Direct debit vs. monthly set-aside?

Reya

Hi, newbie here :wave:

This is such a great site! I've been lurking for a few weeks now, since I heard Martin on the Jeremy Vine show, and now that I'm facing a big financial challenge of my own (and I do see it as a challenge; one to be faced and slapped around a bit until I beat it!) I'm posting the question that's currently puzzling me.

The long and the short of it is, after eighteen years together, my (not so) DH and I are separating. We've always lived a relatively 'spendy' life, because we both earn good wages - him twice as much as me - but now he's on his way out, I'm tightening my belt and sorting out my finances.

My question is: do I put utilities such as the water bills onto direct debit (therefore possibly overpaying each month and letting them earn the interest instead of it sitting in my bank account) or do I set aside the amount in my bank each month and pay the twice-yearly bill when it comes in?

You see, although there is a water meter outside (our rented home was refurbished several years ago, but never connected to the meter) we've always paid the bill twice-yearly, so I've only got a rough guess at how much it would be per month. With all of the utilities etc, I've rummaged out the past two years-worth of bills and calculated roughly how much I should set aside each month. I'm just curious as to whether it's wise to go for direct debit, or whether I should leave the money in my own account so it earns me a little bit of interest (and if that's even worth doing, considering the interest is likely to be in the very low £ mark). I'm guessing my monthly set-aside would be advantageous in the long run, as I know that both switching to a meter and going from two people to only one person in the house is going to bring down the water usage drastically, therefore my bill is likely to be lower than I anticipated (and I might even have money spare at the end of the set-aside period!)

Thanks to Martin and this site, I've just been accepted for the current lowest rate Life of Balance card (Intelligent Finance) so I'll be able to clear off my old HSBC card at the rate of £80 in the £100 payment instead of the old rate of (after interest and repayment protection) £24 in the £100 payment. For that alone, as well as all of the other hints and tips I've picked up while lurking, I'm very grateful!

Sorry, that was a bit rambly Glad to 'meet' you all

Lydia.42

Welcome to MSE
Opinions may be mixed on this one, but i know that with Gas and Lecci bills, the companies often give discount if you pay by direct debit, so you would have to weigh up how much you would save in your account, compared to the discount they would give you.
With the water meter, i would probably go DD for convenience, and ask for it to be connected. If you are now on your own you will not be using much at all.
Also, you wont have the OH wasting water - it makes me cringe when my OH runs the taps when brushing his teeth, etc. :rotfl:
L

Reya

Thanks for the welcome, Lydia!

Also, you wont have the OH wasting water - it makes me cringe when my OH runs the taps when brushing his teeth, etc.

Tell me about it! My (god, what do I call him now he's on his way out? *grin*) soon-to-be-ex OH (long-winded, but it works) is one of these ten-minutes, three times a day tooth-scrubbers, and the tap's going full whack every time. Me, I'm happy to half-fill a glass, turn off the tap and do it that way.

I've just had my water rates (Anglian Water) bill in for the coming year - a horrendous £322.32 - and a few days ago I checked out a comparison site that I saw linked here. Even with cautious overestimation of one or two things, the site told me that switching to a meter would cut my yearly bill by about £190, so I'm definitely going to do that. I'll call Anglian Water tomorrow and get that all sorted out. I have no idea what to do about the bill in the meantime; presumably because it's for 1st April 06 - 31st March 07, and they can get me connected before then, I could go onto DD right away. I'm already looking into how the loo cistern unscrews so I can get a water-filled 2L Coke bottle in there and reduce the flush!

I paid my gas bill on DD several years ago, and it almost always ended up as an overpayment of about £5 a month, earning them money instead of me. I guess that's why I'm probably a bit wary of doing it again.

little_miss_broke_2

Hi Reya :hello:

Welcome to MSE

You've come to the right place.

I always pay my gas and electric by DD, at least then i know each month how much i have to budget for (which works for me, but we're all different!), at least if you do over-pay you can claim it back, which can be a nice little bonus once a year (that's never worked for me though, i always end up in debit, not credit :rotfl: )

Nice to *meet* you, hope you're okay with everything that's going on with your soon-to-be-ex OH.

Reya

Hello, lmb! I read your lightbulb thread a few days back. Wanted to laugh and cry and hug you all at the same time. I'm so glad the brilliant people here managed to help you so quickly!

Nice to *meet* you, hope you're okay with everything that's going on with your soon-to-be-ex OH.

Yup, I'm fine with it. To be honest, as an only child I've always been good at being on my own, so the single aspect of it is fine. Also, neither of us has been very happy over the past year or two, which is where I think the spendy lifestyle has come in. Alas, money doesn't buy happiness and all that (although it does get you a great suntan and some wonderful foreign holiday memories).

little_miss_broke_2

Aw, thanks. Without sounding like a total over the top drama queen (ok, i probably do!), that thread really turned my life around, the advice and kindness i received staggered me beyond belief.

Lol @ "great suntan" - well, there's got to be *some* positives hasn't there?!!

Keep posting, i look forward to getting to know you

RVK2

Hi Reya and welcome

Personally I do a mix of both DD and set-aside. DD for utilities, TV licence etc and set aside a monthly amount for car tax, insurance, MOT and anything else I can't do by DD. Seems to work for me...so far!!

Reya

Hello, RVK2 (erm, that's the best I could do, without typing it all out!)

Luckily for me, I don't drive, so there's no car expenses for me to worry about. Soon-to-be-ex OH is probably going to move out at the end of the month (he found a flat this weekend, but it's unfurnished, so he has to go furniture shopping PDQ!) so once he's gone I'll contact my local council to get my Council Tax single person rebate and I'll also contact the people I rent from (housing association). I'm a bit worried that they might decide I'll be better off in a one-bedroom flat so they can move a family into my two-bedroom house, but really, this house is so small and snug that it's not much bigger than a flat!

The TV licence is already on DD, and I have the lowest cost of contents insurance that I could find (with Budget). It seems like little moneysaving things keep falling into my lap at the moment, though! A few weeks ago, during the housing association's annual boiler service, the service guy said the boiler was set to burn far too much gas - enough for a five-bedroom house! - and that by lowering it for me, he'd be saving my gas bill about £80 a year, without my even noticing a change in the heating of the house. And when I got my Tesco delivery this week, the pickers had put in two items I'd not requested (plus I wasn't charged for them) so I've got an extra and unexpected free meal this week

RVK2

Reya wrote:

Hello, RVK2 (erm, that's the best I could do, without typing it all out!)

Luckily for me, I don't drive, so there's no car expenses for me to worry about. You're lucky, that costs me a small fortune! Soon-to-be-ex OH is probably going to move out at the end of the month (he found a flat this weekend, but it's unfurnished, so he has to go furniture shopping PDQ!) so once he's gone I'll contact my local council to get my Council Tax single person rebate yep, that's a good help and I'll also contact the people I rent from (housing association) (did that with my ex-hubby, name off the rent book, they'll probably come round and get you to sign the forms, my ex attended that interview, yours may need to be too) I'm a bit worried that they might decide I'll be better off in a one-bedroom flat so they can move a family into my two-bedroom house, but really, this house is so small and snug that it's not much bigger than a flat!(unlikely, I'm in the tiniest 2bed imaginable, for me and my daughter, can't see them wanting to move you to be honest..they're more in need of 3's and 4's.)

The TV licence is already on DD, and I have the lowest cost of contents insurance that I could find (with Budget)(£6.64 a month for my 2 bed, is that comparable with yours?). It seems like little moneysaving things keep falling into my lap at the moment, though! A few weeks ago, during the housing association's annual boiler service, the service guy said the boiler was set to burn far too much gas - enough for a five-bedroom house! - and that by lowering it for me, he'd be saving my gas bill about £80 a year,(bargain!!) without my even noticing a change in the heating of the house. And when I got my Tesco delivery this week, the pickers had put in two items I'd not requested (plus I wasn't charged for them) so I've got an extra and unexpected free meal this week

Keep up the good work

amosworks

Hey Reya,

Don't forget also that if you do pay by DD, you are covered by the Direct Debit Guarantee which may help you if they !!!! up, as you'll quickly be able to get the money back from your bank. If you pay manually then the timescales to get back monies owed etc. might not be so short.

Of course, as already mentioned, paying by DD often gets you a few % off your utility rates so you should factor this discount in.

Good luck!!

shazzer22

Hello, i have always paid for bills by only direct debit and never think to put a bit away each month for car tax etc. thus it always being a big shock when it actually comes around to paying it! thanks, i might have to convince the BF to start chipping in a bit extra to our joint account so we can build up a reserve!