Am i doing the right thing?

gingerdiamonds

Hi everyone!

I'm new to this site, and new to budgeting.

I currently owe 4400 on my mbna card.

I am paying off 450 every month. However, because I find it very difficult to buget, I set aside an amount each month for my food and petrol bill. To make sure it is separate from my current account I also pay this amount onto my card. (I have a separate current account for my Direct debits)

So all in all, I pay £800 a month onto my card. (I live alone and very close to work) And am using it to buy my food and petrol at around £350 a month, and never go over.

I'm just wondering if this is the right thing to do? I'm very careful and not spending more than I'm putting on. And this way whatever is left in my current account, I know i can spend on other things and my bills/food/petrol are paid for.

ICan'tStandIt

You need to see how much interest you are paying a month on your MBNA card and factor this into how much you pay in.

Ideally you need to cover the new charges (ie. what you have spent), the interest plus as much as you can afford to bring the balance down.

Once all your direct debits are covered see if you have any spare money so you can make another payment to your card.

What you're doing at the moment is fine, but you're running the risk of you MBNA balance remaining pretty static, which means you're being billed more interest than you really need to be.

Hope this is of some use.

heloid

This is what I do, except I leave about £150 worth in my bank account for times when I need cash (you never want to take cash out of an ATM with a credit card unless you KNOW you can pay the full balance off the next pay day).
If you do the math you save interest on the food spending money each month before you spend it (I save about £5 on it per month), bit like a mortgage offset.

Only caveat is that you need to have will power and not spend more than £350 a month on food etc otherwise you're dipping in to the money you're paying off the balance with.

gingerdiamonds

Thanks for the advice. I think I may carry on doing this because I'm finding that I do have the will power to only spend £350 for my food and petrol - I'm tracking all of my expenditure in a ridiculously detailed spreadsheet and have finally found that this is working for me.

I'm currently leaving about £175 in my current account for any cash needs, like car parking etc. Hopefully i'll be debt free soon!