debts I shouldn't be rushing to pay back, the repayments will be be very minimal if I go over the threshold aswell so much so that I would still be able to deposit the same amount each month.

As for my overdraft, well i'm going to start putting money into my e-savings account so that when the time comes for me to pay the overdraft back I can just pay it off with that money instead.

But thanks for the advice people, i'm going to look into an ISA now. Just a question about that though, I know they run from April to April and you can only have per year per person, say I deposit £200-£250 each month until April, i'll have between £800-£1000 in the ISA when the time comes to open a new one (2009-2010).
Can I still add to the ISA I setup now which will have around £800-£1000, aswell as open up a new one for next years 'ISA allowance' and get another £3600?
Or would I be best off moving the £800-£1000 that i should have saved and depositing that into a new ISA (and getting a better rate as moving from a diff provider?) for next year and build on it that way until its full?

Not sure i've made sense there really. But any help is appreciated!

fullstop

I'll try to answer the ISA question:

You can not put any more money in this years ISA when the new tax year starts 5/6 April but you carry the cash plus interest over to the new tax year when you can start another one and pay in the full £3600 before the next tax year.

Lokolo

hellohello wrote: »

From what i've read though a student loan is one of the debts I shouldn't be rushing to pay back, the repayments will be be very minimal if I go over the threshold aswell so much so that I would still be able to deposit the same amount each month.

Correct. The current rate on SL is 3%. You can get savings rates better outside this so you're money is best off elsewhere.

hellohello wrote: »

As for my overdraft, well i'm going to start putting money into my e-savings account so that when the time comes for me to pay the overdraft back I can just pay it off with that money instead.

Good idea, who suggested that?

hellohello wrote: »

But thanks for the advice people, i'm going to look into an ISA now. Just a question about that though, I know they run from April to April and you can only have per year per person, say I deposit £200-£250 each month until April, i'll have between £800-£1000 in the ISA when the time comes to open a new one (2009-2010).
Can I still add to the ISA I setup now which will have around £800-£1000, aswell as open up a new one for next years 'ISA allowance' and get another £3600?
Or would I be best off moving the £800-£1000 that i should have saved and depositing that into a new ISA (and getting a better rate as moving from a diff provider?) for next year and build on it that way until its full?

The above explanation is slightly wrong.

You can put new money into the ISA in the new tax year, but this prevents you from opening another.

Example:

You have an Egg one now, you put £200 a mont into Eggs ISA each month. Before April 6th you have £800. You then deposit £200 on April 8th (new tax year). This means you have started your ISA for 09/10 and you can then deposit a further £3400 over the tax year.

Alternatively, you can stop the Egg payments before the new tax year. This means you can then open a HSBC (example bank) in the new tax year and start depositing money into this.

You can at this point also transfer money from Egg ISA to HSBC ISA* using an ISA transfer form. This can take around 4 weeks to do though.

*not all ISAs accept transfers in.

Milarky

Regardless of what you put your saving into, the best form of saving is by standing order (or equivalent) regular monthly payment - straight out of your wages.

By establishing the savings 'habit' using a standing order, you soon forget where the money is going and it becomes just another budget item.

Most people will have got started via regular savings arrangments set up either by a parent or themselves. The idea is to achieve a lump sump - but not in any particular time.

Stick to cash deposit accounts for now. And review how much you are putting aside every six months or so. If you can, increase your regular payment at each opportunity.

Simply by 'not spending' we are saving - that's the golden rule....

Stuart_W

hellohello wrote: »

From what i've read though a student loan is one of the debts I shouldn't be rushing to pay back, the repayments will be be very minimal if I go over the threshold aswell so much so that I would still be able to deposit the same amount each month.

You're right, they would be minimal - in fact only £7.50 per month for every £1,000 per year you earn above £15,000pa.
(£16,000pa = £7.50 per month, £17,000pa = £15 per month, £18,000pa = £22.50 per month etc)
Student Loans and Inland Revenue are very very slow at communicating with each other, so it may take a very long time for deductions to start - the good news is that deductions cannot be backdated (unless you're self employed). It's worth remembering that these deductions will appear at some point in the future.

Fire_Fox

When, exactly, does your interest free overdraft expire? If you are to save £250 per month for six months you would have sufficient to pay off your overdraft in June. I can't see the point in having an ISA just yet as you will only have to withdraw it to pay off your overdraft.

Basically I am saying don't start your ISA and make life more complicated until you have enough saved to clear your overdraft. Only then start looking around for the best combined deal - current account, savings and ISA - if you prefer to keep things straightforward. Once you have paid off your overdraft you will be in a good position to get the best deal from the banks as you won't have any debts to transfer.

You can only have one cash ISA active (i.e. saving into it) in any tax year, so you can put in any amount up to £3600 between now and April. You cannot put in £3600 then take it out then put it back. In April your choice is to

1. carry on paying into it with your new £3600 allowance (cannot then open an additional cash ISA) OR
2. leave your £800-1000 dormant (nothing in and nothing out) and open a new one to pay into using your new £3600 allowance OR
3. transfer this years ISA into next years ISA if you can get a better rate OR
4. withdraw the money and start from scratch as if you never had an ISA.

hellohello_2

Thanks for all the info people. Thanks Lokolo for the savings account idea to pay back the OD.

Basically, if all goes to plan, my overdraft will be paid off pretty much by the end of March. I'm just going to keep putting as much of my 'spare' money into my e-savings account until I have got £1600 (or enough to pay back what ever is outstanding on the OD).

Aswell as this i'm going to put £200 a month into an ISA until April, then start a new ISA for the 2009-2010 year, and transfer the £800 that I have saved in the previous ISA to the new one, and continue saving until I reach the £3600 threshold. Basically point 3 which Fire Fox said.